Case: Rama Narang Vs. Ramesh Narang

1. In this contempt petition the petitioner alleged that the respondents 1 and 2 have violated this Courts orders dated 12th December, 2001 and 8th January, 2002 disposing of Contempt Petition (Civil) Nos.9 in Contempt Petition (Civil) No.209 of 1998 in Civil Appeal Nos. 366/1998, 603/1998 and 605/1998. The petitioner and the respondents represent two groups of members of one family. The petitioner, Rama Narang is the father of Ramesh and Rajesh the two respondents herein. They are the children of his first wife, whom he divorced in 1963. The petitioner also has children by the second wife. Disputes have been raging between the parties for over a decade. Several suits and counter suits have been filed. In contempt proceedings filed by the respondent No.1 against the petitioner an order was passed by this Court on 12th December, 2001 to the following effect:The following cases are pending between the parties who are parties in the present proceedings before us one way or the other. We are told that all the parties have settled their disputes in respect of all the litigations specified below1. O.S. No.3535 of 1994 before the Bombay High Court2. O.S. No.3578 of 1994 before the Bombay High Court3. O.S. No.1105 of 1998 before the Bombay High Court4. O.S. No.3469 of 1996 before the Bombay High Court5. O.S. No.1792 of 1998 before the Bombay High Court6. O.S. No.320 of 1991 before the Bombay High Court7. Company Petition No.28 1992 before the Bombay High CourtBefore the Principal Bench, Company Law Board, New Delhi8. Arbitration Suit No.5110 of 1994 before the Bombay High Court2. Today they filed a document styled it as MINUTES OF CONSENT ORDER signed by all the parties. Learned counsel appearing on both sides submitted that all the parties have signed this document. Today except Mona Narang and Ramona Narang (two ladies), all the rest of the parties are present before us when these proceedings are dictated. As for Mona Narang and Ramona Narang learned counsel submitted that Mona Narang had affixed the signatures and the power of attorney holder of Ramona Narang has signed the above document in his presence. This is recorded3. Both sides agreed that all the suits can be disposed of in terms of the settlement evidenced by MINUTES OF CONSENT ORDER produced before us. For disposal of those cases and/or for passing decrees in them we have to pronounce the final formal order in terms of the settlement now produced before us4. We, therefore, withdraw all the aforesaid suits to this Court under ArticleA of the Constitution of India5. Prothonotory and Senior Master of the Bombay High Court is directed to transmit the records in the above mentioned suits by special messenger to this Court so as to reach the Registry here within ten days from today. The Bench Officer of the Principal Bench of the Company Law Board, New Delhi is directed to forward the records relating to company petition No.28 of 1992 to the Registry of this Court so as to reach the Registry within ten days from today6. All the parties have undertaken before us that they will implement the terms of the MINUTES OF CONSENT ORDER on or before 1.1.2002 and that no further time will be sought for in the matterClause (f) of the compromise relates to the operation of the bank accounts. That clause will come into force from today onwardsd suits and the company petition will be posted for final formal orders on 8.1.2002 at 10.30 a.m. along with these contempt proceedingsThe Minutes of the Consent Order referred to in the order dated 12th December, 2001 was as an agreement between the parties, which was duly executed by them7. The bone of contention between the parties is primarily the control of a company known as NIHL. The consent minutes provided inter alia:(a) With effect from 4th May, 1999 Rama, Ramesh and Rajesh are the only Directors of NIHL (and its subsidiaries). Any increase in the Board of Directors shall be with the mutual consent of Rama and Ramesh/Rajesh(b) None of the Directors (Rama, Ramesh and Rajesh) can be removed from directorship(c) Rama and Ramesh shall continue to be in joint management and control of NIHL and Rajesh shall continue to be the Permanent Whole Time Director thereof in charge of day to day operations/management(d) No decision shall be adopted concerning or affecting the said Company (and its subsidiaries) without the consent of Rama and Ramesh (or Rajesh) in writing. It is further clarified and agreed that save and except as provided herein no prevailing decisions including appointment of Directors/Executives or any other persons shall continue unless Rama and Ramesh (or Rajesh) consent to the same in writing(e) All the collections coming in cash shall continue to be remitted in the bank accounts of the Company and all transactions will only be made in the form of cheques and/or as may hereafter be agreed to between Rama and Ramesh (or Rajesh)(f) All bank accounts of the Company shall continue to be operated jointly by any two out of the three Directors namely Rama, Ramesh and Rajesh and/or as may hereafter be agreed to between Rama and Ramesh (or Rajesh). If the amount of any transaction exceeds Rs. 10 (ten) lacs the same shall be undertaken through a cheque signed jointly by Rama and Ramesh/Rajesh8. The consent terms also provide for the performance of various actions by the parties which are not necessary to be recorded. It is sufficient to note that all the agreed actions were to be performed by the petitioners group before 1.1.2002.When the matter appeared in the list on 8.1.2002 the Court recorded that all the eight suits and proceedings withdrawn from other courts had been transmitted. The appellants suits were disposed of in terms of the minutes of the consent order incorporated in the proceedings passed by the Court on 12.12.2001. The order dated 8th January, 2001 further provided:All the above are now being disposed of in terms of the Minutes of Consent Order incorporated in the proceedings passed by us on 12.12.2001The decree will be drawn up in terms of the Minutes of the Consent Order9. On the allegation that the two respondents had violated the terms of the orders specially the clauses 3(c), (d) and (f) of the consent minutes, this contempt petition has been filed. It is also the case of the petitioner that the violations of the orders had been admitted by the respondents. According to the petitioner the violations amounted to a willful disobedience of the orders dated 12.12.2001 and 8.1.2002 and were punishable under this Courts power of contempt10. Initially a notice was issued by this Court on the petitioners application on 9th May, 2003 to the respondents for ascertaining the facts and to enable them to respond to the averments in the petition. After the filing of the responses, on 15th September, 2003, a notice in contempt proceedings was issued to the respondents. In an attempt to bring the disputes between the parties to amicable end, the Court appointed a retired Chief Justice of Orissa High Court as a mediator. The mediation was however, unsuccessful. Since the settlement of disputes was not possible, the proceedings before the mediator were terminated and the contempt petition was directed to be listed for hearing.

Reasoning:
In other words it was limited to the second category of cases mentioned under Section 2(b) of the Act. The Court was not called upon to decide whether there was any contumacious conduct as envisaged by the first category of cases under that Section. The observations made in that regard, are strictly speaking, obiter. The Court was not called upon to consider nor did it construe the language of Section 2(b) of the Act. If we were to accept the observations of the Court as an enunciation of the law, it would run contrary to the express language of the statute. As we have earlier noted, the section itself provides that willful violation of any order or decree etc. would tantamount to contempt. A compromise decree is as much a decree as a decree passed on adjudication. It is not as has been wrongly held by the Calcutta High Court in Nisha Kanto Roy Chowdhury (supra) merely an agreement between the parties. In passing the decree by consent, the Court adds its mandate to the consent. A consent decree is composed of both a command and a contract. The Bombay High Courts view in Bajranglal Gangadhar Khemka (supra) correctly represents the law that a consent decree is a contract with the imprimatur of the Court. Imprimatur means authorized or approved. In other words by passing a decree in terms of a consent order the Court authorizes and approves the course of action consented to. Moreover, the provisions of Order 23 Rule 3 of the Code of Civil Procedure requires the Court to pass a decree in accordance with the consent terms only when it is proved to the satisfaction of the court that a suit has been adjusted wholly or in part by any lawful agreement24. 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 Courts 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 see25. In such circumstances it would neither be in consonance with the statute, judicial authority, principle or logic to draw any distinction between the willful violation of the terms of a consent decree and willful violation of a decree which is passed on adjudication. The decision in Baburam Guptas case must, therefore, be limited to its own peculiar facts. Rita Markandeya Vs. Surjit Singh Arora (1996) 6 SCC 14 , which was also been relied upon by the respondents to urge that the present application for contempt was not maintainable, related to proceedings for eviction. The respondent, who was the tenant had been directed to vacate the tenanted premises. His appeal before this Court was dismissed. While dismissing the appeal the Court recorded:However, as agreed to by both the learned counsel, time to hand over vacant possession to Smt. Rita Markandey is granted till 31.3.1995. This shall be subject to the usual undertaking to be filed by thet within four weeks from today26. The respondent did not file the undertaking. He also did not vacate the tenanted premises by the agreed date. Thet then filed a petition alleging that the respondent had committed contempt of court by gaining time from the Court to vacate the premises only to file an undertaking and thereafter refusing to file the undertaking. The Court found, on an interpretation of its order, that the court had not itself passed any order fixing the time. In terms of the agreement between the parties the time had been fixed and the Court had only embodied the terms of the agreement so arrived at. Therefore, it was held that the respondent could not be held liable for contempt of that order27. The next decision relied upon by the respondents is the decision of this Court in Bank of Baroda Vs. Sadruddin Hasan Daya & Anr. 2004(1) SCC 360. The petitioner in that case had filed a suit against the respondents for recovery of money. The suit was disposed of by consent and a decree was passed incorporating the consent terms. The consent terms inter alia, provided for payment of the decretal amount in instalments. Pending the clearance of the decretal amount the respondents undertook not to sell, mortgage, alienate, encumber or charge some of its properties. Another creditor also filed the suit against the respondent for recovery of a certain amount. This second suit was also disposed of by consent and a decree passed in terms of the consent order. Like the first decree the decreed amount was to be satisfied in instalments and pending satisfaction of the decree, the respondents undertook to the Court not to alienate, encumber, or create third party rights or part with possession of the same properties which had already formed part of the undertaking in the first decree. The respondents defaulted in making payment of the instalments under the first decree. The petitioner put the decree into execution. It also filed a contempt petition alleging that the second consent decree violated the undertaking given in the first decree. The Court found that by placing the same property under attachment in the second decree the respondent had intentionally and deliberately acted in breach of the undertaking given to the Court in the first consent decree. T28. The decision in R.N. Dey and Anr Vs. Bhagyabati Pramanik & Ors 2000 (4) SCC 400 , also relied upon by the respondents, disposed of an appeal filed from an order directing the appellants to deposit certain amounts of money towards compensation money payable in respect of land acquisition proceedings. The directions were given while disposing of contempt proceedings initiated by the respondent after the Court had accepted the unqualified apology tendered by the appellants. The appellants urged that instead of filing a contempt application, the respondent should have proceeded with the execution of the decree or award made in the land acquisition proceedingsHaving regard to the facts of the case the Court felt that the contempt proceedings should not have been resorted to and that in any case since the unconditional apology has been tendered and accepted by the appellant further proceedings should have been droppedAs we read the decision, its ratio runs counter to the submission of the respondents, namely, that the contempt would not lie if the decree or order is executable. Ultimately, the matter is one of the Courts discretion having regard to the facts of the case. As we have said the fact that a decree is executable does not take away the Courts jurisdiction in contempt29. In the present case, the consent terms arrived at between the parties was incorporated in the orders passed by the Court on 12th December 2001 and 8th January 2002. The decree as drawn up shows that order dated 8th January, 2002 was to be punctually observed and carried into execution by all concerned. A violation of the terms of the consent order would amount to a violation of the Courts orders dated 12th December 2001 and 8th January 2002 and, therefore be punishable under the first limb of Section 2(b) of the Contempt of Courts Act, 1971. The question whether the respondents should not be held guilty of contempt because of any earlier confusion in the law reflected in the case of Babu Ram Gupta (supra), is a question which must be left for decision while disposing of the contempt petition on merits. It may be argued as an extenuating or mitigating factor once the respondents are held guilty of contempt. The submission does not pertain to the maintainability of the petition for contempt.