Case Note & Summary
The Supreme Court considered a special leave petition challenging contempt convictions for breach of an undertaking given during loan recovery proceedings. The petitioners, directors of a company that defaulted on loans from Central Bank of India, had secured a conditional stay of possession proceedings by undertaking to deposit Rs. 7 crores in instalments. When their cheques bounced, the bank initiated contempt proceedings under Sections 10 and 12 of the Contempt of Courts Act, 1971. The Delhi High Court convicted the petitioners and sentenced them to three months' simple imprisonment with fines, which was upheld by the Division Bench. The petitioners argued that breach of an undertaking given to secure conditional stay does not constitute contempt, especially when the order itself specified consequences for default, and that there was no substantial interference with justice under Section 13(a). The bank contended the petitioners engaged in repeated dilatory tactics warranting contempt. The Court analyzed the undertaking given on April 8, 2015, where the petitioners admitted liability and promised specific payments. It noted the petitioners had already served 11 days of imprisonment and paid fines. The Court rejected the petitioners' arguments, holding that deliberate failure to comply with a solemn undertaking given to court constitutes contempt, and the availability of other enforcement remedies does not preclude contempt jurisdiction. The Court found the petitioners' conduct showed wilful disobedience, making contempt proceedings appropriate despite the order specifying consequences for breach. The conviction was upheld, though the petitioners had partially served the sentence.
Headnote
A) Contempt of Court - Civil Contempt - Breach of Undertaking - Contempt of Courts Act, 1971, Sections 10, 12 - Petitioners gave undertaking to deposit Rs. 7 crores in instalments to secure stay of possession proceedings - Cheques bounced leading to breach - Court held that deliberate failure to comply with solemn undertaking given to court constitutes contempt - Contempt jurisdiction can be invoked despite availability of other enforcement remedies (Paras 4, 10, 11). B) Contempt of Court - Civil Contempt - Wilful Disobedience - Contempt of Courts Act, 1971, Section 13(a) - Petitioners argued breach did not substantially interfere with justice under Section 13(a) - Court found petitioners' conduct showed wilful disobedience through repeated dilatory tactics - Held that wilful and intentional disobedience warrants contempt punishment (Paras 7, 9, 10). C) Contempt of Court - Civil Contempt - Conditional Order Consequences - Contempt of Courts Act, 1971 - Petitioners contended that when order spells out consequences of breach, contempt jurisdiction inappropriate - Court rejected argument, stating that inbuilt consequences do not preclude contempt proceedings for wilful breach - Contempt jurisdiction remains available for deliberate violations (Paras 7, 11).
Issue of Consideration
Whether failure to comply with an undertaking given to court, on basis of which conditional stay was granted, constitutes contempt of court under Contempt of Courts Act, 1971
Final Decision
Supreme Court upheld the contempt conviction and sentence imposed by High Court, finding petitioners guilty of wilful breach of undertaking
Law Points
- Breach of undertaking given to court constitutes contempt under Contempt of Courts Act
- 1971
- Wilful disobedience of court order is punishable as contempt
- Availability of other enforcement remedies does not preclude contempt jurisdiction
- Contempt proceedings are quasi-criminal requiring proof of wilful disobedience
- Section 13(a) of Contempt of Courts Act
- 1971 requires substantial interference with justice
