Wilful breach of undertaking and appellate orders led to contempt findings and a stay on termination letters.

A jurisdiction objection by a foreign company and its related functionaries was rejected because the contempt proceedings arose from binding undertakings and NCLAT directions recorded in the context of an Indian-law joint venture. The Tribunal held that prior participation and undertakings prevented the respondents from avoiding compliance on jurisdictional grounds. It further found that termination of the technology, marketing and administrative agreements altered the preserved status quo and breached the undertaking and appellate orders, constituting wilful civil contempt. The termination letters were stayed, obligations existing as on 12 June 2019 were required to be maintained, and punishment was deferred pending further hearing.

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Issues: (i) whether the objection that the Tribunal lacked jurisdiction over the foreign company and its related functionaries could defeat the contempt proceedings; and (ii) whether the respondents' termination of the ancillary agreements and related conduct amounted to breach of the undertaking and the NCLAT orders so as to warrant contempt action and interim protective directions.

Issue (i): whether the objection that the Tribunal lacked jurisdiction over the foreign company and its related functionaries could defeat the contempt proceedings.

Analysis: The dispute arose out of a joint venture governed by Indian law and earlier orders/undertakings recorded before the Tribunal and the NCLAT. The jurisdiction objection was examined against the backdrop of those binding directions and the contractual framework, and it was held that the respondents could not evade compliance by raising lack of jurisdiction after having participated in the arrangements and having given undertakings that formed the basis of the appellate directions.

Conclusion: The jurisdiction objection was rejected, and the contempt proceedings were maintainable against the respondents against whom the binding undertaking and orders operated.

Issue (ii): whether the respondents' termination of the ancillary agreements and related conduct amounted to breach of the undertaking and the NCLAT orders so as to warrant contempt action and interim protective directions.

Analysis: The undertaking recorded that the share transfer arrangement and the ancillary agreements would remain effective in the manner stated, and the NCLAT orders preserved the business and contractual position then prevailing. The Tribunal found that the subsequent notices terminating the technology, marketing and administrative agreements altered the status quo and were contrary to the assurance on which the earlier orders had been passed. The conduct was treated as wilful breach of the undertaking and of the appellate directions, amounting to civil contempt, though the Tribunal postponed punishment and instead issued compliance directions to preserve the subject matter of the dispute.

Conclusion: The respondents were held to have committed contempt, and the impugned termination letters were stayed with directions to maintain the obligations existing as on 12 June 2019.

Final Conclusion: The contempt application succeeded to the extent that the Tribunal found breach of the undertaking and the NCLAT orders and granted interim protective reliefs, while reserving further hearing on consequences and punishment.

Ratio Decidendi: A party that obtains relief by giving an undertaking and a related appellate order cannot later defeat those binding obligations by unilateral acts that materially alter the preserved status quo; such conduct constitutes civil contempt where the breach is wilful.

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