Willful contempt for breaching an interim restraint order justified cancelling auctions and restoring the status quo ante.

Willful disobedience of a subsisting interim restraint order can amount to contempt where the order is clear, communicated, and consciously breached. The SC found senior officials proceeded with the lottery and issuance of excise licences despite the High Court's prohibition, and rejected the plea of bona fide misunderstanding because the conduct was deliberate and contumacious. A contemnor cannot retain the benefit obtained by breach of judicial restraint; the Court may use inherent powers to undo the wrong, cancel the auctions, stop the licences, and restore the status quo ante.

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Issues: (i) Whether the respondents had committed willful and deliberate contempt by proceeding with the lottery and issuance of excise licences in breach of subsisting interim orders of the High Court; (ii) Whether the Court could direct cancellation of the auctions and restore the status quo ante notwithstanding the contempt proceedings and the claim of bona fide misunderstanding.

Issue (i): Whether the respondents had committed willful and deliberate contempt by proceeding with the lottery and issuance of excise licences in breach of subsisting interim orders of the High Court.

Analysis: The interim restraint order prohibiting final selection and lottery for excise shops was in force and had been specifically communicated to the respondents. Despite that, the respondents proceeded to advertise and conduct the lottery. The plea that they misunderstood the effect of the order was rejected, since the order was clear, the respondents were senior officials, and they were given an opportunity during the contempt proceedings to undo the breach but declined to cancel the lottery. Mere disobedience was held insufficient only where it is not deliberate, but the conduct here was found to be conscious, contumacious, and in clear defiance of the Court's order.

Conclusion: The respondents were held guilty of willful and deliberate contempt.

Issue (ii): Whether the Court could direct cancellation of the auctions and restore the status quo ante notwithstanding the contempt proceedings and the claim of bona fide misunderstanding.

Analysis: The Court held that a contemnor cannot be permitted to retain the benefit obtained by breach of an interim order. Exercising the Court's inherent powers, it was necessary to undo the wrong caused by the illegal lottery and prevent the continuance of a benefit secured in defiance of judicial restraint. The principle that courts should not be stultified by their own orders and may set right a wrong done in breach of injunction was applied to restore the position that ought to have prevailed.

Conclusion: The auctions were cancelled and the respondents were directed to stop the licences and not allow the successful bidders to continue business.

Final Conclusion: The appeal succeeded, the contempt finding was affirmed, and the illegal benefit obtained in breach of the High Court's restraint order was set aside by cancelling the auctions and restoring compliance with the court's directions.

Ratio Decidendi: A party cannot retain the fruits of an act done in conscious breach of a subsisting court order, and the Court may use its inherent powers to undo the wrong and restore the status quo ante while holding such conduct to be contemptuous when the disobedience is willful and deliberate.

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