TaxTMI 
TaxTMI 
2023 (8) TMI 553
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....T) No. 65 of 2019 has been filed by six Complainants, namely, Dr. C. Vinod Hayagriv, Mr .C. V. Hayagriv, Mrs. C. Triveni Vinod, Mrs. C. Visala Hayagriv, Mr. Chaitanya V. Cotha & Mr. Shreyas V. Cotha against two Contemnors, namely, Sri. C. Ganesh Narayan & Smt. C. Valli Narayan for alleged wilful breach of orders of this Appellate Tribunal passed in CA (AT) No. 65 of 2019 dated 08.07.2021, 25.11.2021 and 24.02.2022. 2. Learned Counsel for the Complainants gave the background of the main appeal CA (AT) No. 65 of 2019, which is under 'hearing' by this Appellate Tribunal, and background of three orders dated 08.07.2021, 25.11.2021 and 24.02.2022, which have allegedly been breached wilfully by the Contemnors. 3. Learned Counsel for the Complainants stated that the Complainants are 50% shareholders in C. Krishniah Chetty & Sons Pvt. Ltd. (in short "CKC & Sons") and similarly the Contemnors are also 50% shareholders of the said company. Learned Counsel for the Complainants stated that CKC & Sons was incorporated in 1979 and since then CKC & Sons has been using the name "C. Krishniah Chetty". Learned Counsel for the Complainants further stated that the Contemnors are also 100% shareh....
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....they have been facing difficulties from the voluntary undertaking given by them on 23.07.2019 not to hold Board Meeting which is still continuing, whereas the Contemnors are misusing the same undertaking prejudicing the interest of the Complainants. Learned Counsel for the Complainants alleged that the Contemnors have opened the competing business adjacent to the main company in B Block, the Touchstone, Bangalore. 8. Learned Counsel for the Complainants elaborated that the various other actions allegedly taken by the Contemnors to jeopardise business of CKC & Sons which also tantamount to contempt, inter-alia, includes:- (i) Email sent on 02.01.2023 by Contemnor No. 1 to all Employees threatening the showroom manager. (ii) Poaching the clients of CKC & Sons by the Contemnor. (iii) Threatening security personal of CKC & Sons. (iv) Getting tax invoices/ purchase invoices from suppliers for supply of jewellery using address of CKC & Sons. (v) Sending social media communication to public using name of C. Krishniah Chetty & Co. (vi) Getting jewellery boxes in mini truck in the same premises for CKC & Co. of the Contemnor. ....
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....ply on behalf of the Appellant Mrs. C Valli Narayan in I.A. No. 1075/2021 in CA (AT) No. 65 of 2019 before this Appellate Tribunal, containing in Para 11 of the Reply, wherein it was referred that no change in status of construction of Touch Stone, B Block since 2019. Learned Counsel for the Complainants emphasised that in the same para the Contemnor recorded "11. No cause of action warranting the prayers sought for. No change in the status of "construction" of Touch Stone 'B' Block, Main Guard Cross Road, Bangalore 560001 ('B Block'), since June 2019 (i).... Without prejudice to the lawful exercise of the rights of the Appellant under the FSA to start a competing business, the Appellant denies that any "hectic preparation" is presently being undertaken as alleged by Respondent Nos. 2-7. (ii)....A perusal of the exterior of the B Block as on 18.06.2021 will reveal that no change has occurred in respect of it since June 2019. Copies of the photographs taken on 18.06.2021 is produced herewith as Annexure H." 11. Learned Counsel for the Complainants cited few judgments as submitted in judgment compilation to buttress their points regarding Contempt and su....
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....v, the Complainant No. 1 herein, to negotiate with M/s Deepali Enterprises for purpose of utilisation of portion of premises for office of the Company. Learned Counsel for the Contemnors clarified that property on Main Guard Cross Road is now redeveloped building between Year 2000 to 2005 and is known as "the Touchstone". Learned Counsel for the Contemnors further stated that Complainant No. 1 & 4 sold their entire shareholding in CKC & Co. to Contemnor No. 1 way back in 1999. 19. Learned Counsel for the Contemnors emphasised that CKC & Sons as well as CKC & Co. carry out the business from the same premises i.e. "the Touchstone Building". Learned Counsel for the Contemnors stated that CKC & Sons carries business from the Touchstone A Block, owned by CV Hayagirv Major (HUF) since 2008 and CKC & Co. carries all his business from the Touchstone B Block owned by C. Ganesh Narayan (HUF) since 2004-05. Learned Counsel for the Contemnors also stated that the Registered office of both the company was at No. 35 Commercial Street, Bangalore for 42 years and now Registered Office of CKC & Co. is at the Touchstone B-Block. Learned Counsel for the Contemnors further stated that the CKC & Co.....
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....l's First order dated 08.07.2021 which clearly demonstrate name of CKC & Co. (Formerly known as Deepali Company Pvt. Ltd.) with address at the Touchstone, Bangalore and one example being serial no. of invoice 0040/2020-21 with date of invoice 04.03.2021, filed by the Contemnors at Page No. 413 of Volume-II in their statement of objections filed in present Contempt Petition. Learned Counsel for the Contemnors further stated that this does not leave any scope for any doubt about any kind of violation or breach by the Contemnors of this Appellate Tribunal orders including first order dated 08.07.2021. 24. Learned Counsel for the Contemnors assailed the conduct of the Complainants who themselves have been carrying out several advertisements in various media disparaging CKC & Co. trying to harm the business and reputation of CKC & Co. which incidentally admit the fact by the Complainants that the business being carried out by the Contemnors since 2010, whereas the Complainants are now trying to make a case that the Contemnors were not allowed to do any business in competition. Learned Counsel for the Contemnors stated that the intentions of the Complainants are dubious and only for p....
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....2) 1 SCC 101]. 31. Summarising pleadings, Learned Counsel for the Contemnors requested to dismiss the Contempt Petition on exemplary costs. 32. From the averments made out by the Complainants, the main issue of the Contempt Petition which is required to be determined by us is to whether there have been specific and clear orders for doing or not doing any stipulated action by the Contemnors and if so, whether there could be one and only one interpretation without any ambiguity, whatsoever, to any party to the said order. 33. This Appellate Tribunal is also required to look into whether there has been any wilful disobedience on the part of Contemnors knowing well the mind and the intentions of this Appellate Tribunal in their orders as alleged by the Complainants. 34. This Appellate Tribunal observes that the Contempt Petition has been filed invoking the jurisdiction of Section 425 of the Companies Act, 2013 r/w Section 10 and 12 of the Contempt of Courts Act, 1971. We also need to refer to Section 2(a) & 2(b) of the Contempt of Courts Act, 1971 which defines the contempt as under :- "Section 2(a) & 2(b) of the Contempt of Courts Act, 1971 2. Definitions....
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....hat the orders involved should be liable to be interpreted only in one way by all concerned and it cannot be basis for having more than one interpretation. In the orders, if alleged contempt involves more than one reasonable and rational interpretation, the Contemnor cannot be held liable for Contempt of Tribunal. 38. The first order which has been relied upon by the Complainants is dated 08.07.2021. This order was passed in main appeal CA (AT) No. 65 of 2019 and not in any I.A. This order mentioned that Learned Counsel (presumably for Contemnors herein) sought permission to file an Interlocutory Application for modification of order regarding Board Meetings which was accorded by this Appellate Tribunal. Incidentally, this order also refers to I.A. No. 1075 and 1076 of 2021 filed by the Respondent therein in CA (AT) No. 65 of 2019/ Complainants herein in the present Contempt Case, which was taken on record. In the last line of the order, it has been recorded "further Learned Counsel for the parties are directed not to show the precipitate for the matter ". In the main appeal No. 65 of 2019 filed by the Contemnors, following reliefs were prayed :- "RELIEFS SOUGHT : ....
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....the affairs of the Respondent No. 1 Company for the FY 2013-14 till date and submit a copy of the report to this Hon'ble Tribunal. g. To appoint an independent auditor for conducting a complete forensic audit into the affairs of the Respondent No. 10 Company for the FY 2013-14 till date and submit a copy of the report to this Hon'ble Tribunal. h. To restrain the Respondent Nos. 2 to 7 from diverting the business of the Respondent 1 Company, directly or indirectly to the Respondent No. 10 company or any other Company. i. To restrain the Respondent Nos. 2 to 7 from appointing any new Director in the Respondent No. 1 Company. j. To conduct Board and General Meetings with the leave of the Hon'ble Bench with an Independent Chairman and observer for all the Board Meetings and General Meetings of the Respondent No. 1 Company. k. To appoint the Appellant or her nominee as a joint signatory for issuance of all cheques/ payments made on behalf of Respondent No. 1 Company from all bank accounts and for any statutory compliances. l. To direct Respondent No 1 company to share all information of all transactions, daily detailed sa....
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....le, 2014. In the said I.A. following prayers were made by the Complainants herein:- "PRAYER In light of the facts and circumstances set out hereinabove, it is most respectfully prayed by the Applicant / Respondent Nos. 2 to 7, i.e., Directors of the Respondent Nos. 1 and 10 Companies as well as the said companies, being joint applicants herein, to take this Application into consideration and : (a) Permit the Applicants / Respondent Nos. 2 to 7 to convene and hold the Board Meetings of the Respondent Nos. 1 and 10 Companies in accordance with the statutory mandate of Section 173 of the Companies Act, 2013 read with Rule 8 of Companies (Meetings of Board and its Powers) Rules, 2014 without any further delay; and (b) To pass such other and further Orders as this Hon'ble Tribunal may deem fit and proper in the facts and circumstances of the case." (Emphasis Supplied) The I.A. No. 1076 of 2021 was for "Application seeking exemption from filing notarise affidavits in the joint application filed on behalf of Respondent No. 2 to 7 and Respondent No. 1 & 10". Thus, the order dated 25.11.2021 was specifically in relation to I.A. No....
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.... State of Bihar & Ors. reported in (1999) 7 SCC 569 clearly stipulates that disobedience should be wilful and should be clear violation of court's order with the knowledge of Contemnor. It also records that initiation of contempt proceeding is not a substitute for execution proceedings though at times purpose may also be achieved. The facts and context of above judgment is naturally different from the present Contempt Case before us, but we take note that both parties having serious disputes on the specific matters which require examination but the same cannot be by way of contempt. In the present appeal, the alleged violation of FSA becomes significant which will legislate the legal rights and remedies of both the parties. The FSA was subject matter in main petition before the Tribunal who passed the impugned order on 24.01.2019 in CP 54/2014 (TP No. 65 of 2016) under Section 397,398,402,403,406,237 of the Companies Act, 1956. It will be pertinent to refer to two relevant paras of the Impugned Order dated 24.01.2019, namely, Para 1 which brings out all the disputes alleged by the Contemnors against the Complainants and final order for the same contained in para 27. These two....
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....ettle the matter. At this stage, taking the ratio of Kapildeo Prasad (Supra), we feel that all such issues need examination but not by way of contempt. 42. At this juncture, we would also like to go into details of the judgment of the Hon'ble Supreme Court of India in the matter of U. N. Bora Vs. Assam Roller Flour Mills Ass. reported in (2022) 1 SCC 101, which has been referred both by the Complainants and the Contemnors for their arguments. The relevant paragraphs of the judgment reads as under :- "8. We are dealing with a civil contempt. The Contempt of Courts Act, 1971 explains a civil contempt to mean a wilful disobedience of a decision of the Court. Therefore, what is relevant is the "wilful" disobedience. Knowledge acquires substantial importance qua a contempt order. Merely because a subordinate official acted in disregard of an order passed by the Court, a liability cannot be fastened on a higher official in the absence of knowledge. When two views are possible, the element of wilfulness vanishes as it involves a mental element. It is a deliberate, conscious and intentional act. What is required is a proof beyond reasonable doubt since the proceedings are quasi....
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....aution and unless, thus, otherwise satisfied beyond reasonable doubt, it would neither be fair nor reasonable for the law courts to exercise jurisdiction under the Act. The proceedings are quasi-criminal in nature, and therefore, standard of proof required in these proceedings is beyond all reasonable doubt. It would rather be hazardous to impose sentence for contempt on the authorities in exercise of the contempt jurisdiction on mere probabilities *** 12. Thus, in order to punish a contemnor, it has to be established that disobedience of the order is "wilful". The word "wilful" introduces a mental element and hence, requires looking into the mind of a person/contemnor by gauging his actions, which is an indication of one's state of mind. "Wilful" means knowingly intentional, conscious, calculated and deliberate with full knowledge of consequences flowing therefrom. It excludes casual, accidental, bona fide or unintentional acts or genuine inability. Wilful acts does not encompass involuntarily or negligent actions. The act has to be done with a "bad purpose or without justifiable excuse or stubbornly, obstinately or perversely". Wilful act is to be distinguished from ....
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....rt, at the most they are entitled to recover the same by executing the said award wherein the State can or may contend that the award is a nullity. In such a situation, as there was no wilful or deliberate disobedience of the order, the initiation of contempt proceedings was wholly unjustified.' *** 25. Pertinently, the special leave petitions were filed by the respondent against the order dated 28-1-2019 [Sagu Dreamland (P) Ltd. v. Jingal Bell Amusement Park (P) Ltd., 2019 SCC OnLine Del 6720] , which as aforesaid, did not deal with the question regarding the monthly rent payable by the respondent but explicitly left the parties to pursue the same before the executing court. The plaintiff-petitioner having acquiesced of that observation of the High Court, cannot be allowed to contend to the contrary. This Court in Jhareswar Prasad Paul v. Tarak Nath Ganguly [Jhareswar Prasad Paul v. Tarak Nath Ganguly, (2002) 5 SCC 352 : 2002 SCC (L&S) 703] , in para 11, opined thus : (SCC p. 360) '11. ... The court exercising contempt jurisdiction is not entitled to enter into questions which have not been dealt with and decided in the judgment or order, violation of wh....
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....edings, as may be permissible in law in respect of the issue(s) under consideration. In such proceedings, all aspects can be considered by the forum/court concerned on merits in accordance with law. We say no more. 27. Reverting to the allegation about damage caused to the suit property by the respondent at the time of vacating the same, in our opinion, the respondent has made out a formidable case that it did not cause any damage, much less permanent damage to the structure in the suit property. Whereas, the petitioner was relying on photographs concerning the debris on the site left behind at the time of vacating the suit property. The debris cannot cause damage and it is certainly not a case of defacement of the suit property. That position is reinforced from the fact that the water park in the suit premises was started and became fully functional within 2-3 months. Viewed thus, it is rightly urged that it can be safely assumed that no damage was caused by the respondent to the structure in question. Minor repairs required to be carried out by the petitioner for making the water park functional cannot be painted as intentional disobedience of the order of this Court. In....
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....Above ratios have been summarised in order to understand the present appeal before us. None of the above principles are found to be applicable in the factual matrix of the Contempt Case before us. As already observed in previous paragraphs the three orders cited by the complainants were in different context and not for alleged violation or breach as made out in Contempt Case No. 13 of 2023. Therefore, the Contempt Case has not been made out. 43. In view of detailed examination including the judgment cited by both the parties, we do not find any alleged contempt and contempt case devoid of any merit(s) is dismissed. We make it abundantly clear that we have not gone into the main matter CA (AT) No. 65 of 2019, through this Contempt Case No. 13 of 2023 and the main appeal, which is being heard separately by this Appellate Tribunal and shall be dealt accordingly in due course. Therefore, the above findings recorded shall confine to only present contempt case and should not be treated as expression of any opinion on merits or demerits of the appeal CA (AT) No. 65 of 2019 pending before us. 44. The Contempt Case No. 13 of 2023 is disposed off accordingly. No costs. ==========....
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....1 through e-filing. Learned Counsel for the Appellant is directed to file hard copy of their Reply to the I.A. No. 1075 of 2021, within one week from today. Learned Counsel for the Respondent No. 9 is also directed to file hard copy of the Reply within one week from today. Further Learned Counsel for the parties are directed not to show the precipitate for the matter. 3 List this case along with both the Interlocutory Applications bearing I.A Nos. 1075 & 1076 of 2021 'For Hearing' on 26th July, 2021. In the meanwhile, Interim Order to continue till next date of hearing. [Justice Anant Bijay Singh] Member (Judicial) Sim/nn [Ms. Shreesha Merla] Member (Technical) 91 92 Document 3 0 NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI I.A. No. 1075 of 2021 in Company Appeal (AT) No. 65 of 2019 IN THE MATTER OF: C. Valli Narayan Vs. C. Krishniah Chetty and Sons Pvt. Ltd. & Ors. For Appellant: 9 .....Appellant ...Respondents Mr. Pramod Nair, Kshitij Parashar, Advocate For Respondent: Mr. Gopal Jain, Sr. Advocate with Ms. Srishti Tiwari, Mr. Mandeep S. Kalra, Mr. Kanak Malik....
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.... along with Mr. Divyanshu Rai, Ms. Aakanksha Kaul & Mr. Kshitij Parashar. For Respondents: Mr. Mandeep S. Kalra, Mr. Paras M. Sharma, 24.02.2022: Mr. Kanak Malik, Ms. Shrishti Singh, Mr. Kanay Pisal, Mr. Rishabh Lekhi & Ms. Divya Singh Pundir, for R-1 & 10. Ms. Meenakshi Arora, Sr. Advocate along with & Mr. Sandeep Narain, for R-2 to 7. Mr. Dhyan Chinnappa, Sr. Advocate along with Mr. Ankur S. Kulkarni, Ms. Uditha Chakravarthy, Mr. Nirnimesh Dube & Mr. Susheel Joseph Cyriac, for R-8. Mr. Promod Nair, Sr. Ms. Sameeksha Patil, for R-9. ORDER (Virtual Mode) Advocate along with Heard Learned Senior Counsel Mr. Nikhil Nayyar appears on behalf of the Appellant, in part. Learned Counsel Mr. Mandeep S. Kalra appears on behalf of the Respondent Nos. 1 & 10. True Copy POA HOEDER FOR 2-6 Document 6 2 Learned Senior Counsel Ms. Meenakshi Arora assisted by Learned Counsel Mr. Sandeep Narain appears on behalf of the Respondent Nos. 2 to 7. Learned Counsel Mr. Ankur S. Kulkarni appears on behalf of the Respondent No. 8. Learned Senior Counsel Mr. Promod Nair assisted by Learned Counsel Ms. Sameeksha Patil ....