JUDGMENT
A.K. Sikri, J.
1. Bank of India, who is the petitioner in this
case, has filed this contempt petition under Article
215 of the Constitution of India as well as under
Sections 11 and 12 of the Contempt of Courts Act, 1971.
The petitioner Bank has prayed for initiation of the
contempt proceedings against the alleged
contemnors/respondents herein. The cause for filing the
present petition is the alleged willful breach,
disregard, violation and disobedience of the
undertakings and assurances dated 24th May and 25th
May, 2000 given to this court by the respondents in CWP
No. 265 of 1997.
2. In order to appreciate the grievance of the
petitioner Bank, it would be appropriate to scan
through the salient facts which led to giving of the
aforesaid undertakings and assurances dated 24th and
25th May, 2000:
3. The respondents No. 6, namely, M/s Usha Micro
Process Controls Limited, is a company incorporated
under the Indian Companies Act (hereinafter referred to
as the ‘respondent No. 6 company’). It made a reference
to Board for Industrial and Financial
Reconstruction (for short ‘BIFR’) under the provisions
of Sick Industrial Companies (Special Provisions) Act,
10985 on the ground that it was a sick company and for
its rehabilitation. Order dated 29th April, 1996 was
passed by BIFR declaring it to be a sick company and
returning the findings that the company cannot be
rehabilitated. It accordingly recommended the winding
up of the company. Against this order the respondent
No. 6 company filed appeal before the Appellate
Authority for Industrial and Financial
Reconstruction (for short ‘AAIFR’) which was also
dismissed by order dated 28th October, 1996. The
respondent No. 6 company and one Mr. S. Vishwanathan filed
CWP No. 265/97 in this court challenging the aforesaid
orders of BIFR and AAIFR. It also moved CM No. 429/97
for grant of ad interim orders.
4. At this stage, it may be apposite to point out
that the petitioner Bank herein is one of the creditors
of the respondent No. 6 company which filed a suit for
recovery of Rs. 4,73,67,035.92 paisa besides costs and
interest against the respondent No. 6 company on 24th
November, 1993 before the Debt Recovery Tribunal (DRT).
During the pendency of the aforesaid writ petition in
this court, the respondent No. 6 company expressed its
intention to settle the dues of different creditors
including the petition Bank hereby and to show its
bona fides deposited sums of Rs. 5 lacs and Rs. 16
lacs which the petitioner Bank kept in a ‘No-lien
Account’. Thereafter the proposals for settlement were
discussed between the parties from time to time. On
20th December, 1999 the counsel for the respondent No. 6
company stated before the court in the aforesaid writ
petition that vide letter dated 25th November, 1999 the
petitioner Bank had accepted the offer of one time
settlement as proposed by the respondent No. 6 company
and on this submission, the court passed the following
order:
“On payment of the same and subject to
other conditions, contained in the
letter, the matter with Bank of India
will stand settled.”
5. However, the respondent No. 6 company did not
comply with the terms and conditions contained in the
letter dated 6th September, 1999 of the respondent No. 6
company which was accepted by the petitioner Bank.
instead, the respondent No. 6 company filed an affidavit
of undertaking of Mr. D. Kar, respondent No. 2 herein and
one of the Directors of the respondent No. 6 company as
per which following undertaking was given:
“1. That I am the director of the
petitioner company and therefore
competent to give this undertaking.
2. That the petitioner company undertake
to pay Rs. 1,39,73,008/- on or before
31.7.2000 towards full and final
settlement with the Bank of India in
terms of the settlement dated 25.11.1999
between the petitioner and Bank of
India (respondent No. 6).
3. That I have deposed correctly.”
6. When the matter came up before the court on
25th May, 2000 acting on the basis of the aforesaid
affidavit of undertaking and the statement of the
learned senior counsel for the respondent No. 6 company,
made on instructions, the aforesaid undertaking was
accepted by this court. Following order was passed:
C.W. 265/97 and CM 429/97
“Mr. Nayar, learned senior counsel for the
petitioner says that he has instructions
to state that petitioner shall deposit a
sum of Rs. 1,39,73,008/- in this court
towards the liability of the New Bank of
India on or before 31st July, 2000. He
points out that the petitioner has
executed and undertaking to that effect.
Learned senior counsel for the petitioner
also says that undertaking be recorded.
We order accordingly. At the same time
we clarify that the deposit made by the
petitioner shall be without prejudice to
the rights and contentions of the
parties.
In so far as Canara Bank is concerned,
Mr. Nayar says that Mr. Raman Malhotra,
Director of the petitioner company is
present and he would like to make a
statement.
Mr. Raman Malhotra, Director of the
petitioner company states that he has the
authority to state on behalf of the
petitioner that a sum of Rs. 62.17 lakhs
shall be deposited in this court on or
before 31st July, 2000 towards the
liability of Canara Bank. He states that
his statement be treated as an
undertaking on behalf of the petitioner
and the same be recorded. We order
accordingly. The undertakings and the
deposit shall be without prejudice to the
rights and contentions of the parties.
List the matter on 3rd August, 2000.”
(It appears that name of the Bank ‘New
Bank of India’ has been wrongly typed
which should have been ‘Bank of India’).
7. This order reveals that respondent No. 1 also
gave undertakings to the Court to clear the dues of
Canara Bank.
8. As per the aforesaid undertaking, the amount
of Rs. 1,39,73,008/- was to be deposited on or before
31st July, 2000. This amount was, however, not
deposited and instead application for extension of time
to deposit this amount by 31st October, 2000 was filed
which was registered as CM 6549/2000. The payment was
still not made as undertaken. Now on or about 18th
October, 2000 another CM 9686/2000 was filed in which,
inter alia, following prayer was made:
That the respondent Nos. 5 and 6 be
directed to agree for settle the dues of
the petitioner company being settled in
accordance with the Reserve Bank of India
guidelines for recovery of dues relating
to non-performing assets of public sector
banks dated July 27, 2000.”
This application was dismissed with following
observations:
“By means of the application, the
petitioner wants to wriggle out of the
undertakings given to the court on 25th
May, 2000. The undertakings given by the
petitioner were recorded and accepted.
The petitioner cannot be allowed to
breach the undertakings given to this
court.
The application is accordingly
dismissed.”
10. Notwithstanding the aforesaid order, the
amount in question was not deposited. This act of
omission and commission has forced the petitioner Bank
to file the present contempt petition stating that the
action of the alleged contemnors/respondents in not
depositing the amount as per the undertakings and
assurances given to this court is intentional and
willful. It amounts to willful disregard and
disobedience of the undertakings dated 24th and 25th
May, 2000.
11. Separate replies are filed by the respondents
1 and 2. An application has been filed on behalf of
the respondents 3-5 (CM 348/2001) contending that the
names of the respondents 3-5 be deleted as they are
wrongly imp leaded as parties. We shall address to this
aspect at a later stage in this order.
12. As already noticed above, the affidavit of
undertaking dated 24th May, 2000 was given by the
respondent No. 2 as a Director of the respondent No. 6
company in which he undertook, on behalf of the
respondent No. 6 company, to make the payment of
Rs. 1,39,73,008/- to the petitioner Bank which
undertaking was accepted by the court vide order dated
25th May, 2000. On the basis of the aforesaid
undertaking given on 25th May, 2000 the order dated
25th May, 2000 further shows that a sum of Rs. 62.17
lakhs was to be deposited by the respondent No. 6
company towards the liability of Canara bank. Therefore,
so far as respondents 1 and 2 are concerned, both had
given undertakings to this court which they have
admittedly flouted.
13. It may be mentioned that in the replies by
respondents 1 and 2, which are almost identical, both
the respondents admit that there is a non-compliance of
the undertakings given by them to this court.
Therefore, factum of breach of the undertakings has
been accepted by the respondents 1 and 2. Learned
counsel for the respondents 1 and 2 was candid in
accepting this position even at the time of arguments.
However, his only plea was that there is no willful
default or non-compliance on the part of these two
respondents and in replies filed these respondents have
tried to explain the circumstances because of which the
deposit could not be made. It is sought to be urged
that these respondents were only the employee Directors
acting under the instructions of promoters, namely, the
respondents 3-5 and the undertakings to this court were
given by these respondents pursuant to the instructions
given by the respondents 3-5 who had also promised to
provide for the funds for making necessary deposits in
terms of undertakings dated 25th May, 2000 given by the
respondents 1 and 2 and accepted by this court. It is
also stated that they have since resigned from the
employment and as also from the Directorship of the
respondent No. 6 company. The learned counsel for these
respondents was at pain to argue that these two
respondents being only employees of the respondent No. 6
company, could not be made to pay the amount, and
therefore, there was no willful default or
non-compliance and these respondents were tendering
unconditional and unqualified apology to this court
with request to accept the same. This apology is
contained in para 7 the relevant portion of which reads
as under:
“That though there was no willful
default/non-compliance on the part of the
answering respondent, still, since the
non-compliance of the said
statement/undertaking is there, the
answering respondent tenders the
unconditional and unqualified apology to
this Hon’ble Court with a request to this
Hon’ble Court to accept the same.”
14. The learned counsel for the respondents 1 and
2 further accepted the position that non-compliance of
the undertakings amounted to contempt of the court and
his submission was that the explanation given in the
replies being genuine, the matter be set at rest by
accepting the apology of these two respondents.
15. The submissions on the basis of which
non-compliance is sought to be explained away are
totally irrelevant and misconceived. These two
respondents were admittedly working as Directors of the
respondent No. 6 company. They had given the
undertakings to this court as Directors. In fact in
the affidavit of the respondent No. 2, he had stated in
no uncertain terms that he was authorised to give such
an undertaking. Likewise, the respondent No. 1 appeared
in the court and gave his undertaking. What was the
arrangement between the respondents 1 and 2 or for that
matter, between the respondent No. 6 company and the
respondents 3-5 as alleged promoters, was neither
disclosed nor the concern of the court in accepting the
undertakings. Secondly, the same attempt of the
respondents 1 and 2 to wriggle out of the undertakings
on the same ground before the writ court by filing CM
No. 9686/2000 failed as the said CM was dismissed by
order dated 9th February, 2001 categorically recording
that they cannot be allowed to breach the undertakings
given to the court.
16. As already noticed above, this contempt
petition is filed only on the ground that the
undertakings given to this court have been breached.
These undertakings were given by the respondents 1 and
2. It may be noticed that the writ petition filed by
the respondent No. 6 company was adjourned from time to
time to enable the respondent No. 6 company to settle
the matter with the creditors i.e., different Banks
including Bank of India and Canara Bank. The
respondent No. 6 company dragged on the matter, which
was filed in the year 1997, by representing that it was
settling the matter with various creditors. Otherwise,
as per the order of BIFR, which was upheld by the AAIFR
also, the respondent No. 6 company would have been wound
up long ago. Thus by giving solemn declaration to the
effect that the amount in question would be paid within
stipulated period, the respondents 1 and 2 made this
court to believe that they would abide by the same and
in this manner, obtained benefit by not allowing the
orders of BIFR to be implemented. The reason why
breach of undertaking given to court amounts to
contempt is that the contemnor by making false
representations to the court obtains benefit and if he
fails to honour the undertaking, he plays a serious
fraud on the court and thereby obstructs the course of
justice. An undertaking entered into with or given to
the court by a party has exactly the same force as an
order made by the court and accordingly breach of an
undertaking amounts to contempt in the same way as
breach of an injunction. Therefore, such breach is
liable to be visited by the same punishment as breach
of an injunction. (See: Chhaganbhai v. Soni
Chandubhai and Saleemuddin
and Anr. v. Sharfuddin and Ors. .
17. Thus when the undertaking is given to the
court, it is to be treated as a solemn undertaking and
the non-compliance/adherence of which clearly amounts
to the contempt of court. As mentioned above, the
respondents 1 and 2 have not disputed this position.
The question of accepting the apology would have arisen
only if the respondents 1 and 2 had purged the contempt
by depositing the amount. However, that is not done.
The contempt still persists. The stand taken by the
respondents 1 and 2 in their replies and as also argued
by their learned counsel is that they would not be
complying with the undertakings as they have no means
to do so. Therefore, having not purged the contempt,
the unconditional and unqualified apology of the
respondents 1 and 2 cannot be accepted. We accordingly
reject this apology.
18. It is time now to decide the nature of
punishment which is to be inflicted upon the
respondents 1 and 2 for committing the contempt.
Learned counsel for these contemnors made a fervent
plea for taking a lenient view keeping in view the
circumstances in which the undertaking was given. Here
there are certain mitigating circumstances which
persuade us to take a lenient view in the matter. The
undertakings were given on behalf of the respondent
No. 6 company of which the respondents 1 and 2 were the
employee Directors. Position may have been different
had the respondents been directors in control of
finances and affairs of the respondent No. 6 company.
They were not going to have any personal gain.
Therefore, although the breach of undertakings may be
willful in technical sense as the respondents 1 and 2
have intentionally and willfully refused to adhere to
the said undertakings, fact remains that they have no
control over finances and being employee Directors who
were getting remuneration from the respondent No. 6
company, they could not have paid the amount from their
own pockets. These considerations persuade us to take
a lenient view of the matter. Therefore, while the
respondents 1 and 2 have to be convicted for an offence
of contempt of court to uphold the majesty of law, we
convict them and sentence them to an imprisonment of
one day i.e. till rising of the court. We also
sentence them to pay a fine of Rs. 2,000/- each to be
paid within a period of two months. We also impose
cost of Rs. 10,000/- each on these two contemnors to be
paid to Delhi Legal Aid and Advise Board.
19. In so far as the respondents 3-5 are
concerned, they are imp leaded in this contempt petition
only on the ground that they Along with respondents 1
and 2 are also the Directors of the respondent No. 6
company and are in charge and responsible to the
respondent No. 6 company for giving the undertakings and
assurances on behalf of the respondent No. 6 company.
However, in the CM No. 348/2001 filed by these
respondents, it is explained that the respondent No. 3
remained Director of the respondent No. 6 company from
25th November 1981 to 15th February, 1989; respondent
No. 4 was the Director from 25th November, 1984 to 6th
April, 1985; respondent No. 5 was the Director from
23rd January, 1984 to 6th September, 1984 and again
from 2nd February, 1985 to 18th August, 1986. Thus the
respondents 3-5 ceased to be the Directors w.e.f. 15th
February, 1989, 6th April, 1985 and 18th August, 1986
respectively. This position is not disputed by the
petitioner Bank or the respondents 1 and 2. Thus the
respondents 3-5 were not the Directors of the
respondent No. 6 company on 25th May, 2000 when the
undertakings given by the respondents 1 and 2 were
accepted by the court. Even if the respondents 3-5,
alleged promoters of the respondent No. 6 company, were
providing the funds for repaying the creditors, which
fact is however not borne from the record, such an
arrangement, if any, was the arrangement of the
respondents interse., So far as the respondents 3-5 are
concerned, they did not given any undertaking to this
court. The present contempt petition is filed alleging
breach of the undertaking which was given only by the
respondents 1 and 2 and not by the respondents 3-5.
Therefore, as far as the respondents 3-5 are concerned,
no action can be taken against them.
20. This CCP stands disposed of.