Civil contempt for breach of undertaking upheld where a promoter director remained responsible for company compliance and repayment obligations.

A clear undertaking to a tribunal for repayment or compliance may be enforced through civil contempt when the person giving it remains in effective control of the company and is responsible for compliance. Later claims of resignation or transfer of management do not absolve liability where the tribunal's order continues that responsibility. Where the statutory execution mechanism is unavailable, contempt jurisdiction may be invoked to secure obedience to lawful orders. The promoter director was therefore found guilty of wilful disobedience and breach of undertaking, and the acquittal was set aside while the conviction and sentence were restored.

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Issues: (i) Whether the promoter director of the company was guilty of civil contempt for wilful disobedience of the Company Law Board's repayment orders and for breach of his undertaking to ensure repayment of deposits.

Analysis: The undertaking filed before the Company Law Board expressly assured repayment of deposits in accordance with the approved scheme. The company's inability to repay did not exonerate the director where he was found to be in control of the company's affairs and responsible for compliance. The later plea of resignation and transfer of management did not displace liability, particularly when the Company Law Board's subsequent order continued the responsibility of the promoter director and group companies. The Court also held that, after the statutory execution mechanism under Section 634A of the Companies Act, 1956 was rendered unavailable, contempt jurisdiction could be invoked to enforce compliance with the lawful orders of the subordinate forum.

Conclusion: The promoter director was guilty of wilful disobedience and breach of undertaking and was liable for contempt.

Final Conclusion: The order of the Division Bench acquitting the promoter director was set aside and the conviction and sentence recorded by the Single Judge were restored, while limited time was granted for payment in exercise of constitutional powers.

Ratio Decidendi: A person who gives a clear undertaking to a court or tribunal for repayment or compliance, and who remains in effective control and responsibility for the company's conduct, may be held guilty of civil contempt for wilful non-compliance when the undertaking and order are deliberately not honoured.

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