Appeal Succeeds as Contempt Over 20% Cheque Payment Dropped, Future Legal Action Rights Kept Open

The NCLAT allowed the appeal against the order entertaining the respondent's contempt application alleging disobedience of an earlier direction to pay 20% of the cheque amount. Recording the appellant's statement that the directed 20% amount had been paid, the Tribunal held that, in the present circumstances, the contempt proceedings need not continue and set aside the impugned order. The respondent was granted liberty to initiate appropriate proceedings, including contempt, in future if warranted by subsequent events. The NCLAT expressly refrained from adjudicating on the merits of the underlying claims.

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1. ISSUES PRESENTED AND CONSIDERED

1.1 Whether initiation and continuation of civil contempt proceedings for alleged disobedience of the order dated 21.10.2024 was justified in light of subsequent conduct and payments made by the appellant.

1.2 Whether delayed compliance and dishonour of cheques, later substituted by bank drafts and further payments, constituted wilful disobedience warranting contempt at the present stage.

1.3 Whether, upon setting aside the impugned contempt order, liberty should be reserved to the respondent to initiate fresh contempt or other appropriate proceedings if future circumstances so require.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1 & 2: Justification for contempt proceedings; effect of subsequent compliance and delay

Interpretation and reasoning

2.1 The Court noted that the appellant had earlier given an undertaking before the Adjudicating Authority on 21.10.2024 to pay 20% of the amount to 19 allottees by 30.11.2024, to complete MoUs with homebuyers, and to individually issue post-dated cheques to settle the matter by 31.03.2025.

2.2 It was observed that contempt proceedings were triggered because cheques issued in pursuance of the undertaking were dishonoured, leading the Adjudicating Authority to direct initiation of contempt proceedings by order dated 22.08.2025.

2.3 The Court recorded the appellant's explanation that there was always an intention to settle with all allottees; settlements were completed with 9 out of 19 allottees; and for the remaining 10, MoUs could not be finalized due to issues regarding the final amount, not due to any intention to disobey the order.

2.4 The Court further took note of statements that the appellant would hand over bank drafts for the 20% amount to remaining allottees whose cheques were not honoured, and would endeavour to enter MoUs for final settlement, resulting in an interim order that the Adjudicating Authority should not proceed further with the contempt at that stage.

2.5 In a subsequent order, the Court recorded that demand drafts had been prepared for certain respondents; some allottees could not be contacted and cheques were ready for them; there was a dispute regarding lesser amounts in proposed drafts; and the appellant undertook to pay as per amounts reflected in the original cheques, with any differential amount to be paid by demand draft or RTGS within three days.

2.6 At the final hearing, the Court noted the appellant's statement that the entire 20% (cheque amount) had been paid to all 9 allottees as contemplated by order dated 21.10.2024, and that dishonoured cheques had been made good by bank drafts.

2.7 While the respondent argued that payments were delayed and not made within the time stipulated by the Court, allegedly showing lack of truthfulness, the Court focused on the overall sequence of events, the steps taken towards settlement, and the actual payment of the 20% amount as directed.

2.8 On this basis, the Court found that the material on record did not establish wilful disobedience of the order of the Adjudicating Authority warranting continuation of contempt proceedings "at this stage".

Conclusions

2.9 The Court held that, having regard to the subsequent compliance and conduct of the appellant, this was not a fit case for initiation or continuation of contempt proceedings for disobedience of the order dated 21.10.2024 at the present stage.

2.10 The order dated 22.08.2025 of the Adjudicating Authority directing initiation of contempt proceedings was set aside.

Issue 3: Liberty to initiate future proceedings

Interpretation and reasoning

2.11 While setting aside the impugned contempt order, the Court clarified that it was proceeding on the basis of the current factual position, including payment of the 20% amount as stated, and without examining the merits of the underlying claims.

2.12 The Court considered it appropriate not to foreclose the respondent's remedies in case circumstances in future disclose grounds for contempt or other proceedings.

Conclusions

2.13 The Court granted liberty to the respondent to take such proceedings, including contempt proceedings, if future circumstances so arise.

2.14 The Court expressly clarified that it had not expressed any opinion on the merits of the substantive claims of any party and disposed of the appeal accordingly.

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