TaxTMI 
TaxTMI 
2023 (5) TMI 1
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....at he had received from the Petitioners herein stock portfolio valued at Rs. 1,97,62,499/-. In addition, the Respondent agreed to pay a sum of Rs. 69,22,529, which has accrued till 17.07.2019 on the said stocks. The Respondent further agreed to pay interest at the rate of 12% per annum on the above amount till 29.02.2020. 1.2. This MoU was filed before the Trial Court, wherein, the Respondent gave an undertaking to the Trial Court that the entire settlement amount shall be paid on or before 29.02.2020 and it was further stated that in case of default, the Respondent herein would become liable for contempt of Court. 2. This contempt petition has been filed by the Petitioners on 02.03.2020 stating that the Respondent has only paid a sum of Rs. 42 lakhs and has failed to pay the balance of Rs. 2,40,84,782.14 as per the undertaking recorded in order dated 30.10.2019 passed by the Trial Court. 2.1 It is stated in the petition that the Petitioners are senior citizens, who are registered medical practitioners who were defrauded by the Respondent, who represented himself to be a portfolio Manager and lured the Petitioners to transfer their stock in shares to the Respondent. The sa....
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....approximately valued at Rs. 1,97,62,569, on the date of transfer of each stock. 7.2. Both the parties entered into agreement dated 26.03.2018 for the management of the said stock portfolio. The Respondent issued six (06) cheques in favour of the Petitioners, however, the same were dishonored on 02.08.2019 due to insufficiency of funds. 7.3. Thereafter, the Petitioners filed two (02) complaint cases, Complaint Case Nos. 27671/2019 and 27736/2019, under Section 138 of the NI Act. 7.4. Subsequently, with a view to arrive at a settlement, the parties entered into the MoU, whereby, the Respondent agreed to pay a total sum of Rs. 2,66,85,028 along with interest at the rate of Rs. 12% per annum till 29.02.2020 to the complainant in both the cases collectively. 7.5. The breakup of this amount was (i) Rs. 1,97,62,499, i.e., the value of the stocks and; (ii) profits to the tune of Rs. 69,22,529, which had accrued till 17.07.2019 on the said stocks. In addition, the interest at 12% was also payable. 7.6. The Respondent agreed to pay a sum of Rs. 25,00,000/- (first installment), within a week from the date of the MoU and to continue to pay the remaining sum in instalments till 2....
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....rs by 31.03.2020 then the Second Party and his family members would be free to sell this Noida Flat or to deal with the same in any manner they like without informing the First Party about the same. He has further assured the Second Party that in case he is unable to pay the money of the Second Party, he will hand over the possession and title documents of Sonepat Property also to the second party and his family members and they would be free to sell the same to anyone they like." (Emphasis supplied) 7.10. On 18.09.2019, the Respondent paid a total sum of Rs. 20 lakhs in favour of the Petitioners. 7.11. On 30.10.2019, the Respondent paid a sum of Rs. 14 lakhs by way of demand draft to the Petitioners and also undertook to pay a remaining sum without any fail. The order dated 30.10.2019 passed by the Trial Court reads as under: "I am accused in the present cases bearing number 27671/2019 & 27736/2019 filed by the complainant against me u/s 138 of NI Act. I have amicably settled all the claims of complainant against me, arising out of the cheque in question, I had agreed to pay full and final settlement amount of Rs. 2,66,85,028/- alongwith interest at the rat....
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....aforesaid undertaking was accepted by this Court vide order dated 21.01.2021 (1st undertaking to this Court), the relevant portion whereof reads as under: "2. Notice of contempt was issued to the respondent, to which he has filed a reply, including an affidavit of unconditional apology dated 17.10.2020 wherein he says, "That I tender my unconditional apology to this Court." and in para 7 of his reply, he has given further undertaking that, "..the respondent has further undertaken to pay to the respondent (sic, petitioner) Rs.35 lakh by 04.012.2020 and R.20 lakh by the 20th every month and the balance by 31.03.2021..." 3. The learned counsel for the respondent submits that the said undertaking shall be duly complied with by the respondent. The said undertaking is accepted. 4. List for compliance on 28.04.2021." (Emphasis supplied) 8.3. However, the Respondent failed to make any payment in furtherance of the undertaking recorded on 21.01.2021. 8.4. In these circumstances, by order dated 13.07.2021, this Court has taken adverse note of the conduct of the Respondent in not even tendering a partial compliance in making the payments; and thereby ....
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....ioners within two weeks." (Emphasis supplied) 8.8. Thereafter by a detailed order dated 20.12.2021, this Court recorded the conduct of the Respondent in not complying with the orders of the Court, even after being provided with sufficient opportunities to pay the Petitioners and mitigate the difficult circumstances. This Court specifically observed that the order on sentencing was deferred so as to bring about some rapprochement and some action from the Respondent to pay the outstanding dues to the Petitioners, as undertaken before this Court. Even on the said date (20.12.2021), this Court granted one last and final opportunity to the Respondent to make the payments to the Petitioners. The relevant portion of the order dated 20.12.2021 is reproduced herein under: "2. It is evident from the aforesaid orders that despite the court holding the respondent guilty of contempt of court, it provided the respondent with sufficient opportunity to pay the petitioners and mitigate their difficult circumstances. 3. The case has been adjourned on four occasions post holding the respondent guilty. The order on sentencing was deferred, so as to bring about some rappro....
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....uilty of contempt of court under section 2(b) read with section 10 and 12 of the Contempt of Courts Act, 1971. Nevertheless, the court provides one last opportunity to the respondent to mitigate his circumstances by making the payments before the next date, failing which, the respondent shall be present in court on the next date for orders on sentencing. No further opportunity shall be granted." (Emphasis supplied) 8.9. On 24.02.2022, the Respondent issued demand draft for an amount of Rs. 70 lakhs to the Petitioners. It was submitted by the learned counsel for the Respondent that a further payment of Rs. 37 lakhs will be made by the Respondent within a week from 24.02.2022. He also undertook not to encumber and/or dispose of any property in which he may have an absolute or partial share or interest. In view of the assurances made and undertaking given before this Court, the orders on sentencing were deferred. The relevant portion of the order dated 24.02.2022, reads as under: "3. The learned counsel for the petitioner submits that after due adjustments, the total amount now due is Rs.2.89 crores, inclusive of all interest as of date. After setting off today's ....
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.... for compliance. 8.13. On 08.08.2022, the learned counsel for the Petitioner submitted that the Respondent has not made any payments in terms of the order dated 02.06.2022. In fact, the Respondent defaulted on making the payment of the first instalment (dated 31.07.2022) itself and therefore, the Petitioner moved an application before this Court seeking advancement of hearing. 8.14. Thereafter, vide order dated 31.08.2022, the Respondent sought further time to make pending payments. In this manner the Respondent, yet again, undertook (3rd undertaking was given to this Court) to make payments of the outstanding amount to the Petitioners before 12.10.2022. 8.15. However, no payment was made in furtherance of 3rd undertaking as well. 8.16. Thereafter, on 17.11.2022, this Court gave one final opportunity to the Respondent to purge the contempt and to pay the requisite amount to the Petitioner within a period of three (3) weeks and noted that the orders on sentencing will be passed, taking into account the steps taken by the Respondent to purge the contempt. The order dated 17.11.2022 reads as under: "The respondent has not complied with the undertaking given vide o....
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....Content 1 Reply dated 17.10.2020 Reply filed in pursuance to the notice issued vide order dated 05.10.2020. In the said reply, the Respondent undertook to pay the Petitioners Rs. 35,00,000 by 04.12.2020 and Rs. 20,00,000 by 20th every month and balance by 31.03.2021. The Respondent acknowledges the payment of outstanding amount under the MoU. 2 Affidavit of unconditional apology dated 17.10.2020 Affidavit tendering unconditional apology to this Court for non-compliance of the MoU dated 07.09.2019 and the order dated 30.10.2019. 3 CM APPL. 20910/2021 dated 14.07.2021 was filed by the Respondent after the Respondent was held guilty of contempt vide order dated 13.07.2021 Application tendering unconditional apology and extension of time by three (03) months for making payments to the Petitioner under the MoU. 4 Affidavit of undertaking dated 30.05.2022 filed by the Respondent in compliance with the order dated 26.05.2022. Affidavit of undertaking whereby the Respondent undertook to pay a sum of Rs. 1,89,00,000 as per the schedule agreed between the parties. Also tendered an unconditional apology to this Court. 10.4. In each of these pleadings ref....
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....Supreme Court to support the sentence given by the High Court. In the said judgment, the Supreme Court has held that the contemnors who violate the undertakings given to the court are undoubtedly guilty of contempt of court. 10.10. The Apex Court has time and again reiterated that non-compliance of 'undertakings' given to the Court will amount to contempt of orders of the Court. In this regard, it is instructive to refer to the judgment of Supreme Court in HSBC PI Holdings (Mauritius) Limited v. Pradeep Shantipershad Jain and Others, 2022 SCC OnLine SC 827, wherein it has been held that non-payment of the outstanding amount by the Respondent even after repeated opportunities and directions passed by the court will amount to punishment under contempt of Court. The relevant portion of the said judgment reads as under: "67. Sufficient opportunities have been given to the respondents to deposit the shortfall amount so as to maintain a sum of USD 60 million in their Corporation Bank account. The first order passed by the learned Single Judge in their application under Section 9 of the Act, 1996 is passed in the year 2014 and even the same has been restored by this Court vide....
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....the decision of this Court in Maruti Udyog Ltd. v. Mahinder C. Mehta [Maruti Udyog Ltd. v. Mahinder C. Mehta, (2007) 13 SCC 220: AIR 2008 SC 309] suggests that irrespective of whether or not a decree is executable, the question to be considered by this Court in determining whether a case for contempt has been made out was, whether, the conduct of the contemnor was such as would make a fit case for awarding punishment for contempt of court. 26. Applying the legal propositions discussed supra, to the facts of the case at hand, we are of the view that the conduct of the respondent-contemnors is such as would justify invocation of contempt jurisdiction of this Court. Not only have the contemnors unreasonably delayed and defaulted in compliance of the orders of this Court without explaining the cause for such default, or seeking extension of time for compliance; but they have also sought to avoid compliance of the order, even after taking benefit of the extended time period granted for compliance of the same. The contemnors cannot, at this juncture, claim that the requirement of deposit was not mandatory, but directory and therefore non-compliance thereof would not constitute c....