CACP No. 2 of 2010 -1- ***** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CACP No. 2 of 2010 Date of decision: 13.1.2011 Dwarka Nath ...Appellant Versus Jugal Kishore Arora and another ...Respondents **** CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. A.K.Chopra, Senior Advocate with Ms. Shilpa Malhotrta, Advocate for the appellant. Mr. Vinod S.Bhardwaj, Advocate for respondent no.2. **** ADARSH KUMAR GOEL, J. 1. This order will dispose of CACP Nos.2 and 7 of 2010 as both the appeals have been filed by the alleged contemner in the same proceedings. CACP NO.2 of 2010 has been filed against finding recorded by learned Single Judge vide order dated 17.8.2010 holding the appellant guilty of wilful and intentional disobedience to orders of this court and giving him one week's time to purge the contempt. CACP No.7 of 2010 is against further order dated 29.11.2010 allowing disposal of goods from the premises in dispute for enforcing order of this Court dated 29.5.2009 of which CACP No. 2 of 2010 -2- ***** disobedience is in question. 2. Respondent no.1-contempt petitioner filed a suit for specific performance of agreement to sell dated 12.1.2000 executed by the appellant in his favour along with three other original defendants. Since the other three defendants did not contest the suit and admitted the claim of the plaintiff, the sale deeds were executed by them with regard to their shares of the property. The appellant contested the suit. One of the grounds for defence was that for 1/6th of the share, the appellant had already entered into an agreement to sell which was subject matter of a suit already filed by the proposed vendees in the said agreement. It is now pointed out that though the trial Court did not grant decree for specific performance in the suit filed by Punit Kaur, the lower Appellate Court granted a decree against which appeal was pending in this Court. The suit of the contempt-petitioner was decreed on 24.2.2006 by the trial Court against which appeal of the appellant was dismissed on 1.3.2008 with the modification to the following effect:- “As such the judgment and decree of learned trial Court dated 24.2.2006 are hereby affirmed but it is made clear that said decree shall be subject to the rights of respondent no.5 Ms. Punit Kaur for 1/6th share in the suit property regarding which decree Ex. R1 and Ex. R2 have been passed in her favour.” 3. Second appeal of the appellant against the said decree was dismissed on 29.5.2009. This Court noticed that sale deed had CACP No. 2 of 2010 -3- ***** already been executed in favour of the appellant with the intervention of the Court, in execution of the decree and possession was also delivered. However, during the pendency of the second appeal vide order dated 29.5.2008 this Court appointed the Deputy Commissioner, Sonepat as receiver to take charge of the property from M/s Vardaan Food and Agro Tech Pvt. Ltd. to whom the property had been leased by the judgment debtor and the articles lying therein. Vide order dated 9.7.2008 possession of the appellant was restored as agent of receiver subject to final decision. The Court rejected the claim of the 3rd parties claiming rights under the defendant-judgment debtor to be impleaded as parties. This Court also rejected the contention that plaintiff was not ready and willing to perform his part of the contract. Accordingly, the decree for specific performance was affirmed. The Court commented upon the conduct of the appellant in following terms:- “Thus, the Courts below finding that the act and conduct of the vendor was not above board, granted the relief of specific performance by turning down the prayer of the appellant for grant of alternative relief to the plaintiff. This Court is in total concurrence with what has been observed by the Courts below. Even otherwise, the competent courts of justice which exercise not only statutory powers, but jurisdiction in equity, should not be a mere onlooker of an attempt by one of the party to unreasonably, unjustifiably and unethically try to evade specific CACP No. 2 of 2010 -4- ***** performance in order to make profit at the expense of the other party to the contract, who has concurrently found by the courts below, always ready and willing to perform the remaining part of his contract. An alternative plea of refund of earnest amount and damage cannot itself be a bar to claim a decree for specific performance of contract. But, no specific performance of a contract, though it is not vitiated by fraud or misrepresentation, can be granted if it would give an unfair advantage to the plaintiff and where the performance of the contract would involve some hardship on the defendant, which he did not foresee. However, what overt acts have been done by the appellant are outcome of his own master mind and he has to face the music in respect of the repercussions thereof alone, but not at the cost of the plaintiff. The grant of alternative relief to the plaintiff instead of specific performance of agreement would be a supplement to the mis-deeds of the appellant. Even it is the own undertaking of the appellant, given before the courts below, regarding the construction raised on the suit land. He in unequivocal terms, had committed to remove the construction raised on the suit land at his own risk and costs, in case the suit is decreed or to give the same, without seeking any compensation, to the plaintiff. In this view of the matter, the prayer of appellant to grant CACP No. 2 of 2010 -5- ***** alternative relief to the plaintiff, is declined.” 4. Finally the Court directed the appellant to hand over possession to the decree holder within three weeks. The operative part of the order is as under:- “Before parting, it is mentioned here that the sale deed has already been executed in favour of the plaintiff, but pursuant to directions issued by this Court, the possession in with the appellant being an Agent of the receiver appointed by this Court. Therefore, with the dismissal of the aforesaid regular second appeals, the appellant and the receiver are directed to hand over the possession of the land in dispute to respondent no.1 within a period of three weeks. The construction raised by the appellant over the suit land, as per his own commitment, was at his own risk and costs. However, he shall remove the same within the said period, failing which the plaintiff shall be at liberty to possess the suit property along with the construction raised thereupon without any payment in lieu thereof.” 5. The decree holder filed the contempt application stating that even though the decree affirmed in second appeal by this Court has become final with the dismissal of SLP on 15.6.2009 and time given by the Hon'ble Supreme Court for removing the machinery, if any, i.e. by August, 2009 had expired, possession of the premises was not being delivered and, thus, the respondent no.1 was not CACP No. 2 of 2010 -6- ***** complying with the order of this Court. To circumvent the order of this Court, the appellant had set up order of Delhi High Court dated 18.4.2009 in the case of M/s Vardaan Food and Agro Tech Pvt. Ltd., the lessee of the suit property. The Delhi High Court had directed maintenance of status quo. The said proceedings in Delhi High Court did not concern the title of the appellant and rights in the decree. He also relied upon order of Delhi High Court dated 28.8.2009 in the case of M/s Vardaan Food and Agro Tech Pvt. Ltd. The said orders did not affect the order of this Court as affirmed by Hon'ble Supreme Court about liability of the appellant to deliver possession which was taken by the appellant as agent of receiver under orders of this Court. The order of this Court was not in issue before the Delhi High Court. Such plea was not entertained by the Hon'ble Supreme Court in SLP against order of this Court by M/s Vardaan Food and Agro Tech Pvt. Ltd. SLP was dismissed on 15.6.2009. SLP of Bank of India and Technology Development Board were dismissed on 31.8.2009. 6. The appellant contested the application relying upon the order of the status quo passed by Delhi High Court in company proceedings in the case of lessee of the appellant. 7. Learned Single Judge after due consideration upheld the claim of the contempt-petitioner and held the appellant guilty of violating orders of this Court wilfully. As regards the order of the Delhi High Court, it was noticed that order of Delhi High Court was on statement of the appellant himself and was not passed after CACP No. 2 of 2010 -7- ***** considering the proceedings in this Court. Order of this court was not in any manner affected thereby. The contemner, thus, wilfully failed to comply with the order of this Court to deliver the possession. Any construction raised by the lessee who received title from the appellant could be no defence. Learned Single Judge observed that the appellant was a former Deputy Director of the C.B.I. and knew the consequences of orders of the Court and his defence against compliance of the order and the undertaking could not be taken as a genuine plea. Relevant observations of learned Single Judge are:- “Son and daughter-in-law of the contemner filed a petition under Sections 397 & 398 of the Companies Act, 1956 before the Company Law Board, alleging acts of “oppression” and “mismanagement” against others including the contemner. The said petition was allowed by the Company Law Board on 29.08.2006 with certain directions. Company Appeal No.SB-46 of 2006 at the instance of the Company of which the contemner is Managing Director/Chairman is pending consideration before the Delhi High Court. In the said appeal, the following order was passed on 18.04.2009 : “Co.A(SB) No.46/2006 1. It is stated that Mr. Krishan Kumar, learned counsel who is to argue the matter, is out of station. 2. A grievance is made by Mr. Dinesh Sharma that some machinery was not found in the factory premises. 3. Mr. Dwaraka Nath, who is present in Court, submits CACP No. 2 of 2010 -8- ***** that no machinery of the company has been sold though some people came to see the machinery. 4. In view of the statement made by Mr. Dwaraka Nath, it shall be ensured that the status quo with regard to title, possession and construction of the properties of the company, both moveable and immoveable, shall be maintained. Mr. Dwaraka Nath Sharma shall also ensure that the machinery belonging to the company, if removed, is restored to its position. List for arguments on 6th May, 2009.” Ms. Shilpa Malhotra, learned counsel for the contemner has pointed out that the appeal is stated to be still pending for final disposal. TDB, who has provided financial assistance to the Company in whose favour the contemner has granted lease, filed a petition for grant of ad interim injunction under Section 9 of the Arbitration and Conciliation Act, 1996 before Delhi High Court. In the said application, Delhi High Court passed an order directing the parties to maintain status quo in respect of properties of the Company on August 28, 2009. The said petition has been disposed of as infructuous on 17.5.2010, when the following order was passed : “In view of the execution petition having been filed and in view of the order having been passed therein today, present petition has become infructuous and is accordingly disposed of. The interim order made in the present petition stands vacated.” CACP No. 2 of 2010 -9- ***** It may be noticed that pending such proceedings before Delhi High Court, in terms of the agreement between TDB, an Arbitrator has announced his Award on 13.11.2009 subsequently modified on 04.02.2010. Since the petition was for ad interim relief and in the meantime the Arbitrator has announced his Award, the miscellaneous application filed by TDB was disposed of as infructuous and thereafter, the TDB filed execution petition for execution of the Award. In Execution Application No.104/2010 and E.A. (OS) No.249 of 2010, the Court has passed the following order on 17.5.2010: “E.A.(OS) 249/2010 Issue notice. Mr. Jayant K. Sud, Advocate, accepts notice on behalf of decree holder. Mr. Jagjit Singh, Advocate, accepts notice on behalf of judgment debtor No.1 and Mr. Sanjay Relan, Advocate, accepts notice on behalf of Mr. Jugal Kishore Arora, judgment debtor No.2, who has been impleaded to the present proceedings. Let replies be filed within a period of four weeks from today. Rejoinder, if any, be filed before the next date of hearing. In the meantime, land situated in village Kishora and village Joshi Chauhan and Kishora, Tehsil and District Sonepat, Haryana measuring approximately 67 kanals and 04 marlas in village Kishora and 11 kanals and 17 marlas in Village Joshi Chauhan, situated at 43.2 KM stone, GT Karnal Road, Village Kishora and Joshi Chauhan, District Sonepat, Haryana (cortiguous land of two villagers) are attached and D.C. Sonepat, is CACP No. 2 of 2010 -10- ***** appointed as a Receiver of the aforesaid property subject to any other order of any other competent court, the D.C. Sonepat shall take possession of the aforesaid land immediately and he shall be in exclusive possession of the said property. I further direct that Mr. Dwaraka Nath, shall be personally present in Court on the next date of hearing as this Court plans to record his statement under Order 10 CPC. Mr. Jagjit Singh, learned counsel to ensure that Mr. Dwaraka Nath is personally present in Court on the next date of hearing. List on 18th October, 2010.” It may be mentioned that counsel for the petitioner has produced a certified copy of a document titled ‘Cancellation of Lease Deed’ dated 02.09.2003 executed by contemner in respect of lease in favour of the Company. But since no reference has been made by the petitioner in the petition before this Court, the said certified copy of the Cancellation of Lease Deed is not taken into consideration. Learned counsel for the petitioner has vehemently argued that the contemner has granted lease of land in favour of the Company after entering into an agreement to sell with the petitioner. Once the decree for specific performance has been granted in favour of the petitioner and stands confirmed with the dismissal of Special Leave Petition at the instance of the contemner and the Company, the Company or the contemner do not have any right, title or interest in the land, the ownership of which vests with the petitioner. The only liberty granted to CACP No. 2 of 2010 -11- ***** the contemner was to remove plant and machinery within extended time by the Supreme Court. The act of executing lease, after the agreement to sell has been proved to be executed in favour of the petitioner and decree granted and sale deed executed, the Company cannot claim any title over the suit property. In addition thereto, reliance is placed upon an undertaking given by the contemner before the Civil Court on 04.02.2004 as well as before the Hon’ble Supreme Court in terms of the order dated 15.01.2009. It is also pointed out that the interim orders passed by this Court on 29.05.2008 and 09.07.2008 were granted in favour of the contemner in respect of machinery and stocks of the Company and it is the contemner, who has been handed over possession of the factory as an Agent of the Deputy Commissioner, Sonepat. Therefore, once the interim orders stands merged with the final orders of this Court and this Court has directed the contemner to return possession, the non-compliance of the directions of this Court to return possession is a intentional and flagrant abuse of the orders of this Court. It is willful disobedience of the orders passed. It is further contended that not only contemner has violated the directions of this Court, but has not complied with even the undertaking given by him in an affidavit in pursuance of the order passed by the Hon’ble Supreme Court. It is further contended that the orders passed by the Delhi High Court in other proceedings i.e. arising out of petition under Sections 397 & 398 of the Companies Act, 1956 filed by the CACP No. 2 of 2010 -12- ***** son and daughter-in-law of the contemner or the order in proceedings for recovery of the amount at the instance of TDB are relied upon as an excuse to avoid the directions and the orders passed by this Court. It is contended that the contemner was aware of the proceedings before the Company Law Board and the fact that he has taken loan or that the company of which he is the Managing Director/Chairman has also taken financial assistance, but gave undertakings time and again. Even otherwise, the order dated 17.5.2010 passed by the Delhi High Court directing the parties to maintain status quo is subject to the orders passed by any other Court of competent jurisdiction. Therefore, the decree for specific performance and the directions of this Court cannot be ignored either by the Deputy Commissioner, who was appointed as Receiver in pursuance of the order of this Court or by the contemner, who has taken possession as an Agent of the Deputy Commissioner. On the other hand, Mr. Kundu, learned Additional Advocate General, Haryana appearing for the Deputy Commissioner- respondent No.1 submitted that on account of an interim order passed by the Delhi High Court, he cannot comply with the orders passed by this Court, therefore, he cannot be said to be in contempt. Mr. Chopra, learned Senior Advocate appearing on behalf of the contemner has argued that the Company is a separate juristic entity, who has been granted lease by the contemner and has raised huge factory building and installed machinery CACP No. 2 of 2010 -13- ***** after availing financial assistance from the institutions. It is, thus, contended that undertaking of the contemner cannot be executed against the Company, who was not party to the decree for specific performance. Strong reliance was placed upon the orders passed by the Delhi High Court granting status quo, firstly in an appeal arising out of the proceedings under Sections 397 & 398 of the Companies Act, 1956 dated 18.04.2009 and the order dated 17.05.2010 in execution proceedings at the instance of the Secured Creditor granting financial assistance to the Company. The order dated 18.04.2009 was passed on the statement of the contemner alone. It is his statement to maintain status quo with regard to title, possession and construction of the properties of the company, both moveable and immoveable. There is nothing on record that the contemner has disclosed the factum of the decree for specific performance granted by the Civil Court before such an order was passed. No doubt, subsequently the present petitioner has moved applications to become party in the proceedings, but the contemner has no hesitation in making any kind of statement in all proceedings so as to obtain benefit as per his convenience and wishes. The contemner has no love for truth and withhelds material information. It may be noticed that the contemner is a former Deputy Director of the CBI and knows the consequences of making a statement before the Courts. It is the contemner, who has been handed over possession as an Agent of the Receiver i.e. the Deputy Commissioner, including factory of the CACP No. 2 of 2010 -14- ***** Company. If the contemner can recover possession of the assets of the company, the contemner is duty bound to restitute the possession delivered to him in terms of the orders passed by this Court. The subsequent order passed in Execution Application dated 17.05.2010, itself states that such order is subject to the order, which may be passed by any competent court. Therefore, the order of status quo passed in execution cannot be relied upon as a shield by the contemner to avoid the orders passed by this Court, more so, when he has taken possession as an Agent of the Receiver i.e. Deputy Commissioner, Sonepat. Thus, respondent No.2 is guilty of willful and intentional disobedience to the orders passed by this Court. However, respondent No.2 is granted a weeks’ time to purge the contempt.” 8. We have heard learned counsel for the appellant. 9. Learned counsel for the appellant submitted that appellant could not be held guilty of contempt of having wilfully violated order of this Court as Delhi High Court vide order dated 18.4.2009, 28.8.2009 and the Debts Recovery Tribunal vide order dated 2.9.2009 directed status quo. 10 There is no merit in the submission. The appellant was put in possession by order of this Court as an agent of the receiver during the pendency of second appeal and was required to vacate the same under the final order of this Court dated 29.5.2009. Order dated 18.4.2009 of the Delhi High Court is prior to the order of this CACP No. 2 of 2010 -15- ***** Court and if the appellant had any right under the said order he could have pointed out the same before this Court. Though orders dated 28.8.2009 and 2.9.2009 are subsequent, the appellant could have moved against the order of this Court dated 27.5.2009 on that basis. The appellant failed to do so. In the circumstances, there was no legal bar to handing over of vacant possession as directed by this Court. Not doing so was only an excuse to wilfully flout the order of this Court, as rightly held by learned Single Judge. We, thus, find no merit in CACP No.2 of 2010. 11. CACP No.7 of 2010 has been filed against subsequent order for giving effect to order dated 29.5.2009. By the said subsequent order, the Court has allowed goods to be disposed of from the suit property of which possession has already been ordered to be handed over to decree holder. Since it was the responsibility of the appellant himself to remove the goods and this having not been done, the receiver had to take steps to remove the same. Contention that permission for change of land use had been given or that rights of Punit Kaur had been reserved cannot be a ground not to comply with the order of this Court which had become final. The impugned order does not in any way stand in the way of Punit Kaur in enforcing her rights, if any. Thus, the fact that second appeal was pending concerning rights of Punit Kaur is no bar to compliance of judgment dated 29.5.2009. Thus, CACP No.7 of 2010 has no merit. 12. It is clear that the appellant is deliberately flouting the orders of this Court and grossly abusing the process of law. There is CACP No. 2 of 2010 -16- ***** no error whatsoever in the view taken by learned Single Judge. Both the appeals are dismissed with costs quantified at ` 50,000/- each. The costs will be payable to the decree holder as compensation. (Adarsh Kumar Goel) Judge January 13, 2010 (Ajay Kumar Mittal) Pka Judge