Undertakings in repayment schemes remain binding despite management changes, and wilful breach can amount to contempt.

An undertaking given to secure a repayment scheme remained enforceable despite a later claim of resignation or change in management, and wilful breach of that undertaking was treated as contempt. The Company Law Board was treated as subordinate to the High Court for contempt purposes because it exercised judicial functions with powers akin to a civil court and its orders were appealable to the High Court. Continuing default under the repayment schedule also defeated the limitation objection. Liability for contempt was found for the respondents who had obtained the benefit of the scheme and then failed to comply, while a respondent with no role in the undertaking was discharged.

---

---

Issues: (i) whether the scheme order of the Company Law Board and the undertakings filed before it and before the High Court bound the promoter director and rendered non-compliance contemptuous; (ii) whether the Company Law Board could be treated as a Court subordinate to the High Court for the purposes of contempt jurisdiction; (iii) whether the contempt petition was barred by limitation; and (iv) whether the contemnors were liable to be punished under the Contempt of Courts Act, 1971.

Issue (i): whether the scheme order of the Company Law Board and the undertakings filed before it and before the High Court bound the promoter director and rendered non-compliance contemptuous

Analysis: The scheme for repayment was sanctioned on the footing of affidavits and assurances given by the promoter director and the group companies. The order of the Company Law Board expressly recorded that the company and every officer, including directors, were jointly and severally responsible for compliance, and a later attempt to withdraw the undertaking was rejected. The subsequent affidavit filed before the High Court also contained a specific repayment assurance. The promoter director's plea that resignation from the board or a change in management relieved him of responsibility was rejected because the undertaking had been given to obtain the benefit of the scheme and remained operative.

Conclusion: The promoter director remained bound by the scheme order and the undertakings, and non-compliance constituted contempt.

Issue (ii): whether the Company Law Board could be treated as a Court subordinate to the High Court for the purposes of contempt jurisdiction

Analysis: The Company Law Board possessed powers akin to a civil court, including powers of discovery, inspection, compelling attendance, receiving evidence on affidavit, and regulating its own procedure. Its orders were appealable to the High Court under the Companies Act, and the regulations treated a Bench as a Court for punishing wilful disobedience. On that basis, and by applying the principle that a body exercising judicial functions with finality may be treated as a Court for contempt purposes, the Board was held to fall within the contempt jurisdiction of the High Court.

Conclusion: The Company Law Board was treated as a Court subordinate to the High Court for contempt purposes.

Issue (iii): whether the contempt petition was barred by limitation

Analysis: The disobedience was continuing in nature because the repayment schedule extended over time and the default persisted. The contempt petition was filed and admitted within the relevant period after the High Court had disposed of the connected appeals, and the subsequent failure to honour the repayment undertaking kept the default alive. The limitation objection was therefore rejected.

Conclusion: The contempt petition was not barred by limitation.

Issue (iv): whether the contemnors were liable to be punished under the Contempt of Courts Act, 1971

Analysis: The Court found deliberate and wilful non-compliance with both the Company Law Board's orders and the repayment undertakings. The first and third respondents were held responsible because they had secured the benefit of the scheme through undertakings and later attempted to evade liability by inconsistent pleas and by relying on an alleged transfer of management. The second respondent, however, was found not guilty because he was not part of the management when the scheme order was obtained and had no role in the undertaking that formed the basis of the order.

Conclusion: The first and third respondents were liable to be punished for contempt, while the second respondent was discharged.

Final Conclusion: The contempt petition succeeded against the promoter director and the company, with the Court imposing punishment for wilful breach of the sanctioned repayment scheme and undertakings, while exonerating the second respondent.

Ratio Decidendi: An undertaking given to obtain judicial or quasi-judicial relief remains enforceable even after a later claim of resignation or change of management, and wilful breach of that undertaking, where the body granting the relief acts judicially and is appealable to the High Court, is punishable as contempt.

---