2019 (12) TMI 1652 - HC - Indian Laws

Contempt petition dismissed as loan default not willful; Bank can recover dues through property sale

Nirmal Urban Co-operative Bank Ltd. Versus Mamta Keneddy Naidu

Nirmal Urban Co-operative Bank Ltd. Versus Mamta Keneddy Naidu - TMI Issues Involved:1. Alleged contempt of court by the respondent.2. Compliance with the terms of the consent order dated 05/05/2017.3. Interpretation of Clauses 8 and 9 of the minutes of the order.4. Whether the respondent's failure to repay the loan amounts to willful disobedience.Issue-wise Detailed Analysis:1. Alleged Contempt of Court by the Respondent:The petitioner bank claimed that the respondent committed contempt of court by violating the undertaking given under Clause 8 of the consent order dated 05/05/2017. The petitioner argued that the respondent's failure to repay the balance outstanding amount within the stipulated period amounted to civil contempt under Section 2(b) of the Contempt of Courts Act, 1971. The respondent, however, contended that the movable properties returned to her were damaged and could not be sold, which hindered her ability to repay the amount within the agreed timeframe.2. Compliance with the Terms of the Consent Order Dated 05/05/2017:The consent order was based on mutually agreed terms between the parties, recorded in the minutes of the order. The petitioner bank complied with Clauses 6 and 7 by returning the auction amount to the purchaser and handing over the movable properties to the respondent. However, the respondent failed to sell the movable properties and deposit the amount in the loan account within the specified period of two months and 15 days, as per Clause 8.3. Interpretation of Clauses 8 and 9 of the Minutes of the Order:Clause 8 required the respondent to sell the movable properties and repay the balance outstanding amount within two months and 15 days. Clause 9 provided that if the respondent failed to repay within this period, the petitioner bank could sell the mortgaged flat afresh to realize the outstanding amount. The court emphasized that Clauses 8 and 9 must be read together, indicating that the consequence of failing to comply with Clause 8 was provided in Clause 9, allowing the petitioner bank to sell the flat.4. Whether the Respondent's Failure to Repay the Loan Amounts to Willful Disobedience:The court examined whether the respondent's failure to repay the loan constituted willful disobedience of the court's order. It was noted that the respondent had deposited Rs. 20,00,000 during the writ petition and Rs. 7,00,000 during the contempt proceedings, showing her bona fides. The court concluded that the undertaking in Clause 8 was given to the petitioner bank, not the court, and the consequence of non-compliance was provided in Clause 9. Therefore, the respondent's failure did not amount to willful disobedience or contempt of court.Conclusion:The court dismissed the contempt petition and dropped the charge against the respondent, stating that the respondent had not committed civil contempt under Section 2(b) of the Contempt of Courts Act, 1971. The order clarified that the petitioner bank could still realize its dues in accordance with Clause 9 of the minutes of the order. Pending applications were disposed of.