TaxTMI 
TaxTMI 
2022 (8) TMI 109
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.... Appellate Tribunal, Rules 2016 read with Sections 12 & 14 of Contempt of Courts Act. The applicant herein was an applicant in an application filed under Section 9 of IBC filed against Respondent No. 3 on 22.09.2018 before National Company Law Tribunal, Chennai, as the 3rd Respondent committed default in payment of debt due to the applicant. This Petition Interlocutory Application No. 1854 of 2019 along with above Contempt Case is filed by the same Petitioner. The petition in Interlocutory Application No. 1854 of 2019 is filed under Rule-11, read with Rule 31 of NCLAT Rules to recall the order dated 11.03.2019 passed by this Tribunal in CA (AT) (Insolvency) No. 170 of 2019. Since both the Contempt and the present petition are filed based on same contention raised by both the Petitioner and the Respondents, we therefore find it appropriate to decide both Contempt and Interlocutory Application by a common judgment. The application was admitted by the Tribunal by its order dated 12.02.2019, a Resolution Professional was appointed in respect of Respondent No.3 to take over the management of its affairs and exercise all other statutory powers under IBC. Respondent Nos. 1 & 2 in the....
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....nt to discharge the obligation of respondents to make payment to the applicant. The respondents counsel, on 04.02.2019 addressed a letter to the counsel for the applicant seeking extension of time for making payment of 1st installment due on 08.04.2019. The applicant through its counsel informed the respondent that no extension would be granted and that the respondent should comply with the directions of this Tribunal as per the orders. As Respondents failed to make payment of the 1st installment amount of Rs. 7,00,00,000/- (Rupees Seven Crores only) on the due date i.e. 08.04.2019 the applicant in strict adherence of Clause 2.3 of the settlement agreement, therefore, deposited the post dated cheque to realize the amount due as 1st installment with the banker on 09.04.2019, but, the cheque was returned unpaid/dishonored by the banker due to insufficiency of funds. Thus, the respondents not only failed to pay the 1st installment, on due date stipulated in the settlement agreement but also failed to maintain balance in the account. The respondents have repeatedly and blatantly disobeyed the directions of this Tribunal and as such the Respondent Nos. 1 & 2 committed willful breach of....
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....p. App. (AT) (Ins.) No. 170 of 2019 seeking extension of time narrating the details of income tax notice issued under Section 226 (3) of Income Tax Act, annexed a copy of order passed by the High Court of Madras dated 03.04.2019 in Writ Petition Nos. 9789, 9925 of 2019 whereby the High Court quashed the impugned order, notices, raised the attachment over the bank account of the Respondent No.3. However, this Tribunal dismissed the Interlocutory Application No. 1285 of 2019 by order dated 11.04.2019. Again meeting of Board of Directors was convened on 15.04.2019 to obtain consent of the board, to take Settlement Agreement on record and ratify the terms. But, the Board of Directors refused to give consent to the Settlement Agreement dated 08.03.2019 and ratify the terms. The Board of Directors raised serious objection regarding liability, breach, relationship and jurisdiction in the meeting and resolved to invoke arbitration clause. On 22.02.2018 the applicant sent a mail which runs as follows: "as discussed, we are monitoring Saudi's situation closely, since this will be a significant amount to reduce our standing amount. However, we don't have any intention for us to get this r....
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....tegic business alliance dated 23.06.2016, the parties agreed to become strategic partners to pursue collaboration opportunities relating to the oil and gas field business, but Sojitz India Pvt. Ltd. did not undertake study for investment activities with OREN, the 3rd Respondent herein to develop further relationship between OREN and Sojitz. However, there was correspondence within Sojitz and APMDC for supply of varieties, for assignment of 38,000 MTs 'A' grade Barytes in favour of the Applicant out of 1,80,000 MT under the agreement dated 09.06.2016. As the supply is not for domestic sale as per conditions of the agreement dated 20.06.2016, the applicant cannot sell 'A' Grade Barytes in India, as, such sale is prohibited in terms of the agreement. Hence the claim of applicant is not sustainable. Later, the applicant sent email dated 22.02.2018 which runs as follows: "as discussed, we are monitoring Saudi's situation closely, since this will be a significant amount to reduce our outstanding amount. However, we don't have any intention for us to get this receivable from you. Anyway to maximize the collection, we do think below will be necessary for OREN' and the email continues. C....
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....rder is not sufficient to punish the respondents/contemnors, it must be a willful disobedience and willful breach of undertaking. It is further contended that the Respondent made every endeavor to comply the order of this Tribunal but unsuccessful, therefore the disobedience or breach of undertaking cannot be said to be willful and consequently not liable for punishment, requested to dismiss the contempt case holding these respondents not guilty. Both the learned counsel filed their written-submissions and those submissions will be considered in detail at appropriate stage. Considering rival contentions, perusing the material on record, the sole point that arises for consideration is: "Whether the Respondent Nos. 1 & 2/ Contemnors committed breach of settlement agreement dated 08.03.2019 and disobeyed the order of this Tribunal dated 11.03.2019 willfully? If so, are the Respondent Nos. 1 & 2/Contemnors liable for punishment as per Section 12 of Contempt of Court Act?" POINT: The undisputed facts are that the applicant herein filed petition to initiate CIRP under Section 9 of IBC against the Respondent No. 3 on 22.09.2018. An interim resolution professional was appointed to t....
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....at OREN pays an amount of INR 24,27,64,004 ("Settlement Amount") to SJI, without any deductions, reductions or set-offs whatsoever, in the respective amounts set out in the second column of the following table (each such amount being referred to as an 'Installment') and on the scheduled dates set out against each instalment in third column of the following (each such amount being referred to as an "Due Date"): S. No. Installment (INR) Due Date 1. 7,00,00,000/- ('First Installment') 8 April 2019 2. 6,00,00,000/- ('Second Installment') 8 May 2019 (if such day is not a business day for banks in New Delhi (Business Day) then the next Business Day 3. 6,00,00,000/- ('Third Installment') 7 June 2019 (if such day is not a business day for banks in New Delhi then the next Business Day 4. 5,27,64,004/- ('Final Installment') 8 July 2019 (if such day is not a business day for banks in New Delhi then the next Business Day Clause 2.4 permits the applicant to present cheques for collection given a security in case the installment amount is not paid. Clause 3 deals with conditions precedent, Clause 3.1 (c) & (d) runs as follows: (c) RA and RK shall file affidavits (substantially ....
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.... not complied with in its letter and spirit, it will be open to the Respondents not only to file a petition for contempt for flouting the direction of this Appellate Tribunal, it will be open to the Respondents to revive the prayer for any proceeding under 'Corporate Insolvency Resolution Process' and request this Appellate Tribunal to recall the order and to dismiss the appeal for non-compliance." It is an undisputed fact that, respondent failed to comply with the direction in terms of settlement agreement dated 08.03.2019, but filed notarized undertaking affidavits of Respondent No. 1 & Respondent No. 2 dated 27.03.2019. The specific undertaking in para 2 (a), (b) is also relevant for deciding the issue, it runs as follows: (a) That the Appellant No. 1 will adhere to the terms and conditions set out in the settlement agreement annexed hereto and take all such actions as may be necessary to pay an amount of INR 24,27,64,004 to the Respondent No. 1 and pay each Installment on or before the respective due date as specified in the settlement agreement dated 08.03.2019, failing which, Respondent No. 1 shall be entitled to deposit the post-dated cheques issued by the Appellant No. ....
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....i criminal in nature. The main endeavor of respondents is that the applicant failed to establish that the violation of the order is willful, in the absence of any material to establish that the violation is willful this Tribunal cannot find the respondents guilty for contempt to punish in terms of Section of 12 of the Contempt of Court Act. No doubt, the proceedings in contempt are quasi criminal in nature and the standard of proof is almost identical to the standard of proof in criminal cases. In Kanwar Singh Saini Vs. High Court of Delhi (2012) 4 SCC 307 the Apex Court held that contempt proceedings being quasi criminal in nature, the standard of proof requires in the same manner as in other criminal cases. The contemnor is entitled to the protection of all safe guards/ rights which are provided in criminal jurisdiction including the benefit of doubt. In Mrityunjoy Das vs. Sayed Hasibur Rahman (2001) 3 SCC 739, U. N. Bora vs. Assam Roller Flourmills (2022) 1 SCC 101, Rama Narang Vs. Ramesh Narang (2009) 16 SCC 600, Debarata Bandhopadhyay Vs. State of West Bengal 1969 SCR (1) 304 the Apex Court reiterated the same principal. The power of contempt is conferred on the courts....
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....tion enjoyed by the Courts is only for the purpose of upholding the majesty of judicial system that exists. While exercising this power, the Courts must not be hyper sensitive or swung by emotions, but must act judicially (Vide: Chairman, West Bengal Administrative Tribunal vs. SK. Monobbor Hossain (2012) 3 SCALE 534). Keeping in view of the limits of contempt jurisdiction and principles regarding standard of proof in contempt case, we would like to analyze the pleas of both parties. In the instant case, the respondents not only gave an undertaking but also agreed to pay the amount as directed by this Tribunal by order dated 11.03.2019. It is also an admitted fact that the petitioner filed an I.A. No. 1285 of 2019 seeking extension of time for compliance of order of this Tribunal, admittedly the Interlocutory application was dismissed on 11.04.2019 holding that no case has been made out to extend the time for compliance of terms of settlement. The respondents are aware about their obligation to comply with the terms and conditions, so also their obligation to obey the undertaking but did not comply with the order of this Court 11.03.2019 and did not obey the undertaking. However, ....
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....omply the directions is strong ground to conclude that the respondents violated the order willfully. Apart from the above facts, Respondent Nos. 1 & 2 filed affidavits before this Tribunal on 02.10.2019 during the pendency of the contempt case, stating that the Respondent Nos. 1 & 2 paid Rupees One crore to the applicant, while requesting to grant some more time to make further payment. Further time, till 31.12.2019, as they intend to pay full amount in terms of the order, while tendering unconditional apology, till date no amount is paid. The conduct of the Respondent Nos. 1 & 2 during the pendency of contempt case prior to initiation of contempt case is sufficient to conclude that the violation of order is willful and deliberate. The Learned Counsel for the Applicant Sri Arun Kathpalia contended that disobedience and breach of the orders by the contemnors is a matter of serious concern. In such case, the Court must deal with the contemnors sternly. It is settled law that while considering the question of disobedience of an order, what must be regarded is the letter and the spirit of the order, together with the bonafides or genuine belief of the alleged contemnor as to such orde....
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....hree adjournments is another strong circumstance to reject the defence of Respondent Nos. 1 & 2. On the other hand, it appears that the respondents are resorting to different methods to avoid payment to the applicant, total conduct of respondents/ contemnors is blame worthy, therefore, they are not entitled to raise any plea to justify their acts, when they repeatedly flouted the order of this Tribunal many a times. As there is no dispute about the jurisdiction of this Tribunal the judgements relied on by the applicants counsel Sri Arun Kathpalia needs no further consideration, as such, those judgments relating to jurisdiction are not discussed. The Learned Senior Counsel for the Respondents Nos. 1 & 2 Sh. Viraj Datar contended that in view of the facts narrated in the reply, the respondents did not disobey the order wilfully. In the absence of a finding as to the intentional or wilful violation, holding the respondents/ contemnors guilty for contempt is illegal. In support of his contentions, he relied on judgment of the Apex Court in Ram Kishan vs. Tarun Bajaj (2014) 16 SCC 204, wherein it was held as follows: "10. Thus, in order to punish a contemnor, it has to be establishe....
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....iples laid down in above judgment is not in quarrel, but the conduct of the respondent directly established their intention in disobeying the order of this Tribunal deliberately, the learned counsel also relied on the judgment of Apex Court in Niaz Mohammad & Ors. vs State of Haryana & Ors [1994] 6 SCC 332, the Apex Court observed that: "9..... The Court while considering the issue as to whether the alleged contemnor should be punished for not having complied and carried out the direction of the Court, has to take into consideration all facts and circumstances of a particular case. That is why the framers of the Act while defining civil contempt, have said that it must be wilful disobedience to any judgment, decree, direction, order, writ or other process of a court. Before a contemnor is punished for non compliance of the direction of a court the court must not only be satisfied about the disobedience of any judgment, decree, direction or writ but should also be satisfied that such disobedience was wilful and intentional.... But while examining the grievance of the person who has invoked the jurisdiction of the Court to initiate the proceeding for contempt for disobedience of it....
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....e settlement agreement, it is difficult to hold that the Respondent Nos. 1 & 2/ Contemnors committed wilful breach of settlement agreement. Accordingly, we find that Respondent Nos. 1 & 2 did not commit any willful breach of Settlement Agreement dated 08.03.2019. Considering totality of the facts and circumstances of the case, we hold that the respondents 1 & 2 contemnors wilfully disobeyed the order of this Tribunal dated 11.03.2019. Since the excuse pleaded by the respondents is not bonafide. In view of our foregoing discussion, we found that the Respondent Nos. 1 & 2/ Contemnors are guilty for wilful disobedience of order dated 11.03.2019, while holding that the Respondent Nos. 1 & 2/ Contemnors not guilty for wilful breach of settlement agreement dated 08.11.2019. Coming to the sentence to be imposed under Section 12 of Contempt of Courts Act, the maximum sentence is simple imprisonment for a term which may extend to six months or with fine which may extend to Two Thousand rupees or with both. However, the proviso to Section 12 obligates the Court or Tribunal to consider the apology tendered by the Petitioner while considering the quantum of punishment. We have already discu....