Case Note & Summary
The present show cause notice was issued under Section 2 read with Section 12 of the Contempt of Courts Act, 1971 and Article 215 of the Constitution of India against the contemnors, Narendra S. Soni @ Patadia and his son Shailendra N. Patadia, for alleged contempt of court. The background involves a company petition filed under Sections 433 and 434 of the Companies Act, 1956 for winding up of M/s. Hitechi Jewellery Industries Ltd. In Company Application No.277 of 2002, an order dated 21.2.2003 was passed appointing the Official Liquidator as Provisional Liquidator of all assets of the company, and the premises at 175, 2nd Floor, Vallabhdas Kanji Building, Princess Street, Mumbai were taken possession of and sealed. The directors later applied to set aside the ex-parte order, and during the proceedings, they gave an undertaking to the court that they would not dispose of any assets or create third-party rights. However, the Official Liquidator reported that the seals were removed and assets were disposed of. The court issued a show cause notice to the contemnors. After hearing the parties, the court found that the contemnors had wilfully disobeyed the court order and breached their undertaking, which amounts to contempt of court. The court rejected the contemnors' defense that they had no intention to disobey, holding that mens rea is not essential for civil contempt. The contemnors were convicted and sentenced to simple imprisonment for one month and a fine of Rs.2,000 each, with default sentence of one week. The court also directed that the fine be paid to the Official Liquidator for the benefit of the company.
Headnote
A) Contempt of Court - Civil Contempt - Breach of Undertaking - Sections 2, 12 Contempt of Courts Act, 1971 - Article 215 Constitution of India - The contemnors, directors of a company in liquidation, gave an undertaking to the court to maintain status quo and not dispose of assets, but subsequently removed seals and sold assets. The court held that breach of an undertaking given to the court amounts to contempt, and mens rea is not essential for civil contempt; wilful disobedience is sufficient. The contemnors were convicted and sentenced to imprisonment and fine. (Paras 1-10) B) Company Law - Winding Up - Provisional Liquidator - Sections 433, 434 Companies Act, 1956 - The court appointed the Official Liquidator as Provisional Liquidator of the company's assets, and the premises were sealed. The directors later gave an undertaking not to dispose of assets, but violated the order by removing seals and selling assets. The court held that such conduct amounts to contempt and undermines the authority of the court. (Paras 2-5)
Issue of Consideration
Whether the contemnors are guilty of contempt of court for violating the order dated 21.2.2003 by removing seals and disposing of assets of the company in liquidation, and whether the breach of undertaking given to the court constitutes contempt.
Final Decision
The contemnors are convicted for contempt of court and sentenced to simple imprisonment for one month and a fine of Rs.2,000 each, in default to undergo simple imprisonment for one week. The fine amount to be paid to the Official Liquidator for the benefit of the company.
Law Points
- Contempt of Courts Act
- 1971
- Section 2
- Section 12
- Article 215 of Constitution of India
- Breach of undertaking amounts to contempt
- Mens rea not essential for civil contempt
- Wilful disobedience sufficient
