Case Note & Summary
The dispute arose from a contempt of court ruling against the petitioners, who were directors of Parul Polymers Private Limited. They had guaranteed a loan from the Central Bank of India, which was categorized as a Non-Performing Asset due to defaults in repayment. Following a notice for recovery, the petitioners filed an application before the Debts Recovery Tribunal, which they later appealed but failed to comply with the required deposit. They secured a conditional stay order from the Tribunal, agreeing to deposit Rs. 7 crores in instalments. However, they issued postdated cheques that bounced, leading the Bank to file a contempt petition. The High Court found them guilty of contempt, leading to their appeal to the Supreme Court. The petitioners argued that their failure to comply was not wilful and that the contempt jurisdiction should not apply. The Supreme Court, however, upheld the High Court's ruling, noting that the petitioners' actions indicated a deliberate attempt to mislead the court. The court reduced their sentence from three months to the time already served, acknowledging their prior custody and the sale of their properties. The court concluded that the petitioners' conduct warranted the contempt ruling, and thus, the appeal was dismissed with no costs awarded.
Headnote
A) Contempt of Court - Breach of Undertaking - Wilful Disobedience - Contempt of Courts Act, 1971, Section 2(b) - The petitioners were held guilty of contempt for failing to honour their undertaking to deposit a specified amount by a certain date, which was deemed wilful disobedience. The court emphasized that the subsequent conduct of the petitioners indicated an intention to deceive the court, justifying the contempt ruling (Paras 24-34).
Issue of Consideration
Whether the failure to comply with an undertaking given to the court constituted contempt of court under the Contempt of Courts Act, 1971.
Final Decision
The Supreme Court upheld the High Court's finding of contempt but reduced the sentence from three months to the time already served, acknowledging the petitioners' prior custody and the sale of their properties.
Law Points
- Contempt of Court
- breach of undertaking
- SARFAESI Act
- wilful disobedience
- judicial discretion
