Case Note & Summary
The appeal arose from a contempt order passed by a single judge of the Bombay High Court. The parties were chartered accountants and partners in the firm M/s. N. M. Raiji & Co. In December 2004, an arbitration petition under Section 9 of the Arbitration and Conciliation Act, 1996 was filed, which was disposed of on 8 September 2005 by consent terms. The consent terms required all cheques and documents of the firm to be signed jointly by the partners. Subsequently, two partners (respondents) purchased five internet cards for firm laptops and prepared a payment voucher and a cheque for Rs. 10,945/-. One of the appellants, upon inquiry, raised doubts about the necessity of the purchase and did not immediately sign the cheque. The respondents demanded signature, and after some delay, the cheque was signed. On 14 December 2006, the respondents filed a contempt petition alleging willful disobedience of the consent order. The single judge, by order dated 24 April 2007, found the appellants guilty of civil contempt, observing that their defence was an afterthought and that the refusal was intended to harass; however, the court accepted the unconditional apology and imposed a fine. The appellants challenged this order. The Division Bench considered the concept of willful disobedience under Section 2(b) of the Contempt of Courts Act, 1971, and held that civil contempt requires an intentional and deliberate breach. The court noted that a partner raising doubts about a financial transaction before signing a cheque, in the absence of any specific undertaking being breached, cannot be treated as willful disobedience. The court also recorded that the cheque was eventually signed and the firm continued its business under the consent terms. Finding no intentional or deliberate breach, the Division Bench quashed the contempt order, allowed the appeal, and disposed of the notice of motion without costs.
Headnote
A) Contempt of Court - Civil Contempt - Willful Disobedience - Contempt of Courts Act, 1971, Section 2(b) - The dispute arose out of a consent order in a partnership dispute that required joint signatures on cheques. One partner raised doubts about an internet card purchase and initially refused to sign a cheque, leading to a contempt petition. The Division Bench held that civil contempt requires intentional and deliberate breach or disobedience of a court order; a partner’s temporary refusal due to genuine doubts does not amount to willful disobedience, especially when the cheque was subsequently signed and the parties continued business under the consent terms. The impugned order of the single judge imposing penalty was therefore quashed. (Paras 5-9)
Issue of Consideration
Whether the appellants' refusal to sign a cheque of Rs. 10,945/- constituted willful disobedience of the consent order, thereby amounting to civil contempt under Section 2(b) of the Contempt of Courts Act, 1971
Final Decision
Appeal allowed; impugned order dated 24 April 2007 quashed and set aside; notice of motion disposed of; no costs. The court held that the appellants' actions did not constitute willful disobedience of the consent order as there was no intentional or deliberate breach; the cheque was subsequently signed and the unconditional apology was accepted but penalty was not warranted.
Law Points
- Civil contempt under Section 2(b) of Contempt of Courts Act
- 1971 requires intentional and deliberate breach or disobedience of a court order
- raising genuine doubts about a financial transaction before signing a cheque does not constitute willful disobedience
- penalty in contempt not justified if there is no intentional disobedience and subsequent compliance occurs
Case Details
2017 LawText (BOM) (01) 18
Appeal No. 369 of 2007 in Contempt Petition No. 01 of 2007 in Arbitration Petition No. 543 of 2004 with Notice of Motion No. 2137 of 2007
Anoop V. Mohta, P. R. Bora
Mr. Gauraj Shah, Ms. Priyanka Kothari, Ms. Neha Bhatt
Jayesh M. Gandhi and Vinay D. Balse
Yogendra N. Thakkar & Ors.
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Nature of Litigation
Appeal against order of single judge holding appellants guilty of civil contempt and imposing penalty
Remedy Sought
Appellants sought setting aside of the contempt order and penalty imposed
Filing Reason
The single judge found the appellants guilty of willful disobedience of a consent order by not signing a cheque for internet cards, and imposed a fine despite their unconditional apology
Previous Decisions
The single judge of the Bombay High Court, in Contempt Petition No. 01 of 2007, by order dated 24 April 2007, held the appellants guilty of civil contempt and imposed a fine while accepting the unconditional apology. Arbitration Petition No. 543 of 2004 was earlier disposed of by consent terms on 8 September 2005, requiring joint signatures on firm cheques.
Issues
Whether the appellants' refusal to sign the cheque for Rs. 10,945/- constituted willful disobedience of the consent order, thereby amounting to civil contempt under Section 2(b) of the Contempt of Courts Act, 1971
Submissions/Arguments
Appellants contended that they did not willfully disobey the order; they had raised genuine doubts about the necessity of purchasing internet cards, which was not office equipment; the cheque was eventually signed; they tendered an unconditional apology and there was no intentional or deliberate breach.
Respondents argued that the refusal to sign was deliberate and intended to harass, and that the defence raised was an afterthought; the single judge had accepted this argument.
Ratio Decidendi
Civil contempt under Section 2(b) of Contempt of Courts Act, 1971 requires an intentional and deliberate breach or disobedience of a court order. In a partnership dispute, where a consent order mandates joint signatures on financial instruments, a partner’s temporary refusal to sign a cheque due to genuine doubts about the expenditure does not amount to willful disobedience, particularly when the cheque is subsequently signed and there is no breach of any specific undertaking. Unconditional apology and subsequent compliance further negate the need for penalty.
Judgment Excerpts
The term 'willful default' or 'willful disobedience' as contemplated under the Contempt of Courts Act is well defined and well recognized. The Civil Contempt is, therefore, required to be considered in the facts and circumstances of the case read with the additional foundation of 'intentional/ deliberate breach or disobedience' of the order.
One of the partners if raises some doubt that itself cannot be a reason to show that his intention was deliberate to disobey the order...
There was no breach of any specific undertaking and 'deliberate or willful disobedience' as contemplated under the provisions of the Contempt of Courts Act.
Therefore, impugned order dated 24 th April, 2007 passed in Contempt Petition No. 01 of 2007 by the learned single Judge, is hereby quashed and set aside.
Procedural History
In December 2004, Arbitration Petition No. 543 of 2004 was filed under Section 9 of the Arbitration and Conciliation Act, 1996, and was disposed of on 8 September 2005 by consent terms requiring joint signatures on firm cheques. In or about October 2006, respondents purchased internet cards for firm laptops and prepared a cheque for Rs. 10,945/-; the appellant raised doubts and did not sign immediately. On 18 October 2006, respondents demanded signature and the cheque was subsequently signed. On 14 December 2006, respondent no. 1 filed Contempt Petition No. 01 of 2007 alleging willful disobedience. After affidavits, the single judge on 24 April 2007 held appellants guilty of civil contempt, accepted unconditional apology, and imposed a fine. Appellants filed Appeal No. 369 of 2007, which was heard and allowed by the Division Bench on 31 January 2017.
Acts & Sections
- Contempt of Courts Act, 1971: Section 2(b)
- Arbitration and Conciliation Act, 1996: Section 9
