Contempt petition dismissed. The Court held that since no express undertaking was recorded by the respondents in the earlier orders accepting the settlement, there is no foundation for contempt proceedings. Breach of a compromise decree must be enforced under execution rules under CPC instead of contempt.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
$~A-1
HINDUSTAN POWER PROJECTS (P) LTD..... Petitioner Through Ms.Maneesha Dhir, Mr.K.P.S.Kohli, Ms.Sharmistha Ghosh and Mr.Mahipal Singh, Advs.
versus
GAO JI FAN & ORS ..... Respondent Through Mr.A.S.Chandhiok, Sr. Adv. and Mr.Rakesh Khanna, Sr.Adv. with Ms.Pooja Mehra Saigal, Mr.Sahil and Ms.Shefali Jain, Advs.
CORAM: HON'BLE MR. JUSTICE JAYANT NATH
JAYANT NATH, J. (ORAL)
CONT.CAS.490/2017
Page 1
petitioner had undertaken to pay a sum of 30.37 million USD in stated 12 instalments. The settlement also provided that if there is default in payment of the said instalment amounts in accordance with the payment schedule then the entire outstanding amount of USD 35,740,136/- less any amount paid under the said Agreement would become payable immediately.
This Court by order dated 29.5.2017 dismissed the said application holding that as the respondent No.3 company had accepted the payment in the extended period that too with interest on the defaulted instalments, then merely because there was a default in making payments, revival of the Company Petition for winding up was not justified. The Court also noted that if a time limit is provided by the consent order the court has jurisdiction/ power to extend such time stated in the consent terms filed by the parties and the said terms would merge in the order of the Court.
CONT.CAS.490/2017
Page 2
despite receipt of the full amount as has been noted by this Court in the order dated 29.5.2017. The grievance of the petitioner is that under Clause 7 of the Settlement Agreement Trina Solar’s receipts for each instalment duly paid were to be duly released to the petitioner. This particular document entitles the owners of the solar modules for a warranty for 25 years. It has been pleaded that though the petitioner has paid the entire dues the respondents have illegally and contrary to the terms of the Settlement and order of this court withheld the Trina Solar’s Receipts which the respondent was obliged to release.
Another grievance of the petitioner is that as per Clause 6 of the said Agreement the respondents were obliged to withdraw the pending arbitral proceedings which has not been done.
CONT.CAS.490/2017
Page 3
specific direction was passed holding that the respondents are obliged to release the Trina Solar Receipts or withdraw the arbitration proceedings. Reliance is placed on judgment of the Division Bench of the Allahabad High Court in Arun Kumar Tiwari and Ors. vs. Rajesh Pandey and Ors., 2015(6) ADJ 338 and judgment of the Supreme Court in Kanwar Singh Saini vs. High Court of Delhi, (2012) 4 SCC 307.
“CO.PET. 584/2014 CO.PET. 585/2014
Both these matters are stated to have been settled in terms of the compromise arrived at between the parties on 8th January, 2015, A copy of the settlement agreement entered into between the parties has also been filed before the Court along with affidavits of Principal Officers of both the parties. The same is taken on record. Both the parties affirm the settlement arrived at between them. Counsel for respondent-company undertakes to this Court to pay the instalments in terms of the schedule mentioned in para 1 of the aforesaid settlement dated 8th January, 2015. The undertaking given by the respondent is accepted by this Court and the respondent is directed to remain bound by the same.
Counsel for the petitioner states that in view of the aforesaid settlement, and also in view of the undertaking given by the respondent to this Court, petitioner does not seek to press the present petitions, with liberty to take such appropriate steps including revival of these petitions and initiation of contempt proceedings, if advised, in case of violation of undertaking given to this Court. He is permitted to do so.
The petitions stand disposed off in terms of the aforesaid.”
CONT.CAS.490/2017
Page 4
CONT.CAS.490/2017
Page 5
“10. Thus where the petitioner company had received an huge sum of USD 31 million approx. under the settlement agreement would it then be entitled to seek revival of the liquidation proceedings, seeking resort to Clause 4 (supra). The answers would be "No".
CONT.CAS.490/2017
Page 6
finding and the fact that the petitioner had made payment of the agreed amount in terms of the Settlement Agreement with interest for the delayed payment the court took the view that the petitioner cannot now be made to suffer liquidation proceedings.
CONT.CAS.490/2017
Page 7
withholding necessary certificates and continuing with the arbitration proceedings.
15. The Supreme Court in Ram Narang vs. Ramesh Narang and Another (supra) was dealing with a case where the petitioner and the respondent represented two groups of members of one family. More than eight cases were sought to be disposed of by settlement of the disputes. The parties filed the Minutes of consent order before the court. An undertaking was also recorded by the parties that they will implement the terms of the Minutes of Consent. It was in those facts and circumstances that the court held as follows :-
22. The Court then considered various consent orders which could not base proceedings for contempt if the consent orders were violated. Thus for example, a decree for payment of money if not complied with could not found an action for contempt. Similarly, the allocation of certain property to a party by consent would not give rise to proceedings of contempt if possession of property was not given to that party. The Court was of the view that: (SCC p. 53, para 10)
“In the absence of any express undertaking given by the appellant or any undertaking incorporated in the order impugned, it will be difficult to hold that the appellant wilfully disobeyed or committed breach of such an undertaking. … if we were to hold that non-compliance of a compromise decree or consent order amounts to contempt of court, the provisions of the Code of Civil Procedure relating to execution of decrees may not be resorted to at all. In fact, the reason why a breach of clear undertaking given to the court amounts to contempt of court is that the contemner by making a false representation to the court obtains a benefit for himself and if he fails to honour the undertaking, he plays a serious fraud on the court itself and thereby obstructs the course of justice and brings into disrepute the judicial institution. The same cannot, however, be said of a consent order or a compromise decree where the fraud, if any,
CONT.CAS.490/2017
Page 8
is practised by the person concerned not on the court but on one of the parties. Thus, the offence committed by the person concerned is qua the party not qua the court, and, therefore, the very foundation for proceeding for contempt of court is completely absent in such cases.”
(emphasis in original)
The appeal was accordingly allowed and the order passed under Section 2( b ) of the Act was set aside.
......
24. All decrees and orders are executable under the Code of Civil Procedure. Consent decrees or orders are of course also executable. But merely because an order or decree is executable, would not take away the court's jurisdiction to deal with a matter under the Act provided the court is satisfied that the violation of the order or decree is such, that if proved, it would warrant punishment under Section 13 of the Act on the ground that the contempt substantially interferes or tends substantially to interfere with the due course of justice. The decisions relied upon by the respondents themselves hold so as we shall subsequently see.
25. In such circumstances it would neither be in consonance with the statute, judicial authority, principle or logic to draw any distinction between the wilful violation of the terms of a consent decree and wilful violation of a decree which is passed on adjudication. The decision in Babu Ram Gupta case [(1980) 3 SCC 47 : 1980 SCC (Cri) 527] must, therefore, be limited to its own peculiar facts.”
“16.Be that as it may, the so-called statement/undertaking given by the appellant/defendant culminated into the decree of the civil court dated 12-5-2003. Thus, the question does arise as to whether the application under Order 39 Rule 2-A CPC or under the 1971 Act could be entertained by the civil court and whether the matter could be referred to the High Court at all.
CONT.CAS.490/2017
Page 9
18. In case there is a grievance of non-compliance with the terms of the decree passed in the civil suit, the remedy available to the aggrieved person is to approach the execution court under Order 21 Rule 32 CPC which provides for elaborate proceedings in which the parties can adduce their evidence and can examine and cross-examine the witnesses as opposed to the proceedings in contempt which are summary in nature. Application under Order 39 Rule 2-A CPC is not maintainable once the suit stood decreed. Law does not permit to skip the remedies available under Order 21 Rule 32 CPC and resort to the contempt proceedings for the reason that the court has to exercise its discretion under the 1971 Act when an effective and alternative remedy is not available to the person concerned. Thus, when the matter relates to the infringement of a decree or decretal order embodies rights, as between the parties, it is not expedient to invoke and exercise contempt jurisdiction, in essence, as a mode of executing the decree or merely because other remedies may take time or are more circumlocutory in character. Thus, the violation of permanent injunction can be set right in executing the proceedings and not the contempt proceedings. There is a complete fallacy in the argument that the provisions of Order 39 Rule 2-A CPC would also include the case of violation or breach of permanent injunction granted at the time of passing of the decree.”
17. I may also look at the judgment of the Division Bench of the Allahabad High Court in Arun Kumar Tiwari and Ors. vs. Rajesh Pandey and Ors.(supra). The said judgment pertains to a consent order passed in a company court. The Court held as follows
“8. On merits, the issue which falls for consideration before the Court is whether a contempt petition of this nature, complaining of a breach of a settlement agreement which was entered into between the parties before the Mediation and Conciliation Centre of this Court and in
CONT.CAS.490/2017
Page 10
terms whereof the company appeal was disposed of, was maintainable.
14.....Once a settlement is arrived at in the course of a mediation proceeding, the enforcement of the terms of settlement as a decree of the Court, upon a final order of the Court passed in terms of the settlement, must take place in a manner provided for the enforcement of decrees and orders. Recourse to the contempt jurisdiction would not be warranted. The issue in regard to the maintainability of a contempt petition cannot, with
CONT.CAS.490/2017
Page 11
respect, be resolved on the basis of the importance of the mediation and conciliation centre as a Court annexed institution. The essence of the matter is that the terms of the settlement agreement which was arrived at in the course of mediation proceedings would have to be enforced as a decree of the Court once a final order was passed by the Division Bench in its terms on 4 January 2013.”
CONT.CAS.490/2017
Page 12
received by the respondent. The court further concluded that the respondent cannot be made to suffer liquidation proceedings. Hence, essentially on facts this court came to a conclusion that there was no justification to revive the winding up petition.
JAYANT NATH, J
APRIL 03, 2018/ n
Corrected and released on 24.04.2018
CONT.CAS.490/2017
Page 13
2 issues framed by the court
Whether a consent order accepting a settlement agreement without specific undertakings can serve as the foundation for contempt proceedings for breach of the agreement.
Whether the court can maintain contempt jurisdiction when the non-compliance relates to rights between parties that should be enforced as a decree rather than as contempt.
Colour shows how this judgement treated each authority
Ram Narang vs. Ramesh Narang and AnotherExplained¶15
Ram Narang vs. Ramesh Narang and Another, (2006) 11 SCC 114 · Who else cites this
Delhi Development Authority vs. Skipper Construction Co.(P) Ltd. and AnotherRelied on¶6
Delhi Development Authority vs. Skipper Construction Co.(P) Ltd. and Another, (1996) 4 SCC 622 · Who else cites this
Arun Kumar Tiwari and Ors. vs. Rajesh Pandey and Ors., 2015(6) ADJ 338Explained¶26
Kanwar Singh Saini vs. High Court of Delhi, (2012) 4 SCC 307Explained¶26
HINDUSTAN POWER PROJECTS (P) LTD
GAO JI FAN
JAYANT NATH
As recorded by the court registry
Proceedings for wilful disobedience of a court order under the Contempt of Courts Act 1971.
Judgements on the same questions, provisions and authorities, from every court
