1 IN THE HIGH COURT OF JUDICATURE AT MADRAS (CONTEMPT JURISDICTION) TUESDAY, THE 18th DAY OF JANUARY, 2011 THE HON'BLE MR.JUSTICE M.CHOCKALINGAM Contempt Petition No.114 of 2008 ************ 1.N.Srinivas, No.324, 25th Street, 9th Main Road, B.S.K.IInd Stage, Bangalore - 560 070. 2.Triven Garments represented by its Director L.S.Abhinesha Babu having Registered office at No.11 Vijayaraghava Road T.Nagar, Chennai 600 017. .. Petitioners vs 1.Naresh Kumar, No.9,Krishna Bai Street, T.Nagar, Chennai - 600 017. 2.Anuraj Jain, No.9,Krishna Bai Street, T.Nagar, Chennai - 600 017. 3.Kamal Chand Jain S/o.Madhanlal Jain, No.9,Krishna Bai Street, T.Nagar, Chennai - 600 017. 4.Susil Kumar Jain S/o.Gyan Chand Jain, No.7,B.M.K.Street, T.Nagar, Chennai - 600 017. 5.Natiinal Medicines Pvt. Ltd., rep. By its Managing Director M.Naresh Kumar, having his office at No.9 Krishnabai St., T.Nagar, Chennai 600 017 6.Ramachandran Chief Manager Union Bank of India 152, Anna Salai Chennai 600 002. .. Respondents https://hcservices.ecourts.gov.in/hcservices/ 2 Contempt Petition praying that this Court be pleased to issue notice to the respondents herein and punish them for having committed Contempt of the order of this Hon'ble Court dated 23/03/2006 and made in O.A.No.243 of 2006 in C.S.No.979 of 2004. The above Contempt Petition coming on this day before this Court for hearing in the presence of Mr.T.V.Ramanujam, Senior Counsel for Mr.T.V.Krishnamachari, Advocate for the Petitioners herein; and of Mr.D.Dharamchand Jain, Advocate for the respondents 1 to 5 herein; and of Mr.K.Harishankar, Advocate for the 6th respondent herein; and upon reading the petition and the affidavit of L.S.Abhinesha Babu, filed herein; and the Counter Affidavit of Kamalchand M.Jain,Anuraag Jain, D.Sivaguru,Naresh Kumar, filed herein; this Court made the following order:- This petition has been brought forth by the petitioners seeking action against the respondents 1 to 5 herein for an act of contempt committed by them by disobeying the orders of this Court made in O.A.No.243 of 2006 in C.S.No.979/2004 dated 23.3.2006. 2.The case of the petitioners is as follows: The petitioners along with others have filed a suit for declaration and permanent injunction before this Court in C.S.No.979 of 2004. While doing so, they have filed an application in O.A.No.1013/2004 for injunction, and this Court granted an order of injunction restraining the https://hcservices.ecourts.gov.in/hcservices/ 3 respondent from interfering with their peaceful possession and enjoyment of the suit property on 23.12.2004. The said injunction is still in force. The fifth defendant filed a counter. While the matter stood thus, in the year 2006, the fifth respondent made attempts to alienate the suit property. Thereafter, the petitioners have filed an application in O.A.No.243/2006 for injunction, and this Court has ordered status-quo to be maintained on 23.3.2006. Now, the suit is ripe for trial. The petitioners have applied for encumbrance certificate and got the same on 6.12.2006, from which they came to know that the fifth respondent has mortgaged the suit property by way of deposit of title deeds for a sum of Rs.6,25,00,000/- in favour of the sixth respondent bank herein. Thus the act of the fifth respondent is in gross violation and willful disobedience of the orders of status-quo made by this Court. The respondents 1 to 4 are the Directors of the fifth respondent company. The fifth respondent has no right to mortgage the property when the order of status-quo is in force. Hence the respondents 1 to 5 are liable to be punished. 3.The respondents 1 to 5 have filed a counter affidavit stating that the petitioners filed O.A.Nos.1013/2004 and 243/2006 for interim injunction; that the respondents have filed a counter; that at the time of arguments, both sides claimed that they are in possession https://hcservices.ecourts.gov.in/hcservices/ 4 of the suit property; that accordingly, the Court ordered status-quo to be maintained till the disposal of the suit; that they thought that the status-quo order is only with respect to the possession of the suit property; that in the counter affidavit filed in O.A.No.243/2006, and the written statement filed, the fifth respondent had submitted about the loan availed from City Bank; that the charge was registered in the Company Law Board; that this was not questioned by the petitioners; that they knew about it; that subsequently, the loan was transferred from City Bank and loan was obtained from the sixth respondent bank; that a charge was registered in the Company Law Board in that regard; that there is no prohibition for the fifth respondent to have the loan transferred and for execution and registration of agreement by deposit of title deeds dated 6.12.2006, in favour of the sixth respondent; that the said agreement was executed by the second respondent herein as Director of the fifth respondent; that they have not violated the order as the mortgage existed even before the loan was changed to and in favour of another bank; that as owner of the property, the fifth respondent is entitled to deal with the same as the status-quo order is only in regard to possession; that however, they seek unconditional apology for the omission if any done by them, and hence the petition was to be dismissed. 4.In the counter affidavit filed by the sixth https://hcservices.ecourts.gov.in/hcservices/ 5 respondent, it is stated that they were never made aware of the Court's order; that they have taken legal opinion from their panel advocate and thereafter only, the mortgage was made; that the respondents 1 to 5 have borrowed crores of rupees from the sixth respondent bank and have failed to repay the same; that the bank has already initiated proceedings in O.A.No.16 of 2008 before the Debts Recovery Tribunal at Chennai for recovering their dues; that the same is pending; that the sixth respondent has not committed any act of contempt, and hence the sixth respondent has got to be discharged from the contempt proceedings. 5.Advancing arguments on behalf of the petitioner, the learned Senior Counsel Mr.T.V.Ramanujan would submit that the factum of execution of the said mortgage deed by way of deposit of title deeds is admitted by the contemnors; that while the said order to maintain the status-quo by both the parties in an application in which the interim relief to restrain the respondents 1 to 5/defendants from alienating or dealing with the property was sought for, was in force, it would be clearly indicative of the willful and deliberate disobedience of the orders of the Court; that the respondents 1 to 5 have to be dealt with in accordance with law for the said disobedience; that further, the mortgage transaction entered into by the sixth respondent with the respondents 1 to 5, has to be declared void since https://hcservices.ecourts.gov.in/hcservices/ 6 the sixth respondent should not be allowed to take advantage of his own wrong and the action of all the respondents was a clear interference in the administration of justice by taking law into their own hands; that the sixth respondent bank should have verified the encumbrance before entering into the transactions, and hence they are liable to be punished. 6.In answer to the above, it is contended by the learned Counsel for the respondents 1 to 5/contemnors that the respondents 3 and 4 were not Directors of the fifth respondent company; that it is true that a mortgage deed was executed by deposit of title deeds by the second respondent on behalf of the fifth respondent company; but, the same was executed by the fifth respondent on the bonafide impression that there was no prohibition for the fifth respondent to deal with the property of which he is the owner; that even at the time of filing of the suit, the property was actually mortgaged with another bank; that subsequent to the order, the mortgage was actually transferred to the sixth respondent, and hence it cannot be said to be a violation of the order at all; that apart from that, the fifth respondent was entitled to deal with the suit property as the status-quo order was only with regard to the possession, and hence the petition was to be dismissed as it did not carry any merit. https://hcservices.ecourts.gov.in/hcservices/ 7 7.The learned Counsel for the sixth respondent bank would submit that the respondents 1 to 5 have borrowed crores of rupees from them and have failed to repay the same; that they are custodian of public moneys and hence their interest has got to be protected. 8.The Court paid its anxious consideration on the submissions made. 9.Admittedly, the petitioners/plaintiffs filed C.S.No.979 of 2004 seeking a declaratory relief that the sale deeds dated 17.3.1975 and 15.7.2004, in respect of the suit schedule mentioned immovable properties as non-est in law and not binding on the plaintiffs along with the permanent injunction to restrain the defendants from dealing with the suit property in any manner on the strength of the said sale deeds. At the time of filing of the suit, O.A.No.1013/2004 seeking interim injunction not to interfere with the peaceful possession and enjoyment of the suit property was made, and the same was ordered on 23.12.2004. While so, the plaintiffs filed O.A.No.243/2006 praying for an interim injunction to restrain the defendants from in any way alienating or encumbering the suit property pending disposal of the suit, and the application was contested by the respondents 1 to 5/contemnors. The Court made an order on 23.3.2006, which reads as follows: "1.That both parties hereto be and are hereby https://hcservices.ecourts.gov.in/hcservices/ 8 directed to maintain status quo as on this day till the disposal of the suit." Now this contempt petition is brought forth to initiate proceedings against the respondents 1 to 5 since they have violated the said order by execution of a mortgage deed by way of deposit of title deeds for a sum of Rs.6,25,00,000/- by the fifth respondent company through its Directors in favour of the sixth respondent bank. 10.As pointed out above, the said application in O.A.No.243/2006 was one for interim injunction to restrain the respondents 1 to 5 from in any way alienating or encumbering the suit property pending the disposal of the suit. On contest, the Court made an order directing both the parties to maintain status-quo on that day namely 23.3.2006. Admittedly, the second respondent has executed a mortgage deed by deposit of title deeds in respect of the suit property for a sum of Rs.6,25,00,000/- on 6.12.2006, i.e., about 9 months after the passing of the status-quo order. The contemnors as respondents have contested the said application, and the said order came to be passed. Now the contention put forth by the learned Counsel for the contemnors that the order to maintain the status-quo was in respect of the possession of the property cannot be countenanced in the face of the above order dated 23.3.2006, made in O.A.No.243/2006. Even if it is true that the property was actually under mortgage with another https://hcservices.ecourts.gov.in/hcservices/ 9 bank even before the filing of the suit, the respondents 1 to 5 at no stretch of imagination, can transfer the mortgage by deposit of title deeds and that too, avail a loan of Rs.6,25,00,000/-. While the status-quo order to restrain the contemnors from in any way dealing with the property was in force, executing the mortgage deed for a higher sum like Rs.6,25,00,000/-, would be clearly indicative of the fact that the Directors of the fifth respondent company were in their attempt of complicating the issue and have also fastened the liability on the higher side in respect of the immovable property which was the subject matter of the suit. The said act cannot, but be termed as willful and deliberate disobedience of the orders of the Court. 11.So far as the sixth respondent nationalized bank is concerned, had the bank verified the encumbrance before the creation of the said mortgage transaction by deposit of title deeds, it could have avoided the said transaction itself. Having failed in their duty to check the encumbrance at that juncture when an amount of Rs.6,25,00,000/- namely the public money deposited with the nationalized bank, was sanctioned, now the bank officials cannot be allowed to say that they had no knowledge about the pendency of such proceedings. 12.As far as the contention put forth by the learned Counsel for the sixth respondent bank that the sixth https://hcservices.ecourts.gov.in/hcservices/ 10 respondent was a nationalized bank, the custodian of the public money, and the bank has already initiated proceedings before the Debt Recovery Tribunal for recovering the dues from the mortgagor company, and the interest of the sixth respondent nationalized bank has got to be taken into consideration at this stage is concerned, since the said mortgage transaction was entered into between the respondents 1 to 5 as mortgagors and the sixth respondent as mortgagee, and the mortgage was entered into not only pending the proceedings in the original suit, but also when the order to maintain status-quo was in force, the sixth respondent cannot proceed against the property in question since the said mortgage transaction is neither binding nor of any consequence. 13.It is pertinent to point out that even at the stage of interlocutory application, the contemnors have contested the said application, and hence they could not plead no knowledge, and the said order to maintain the status-quo was well within their knowledge. It is also admitted by them in the counter affidavit that the fifth respondent company through the second respondent has created a mortgage by deposit of title deeds for a sum of Rs.6,25,00,000/- on 6.12.2006, even though the order to maintain status-quo was made on 23.3.2006. When the intention of the Court that a particular state of affairs to exist is explicit in the order and the same was also in https://hcservices.ecourts.gov.in/hcservices/ 11 force, the state of affairs is not only required to be maintained; but, it is presumed to exist till the Court orders otherwise, and thus, the act of the respondents 1 to 5 in executing the above mortgage deed was done in defiance and also in disobedience of the orders of the Court, which, in the considered opinion of the Court, has got to be viewed seriously. Though the mortgage deed was executed by the second respondent representing the fifth respondent company, it would be binding not only on the fifth respondent company, but also the other Directors of the company. 14.At this juncture, it would be more apt and appropriate to reproduce the relevant portions of the decision of the Apex Court reported in (2009) 4 SCC 213 (C.ELUMALAI V. A.G.L.IRUDAYARAJ) as follows: 5. "31. Apology is an act of contrition. Unless apology is offered at the earliest opportunity and in good grace, the apology is shorn of penitence and hence it is liable to be rejected. If the apology is offered at the time when the contemnor finds that the court is going to impose punishment it ceases to be an apology and becomes an act of a cringing coward. 32. Apology is not a weapon of defence to purge the guilty of their offence, nor is it intended to operate as universal panacea, but it is intended to be evidence of real contriteness. As was noted in L.D. Jaikwal v. State of U.P. ((1984) 3 SCC 405) : (SCC p.406, para 1) "We are sorry to say we cannot subscribe to the ‘slap-say sorry-and forget’ school of thought in administration of contempt jurisprudence. Saying ‘sorry’ does not make the slapper taken the slap smart less upon the said hypocritical word being uttered. https://hcservices.ecourts.gov.in/hcservices/ 12 Apology shall not be paper apology and expression of sorrow should come from the heart and not from the pen. For it is one thing to ‘say’ sorry-it is another to ‘feel’ sorry." The above position was highlighted in T.N. Godavarman Thirumulpad (102) v. Ashok Khot ((2006) 5 SCC 1) at SCC p.17, paras 31-32. 6. "56. The next question is whether for disobedience of the order passed by this Court, the respondent contemnors are liable to punishment. In this connection, we may refer to some of the legal provisions. Article 129 of the Constitution declares this Court (Supreme Court) to be ‘a court of record [having] all the powers of such a court including the powers to punish for contempt of itself’. 57. Clause (c) of Section 94 of the Code of Civil Procedure, 1908 enacts that in order to prevent the ends of justice from being defeated, the court may, commit the person guilty of disobedience of an order of interim injunction to civil prison and direct his property to be attached and sold. Rule 2-A of Order 39 as inserted by the Code of Civil Procedure (Amendment) Act, 1976 (Act 104 of 1976) reads thus: ‘2-A. Consequence of disobedience or breach of injunction.-(1) In the case of disobedience of any injunction granted or other order made under Rule 1 or Rule 2 or breach of any of the terms on which the injunction was granted or the order made, of the court granting the injunction or making the order, or any court to which the suit or proceeding is transferred, may order the property of the person guilty of such disobedience or breach to be attached, and may also order such person to be detained in the civil prison for a term not exceeding three months, unless in the meantime the court directs his release. (2) No attachment made under this rule shall remain in force for more than one year, at https://hcservices.ecourts.gov.in/hcservices/ 13 the end of which time, if the disobedience or breach continues, the property attached may be sold and out of the proceeds, the court may award such compensation as it thinks fit to the injured party and shall pay the balance, if any, to the party entitled thereto.’ * * * 60. In Ashok Paper Kamgar Union v. Dharam Godha ((2003) 11 SCC 1), this Court had an occasion to consider the concept of ‘wilful disobedience’ of an order of the Court. It was stated that ‘wilful’ means an act or omission which is done voluntarily and with the specific intent to do something the law forbids or with the specific intent to fail to do something the law requires to be done, that is to say, with bad purpose either to disobey or to disregard the law. According to the Court, it signifies the act done with evil intent or with a bad motive or purpose. It was observed that the act or omission has to be judged having regard to the facts and circumstances of each case. 61. In Kapildeo Prasad Sah v. State of Bihar ((1999) 7 SCC 569) it was held that for holding a person to have committed contempt, it must be shown that there was wilful disobedience of the judgment or order of the court. But it was indicated that even negligence and carelessness may amount to contempt. It was further observed that issuance of notice for contempt of court and power to punish are having far-reaching consequences, and as such, they should be resorted to only when a clear case of wilful disobedience of the court’s order is made out. A petitioner who complains (sic of a) breach of court’s order must allege deliberate or contumacious disobedience of the court’s order and if such allegation is proved, contempt can be said to have been made out, not otherwise. The Court noted that power to punish for contempt is intended to maintain effective legal system. It is exercised to prevent perversion of the course of justice. 62. In the celebrated decision of Attorney General v. Times Newspaper Ltd.1974 AC 273 Lord Diplock stated: (AC p.308 A) ‘... There is an element of public policy in punishing civil contempt, since the https://hcservices.ecourts.gov.in/hcservices/ 14 administration of justice would be undermined if the order of any court of law could be disregarded with impunity...’ 63. In Anil Ratan Sarkar v. Hirak Ghoss ((2002) 4 SCC 21) this Court held that the Contempt of Courts Act has been introduced in the statute book for securing confidence of people in the administration of justice. If an order passed by a competent court is clear and unambiguous and not capable of more than one interpretation, disobedience or breach of such order would amount to contempt of court. There can be no laxity in such a situation because otherwise the court orders would become the subject of mockery. Misunderstanding or own understanding of the court’s order would not be a permissible defence. 64. It was observed that power to punish a person for contempt is undoubtedly a powerful weapon in the hands of judiciary but that by itself operates as a string of caution and cannot be used unless the court is satisfied beyond doubt that the person has deliberately and intentionally violated the order of the court. The power under the Act must be exercised with utmost care and caution and sparingly in the larger interest of the society and for proper administration of justice-delivery system. Mere disobedience of an order is not enough to hold a person guilty of civil contempt. The element of willingness is an indispensable requirement to bring home the charge within the meaning of the Act. * * * 66. In All Bengal Excise Licensees’ Assn. v. Raghabendra Singh ((2007) 11 SCC 374) this Court considered several cases and observed that wilful and deliberate act of violation of interim order passed by a competent court would amount to contempt of court. * * * 70. From the above decisions, it is clear that punishing a person for contempt of court is indeed a drastic step and normally such action should not be taken. At the same time, however, it is not only the power but the duty of the court to uphold and maintain the dignity of courts and majesty of law which may call for such extreme step. If for proper administration of justice and to ensure due compliance with the orders passed by a court, it is required to take strict view under the Act, it should not hesitate https://hcservices.ecourts.gov.in/hcservices/ 15 in wielding the potent weapon of contempt." (emphasis in original) The above position was highlighted in Patel Rajnikant Dhulabhai v. Patel Chandrakant Dhulabhai ((2008) 14 SCC 561) at SCC pp.575-79, paras 56-57, 60-64, 66 & 70. 7. On consideration of various aspects, we are satisfied that there has been a wilful and deliberate violation of this Court’s order. We, therefore, in exercise of the Court’s jurisdiction under Article 129 of the Constitution of India impose exemplary costs of Rs.2,00,000 on each of the contemnors to be deposited to the Registry of the High Court within a period of eight weeks. On deposit being made, the amount shall be transferred to the National Legal Services Authority. In case of non-payment, the contemnors shall undergo simple imprisonment for three months each. Any third- party right created after order dated 19-3-2007 is of no consequence and stands set aside." 15.Therefore, in appraisement of the facts and circumstances of the case on hand, this Court is of the considered opinion that imposing exemplary costs of Rs.1,00,000/- on each of the respondents 1 to 5/contemnors would meet the ends of justice. 16.Accordingly, exemplary costs of Rs.1,00,000/- (Rupees one lakh only) is imposed on each of the respondents 1 to 5 which shall be deposited to this Registry within a period of six weeks herefrom. On such deposit being made, the amount shall be transferred to the High Court Legal Services Committee. In case of default, the respondents 1 to 5 shall undergo Simple Imprisonment for a period of four weeks each. It is made clear that any https://hcservices.ecourts.gov.in/hcservices/ 16 third party right created after the order of status-quo dated 23.3.2006, is of no consequence and stands set aside. This contempt petition is, accordingly, disposed of. Witness the Hon'ble Thiru M.YUSUF EQBAL, the Chief Justice of High Court at Madras, as aforesaid, this the 18th day of January, 2011. SD/- DEPUTY REGISTRAR (OS) //Certified to be true copy// Dated at Madras this the day of 2011. COURT OFFICER (O.S.) From 25th Day of September 2008 the Registry is issuing certified copies of the orders/judgments/Decrees in this