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

The court dismissed the contempt petition against the respondent, ruling that her failure to repay the loan did not amount to willful disobedience or ... Contempt of Court - Violation of specific undertaking to repay the balance outstanding amount to the petitioner bank within a total period of two months and 15 days from 05/05/2017 - disobedience of the consent order and violation of undertaking given by the respondent amounting to civil contempt as defined in Section 2(b) of the Contempt of Courts Act, 1971 or not. Interpretation of the clauses of the minutes of the order dated 05/05/2017, in terms of which this Court disposed of the writ petition. HELD THAT:- The minutes of the order and all its clauses are required to be read as a whole to come to a conclusion as to whether the respondent can be said to have committed contempt of this Court under Section 2(b) of the aforesaid Act, due to breach of undertaking specifically recorded in the said minutes of the order. The undertaking, the breach of which is alleged by the petitioner is found in Clause 8 of the above quoted minutes of the order. In the said clause, the respondent was required to sell the movable properties handed over by the petitioner bank to raise amount for depositing it towards dues in the loan account - It is an admitted position that the respondent did not deposit the balance amount due within the said period of two months and 15 days. Therefore, the said undertaking was not honoured by the respondent. There can be no doubt about the fact that a contempt petition be maintainable even if order or decree of the Court of which contempt is alleged, is executable. But, in the said judgment of the Hon’ble Supreme Court in the case of Rama Narang Vs. Ramesh Narang and another [2006 (4) TMI 553 - SUPREME COURT], it was specifically laid down that ultimately the matter was one of discretion of the Court, having regard to the facts of the case. It is relevant to note that after the said judgment was delivered, the Hon’ble Supreme Court had occasion to consider the very same matter on the question as to whether the alleged contemnor had indeed committed contempt of the consent order of the Hon’ble Supreme Court by breach of undertakings. The subsequent judgment of Rama Narang Vs. Ramesh Narang and another. After discussing the facts of that case and applying the position of law, the Hon’ble Supreme Court came to a conclusion, in the facts of that case, that the alleged contemnor had committed contempt of the consent order passed by the Hon’ble Supreme Court. Whether in the facts of a particular case the undertaking given by a party is such that the breach of the undertaking has the consequence of defiance and disobedience of the Court itself? - HELD THAT:- In the present case, the consequence of the failure on the part of the respondent to abide by the undertaking incorporated in Clause 8 of the minutes of the order, was clearly an action available to the petitioner bank under Clause 9 of the minutes of the order. As noted above, this might appear to be onerous for the petitioner bank, but, since it agreed to such specific terms in the minutes of the order, full effect needs to be given to the fall out of Clauses 8 and 9 read together. It is relevant that the manner in which the minutes of the order were drafted, the possession and attachment of the flat has continued with the petitioner bank and it is not as if the respondent got away with the property mortgaged to the bank, as well as being relieved of the obligation of returning the outstanding amount. In this situation, this Court is unable to come to a conclusion that failure on the part of the respondent to abide by the requirements of Clause 8 of the minutes of the order would result in punishment of the respondent for contempt of this Court under Section 12 of the said Act. Considering over all facts and circumstances of the present case, it appears that the respondent did send communication to the petitioner bank that she tried to abide by the undertaking given in Clause 8 of the said minutes of the order, but, she was unable to abide by the same due to certain circumstances. It was also stated that the respondent herself was making efforts to bring buyers for the flat in question so that the outstanding amount could be paid to the petitioner bank. It is also an admitted position that the respondent did deposit the amount of Rs.20,00,000/- and subsequently, an amount of Rs.7,00,000/- during pendency of the proceedings. Although, the said amount is far less than the amount due to the petitioner bank, as per Clause 9 of the said minutes of the order, the petitioner bank is at liberty to dispose of the said flat to realize the outstanding amount - this Court is of the opinion that the manner in which the minutes of the order were drafted, particularly Clauses 8 and 9 thereof, in the facts of the present case, it cannot be said that the respondent has committed civil contempt of this Court under Section 2(b) of the said Act. The contempt petition is dismissed. 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.