Wilful breach of court undertaking amounts to civil contempt when consent terms are deliberately defeated by subterfuge.

Wilful breach of an undertaking incorporated in court-sanctioned consent terms amounts to civil contempt when the parties use a subterfuge to defeat the agreed scheme of joint management and control. The consent terms required joint operation of bank accounts and joint signatures for transactions above a specified limit, but the respondents allegedly split transactions and excluded the petitioner from management, defeating both the letter and spirit of the undertaking. The SC held this to be deliberate non-compliance with its orders, found the respondents guilty of contempt under the Contempt of Courts Act, 1971, and imposed simple imprisonment and a fine, with imprisonment kept in abeyance.

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Issues: Whether deliberate breach of the undertaking incorporated in the consent terms and orders of the Court amounted to contempt, and whether the respondents were liable to be punished for wilful disobedience.

Analysis: The consent terms were not merely private arrangements; they were incorporated in the orders of the Court and were intended to secure joint management and control of the company, including joint operation of bank accounts and joint signature for transactions exceeding Rs. 10 lakhs. The Court held that the respondents had adopted a subterfuge of splitting transactions and otherwise excluding the petitioner from management, thereby defeating both the letter and spirit of the undertaking. It further held that wilful breach of an undertaking given to the Court amounts to civil contempt, and that the facts disclosed deliberate non-compliance with the Court's orders.

Conclusion: The respondents were held guilty of contempt and convicted under section 2(b) of the Contempt of Courts Act, 1971. Sentence of simple imprisonment for two months and fine was imposed, though the imprisonment was kept in abeyance in view of the circumstances.

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