Civil contempt requires wilful disobedience; genuine inability under the sick-company regime defeated the contempt claim.

Civil contempt requires wilful, deliberate and contumacious disobedience, not mere non-compliance. The Delhi HC held that the earlier undertaking to keep the bank guarantee alive had lost independent force after later orders replaced it with a direction to deposit the amount, so the real question was whether that later direction was intentionally defied. On the facts, the respondent company's sick-company status, BIFR proceedings and restraint on alienation of assets under the Sick Industrial Companies Act showed genuine inability rather than bad faith. As payment was ultimately made in stages, the Court found no wilful disobedience and no enforceable separate breach of undertaking.

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Issues: Whether the respondent's non-compliance with the direction to deposit Rs. 7 crores amounted to wilful disobedience constituting civil contempt, and whether the earlier undertaking to keep the bank guarantee alive could still be enforced as a separate breach.

Analysis: Civil contempt under Section 2(b) of the Contempt of Courts Act, 1971 requires more than mere non-compliance; the disobedience must be deliberate, intentional, and contumacious. The Court found that the original undertaking dated 21-2-1995 had lost its independent significance after the subsequent orders directing invocation of the bank guarantees and then modifying the earlier order by directing deposit of Rs. 7 crores. The relevant inquiry therefore became whether the later direction to deposit the amount had been wilfully disobeyed. On the facts, the respondent company had been declared a sick company, was under proceedings before the BIFR, and was restrained from alienating assets under Section 22A of the Sick Industrial Companies (Special Provisions) Act, 1985. The Court accepted that these circumstances created genuine inability and that the eventual payment, made in stages and completed later, negated any inference of bad faith or deliberate defiance.

Conclusion: The non-payment within time was not wilful and did not amount to civil contempt. The alleged breach of undertaking was no longer alive for independent enforcement.

Final Conclusion: The contempt petition failed because the respondents' default was attributable to bona fide inability arising from the sick-company regime and not to intentional disobedience of the Court's order.

Ratio Decidendi: For civil contempt, the disobedience must be wilful and intentional; where non-compliance is caused by genuine inability and surrounding legal restraints, contempt is not made out.

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