Contempt of Court excludes casual, accidental, bona fide or unintentional acts or genuine inability. – Delhi HC
Title: M/S KUEHNE + NAGEL PVT. LTD. V MR. PREM SINGHEE
+ CCP(CO.) – 1/2015 & CO.APPL. 846/2023
Decided on: 15 December, 2023
CORAM: HON’BLE MR. JUSTICE DHARMESH SHARMA
Facts:
The present Contempt Petition CCP(CO.) 01/2015 has been preferred by the petitioner under Section 11 read with 12 of the Contempt of Courts Act, 1971 against the respondent Mr. Prem Singhee. The petitioner alleges that the respondent has failed to comply with the order dated 14.02.2014 and has also not made complete payment of dues as was agreed upon in the settlement between the parties. The respondent, at the time of the alleged non-compliance, was the Managing Director of SVOGL Oil & Gas Energy Ltd., a listed company engaged in Oil and Gas Exploration Services.
The petitioner had previously filed a Company Petition under Sections 433 and 434 of the Companies Act, 1956 (bearing No. CO.PET. 523/2013) titled ‘M/s Keuhne + Nagel Pvt. Ltd. v. Mr. Prem Singhee’, seeking winding up of the company due to non-payment of dues. SVOGL Oil and Gas Energy Ltd. is currently undergoing liquidation in terms of an order dated 28.07.2017 in CO.PET. 446/2013 titled „Citicorp International Limited v. Shiv Vani Oil and Gas Exploration Services Ltd.‟, whereby a Provisional Liquidator was appointed.
Laws Involved:
Section 11 Contempt of Courts Act, 1971- Power of High Court to try offenses committed or offenders found outside the jurisdiction.
Section 12 Contempt of Courts Act, 1971- Punishment for contempt of court.
Section 20 of the Contempt of Courts Act, 1971- Limitation for actions for contempt.
Contentions:
The respondents argue that after implementing the Strategic Debt Restructuring Scheme, the company’s lenders gained majority control, affecting its management. Additionally, a Provisional Liquidator appointed by the court on 28.07.2017 restricted the company and its management, including the respondent, from dealing with company assets. This constraint, along with the financial constraints, prevented the respondent from making payments to the petitioner. The respondent asserts that the failure to pay the remaining installments isn’t a willful disobedience of the court order from 14.02.2014 or a breach of the respondent’s undertaking.
The respondents contend that the current contempt petition is time-barred according to Section 20 of the Contempt of Courts Act. This section mandates the court to acknowledge and address contempt within one year of the alleged incident. The respondent argues that the court’s cognizance, occurring 8 years and 8 months after the supposed contempt, exceeds the statutory limitation, thereby rendering the present petition invalid.
Issues:
1. Whether the respondent’s failure to pay the remaining installments to the petitioner constitutes willful or deliberate disobedience and violation of the court’s order and the respondent’s undertaking.
2. Whether the present contempt petition is barred due to the court taking cognizance after 8 years and 8 months.
Courts Judgement and Analysis:
On Issue no. 1, After hearing the counsels and reviewing the records, the court concluded that it is established in legal principles that the Contempt of Courts Act deals with civil contempt, which necessitates willful disobedience of a court decision and this case is Quasi criminal in nature, The case of U.N. Bora v. Assam Roller Flour Mills Assn. is cited for clarity. In this case, after analyzing numerous precedents, it was reaffirmed that:
(i) It must be demonstrated that there was awareness of the court order or directions, and the disobedience was a deliberate, conscious, and intentional act. (ii) If two interpretations are possible, the element of willfulness diminishes, as it involves a mental component. (iii) Due to the quasi-criminal nature of the proceedings, proof beyond a reasonable doubt is required. (iv) When a distinct mechanism is provided in the same judgment alleged to have been violated, a party must exhaust that mechanism before approaching the court under the Contempt of Courts Act, 1971.
Further Citing Urban Infrastructure Real Estate Fund v. Dharmesh S. Jain, and R.N. Dey v. Bhagyabati Pramanik (2000) 4 SCC 400 and doing all this analysis the court held that, to establish contempt, it is crucial to demonstrate that disobedience of the court order is “wilful.” Numerous cases emphasize that the term “wilful” introduces a mental element, indicating a knowingly intentional, conscious, calculated, and deliberate action with full awareness of the consequences. This excludes casual, accidental, bona fide, or unintentional acts, as well as genuine inability. Wilful acts do not encompass involuntary or negligent actions; they must be done with malice or without a justifiable excuse, appearing stubborn, obstinate, or perverse. Deliberate conduct implies that the person knows what they are doing and intends to do so with a calculated action and potentially an evil motive. Consequently, if disobedience arises from compelling circumstances that make it impossible for the contemnor to comply with the order, punishment may not be warranted. Committal or sequestration should only be ordered when contempt involves a degree of default or misconduct. The court further analyzed and upheld that by applying the mentioned principle to the current case, the respondent’s explanation holds merit. The respondent contends that they genuinely intended to fulfill the payment commitment made on behalf of the company in liquidation, but were hindered by subsequent proceedings before the NCLT. It was evident that there was no intentional violation or wilful disobedience of the court order that would warrant contempt action against the respondent. Hence the court affirms that the parties are free to pursue their claims through execution proceedings or any other legal avenues available. In such proceedings, the relevant forum or court can thoroughly assess all aspects of the matter on merit and by the law.
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Written by- Aditi