Ecl Finance Ltd vs Harikishan Shankarji Gudipati

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 18834 OF 2017 (Arising out of SLP (Civil) No. 12596 OF 2017)

ECL FINANCE LTD .. APPELLANT (S)

VERSUS HARIKISHAN SHANKARJI GUDIPATI & ORS. .. RESPONDENT (S)

JUDGMENT

KURIAN, J.,

1. Leave granted.

2. The appellant is before this Court aggrieved by an order

dated 14th February, 2017 passed by the Division Bench

of the High Court of Bombay in Appeal (LDG.) No.2 of

2017. The said appeal was filed against the order dated

22nd December, 2016 in Contempt Petition No. 17 of

2016 in Suit No. 802 of 2014.

Signature Not Verified

3. The appellant filed a Contempt Petition alleging that the Digitally signed by DEEPAK MANSUKHANI

respondents herein had not honoured the consent Date: 2017.11.24 15:37:44 IST Reason:

decree drawn on 14th August, 2015, and hence they are 2

liable to be punished for contempt. It appears that the

appellant had also initiated execution proceedings,

since in the decree, it is stated that in case the terms of

the consent are violated, the suit would stand decreed

in terms of the prayer made in the plaint. Be that as it

may, we find from the order dated 22nd December, 2016

of the learned Single Judge that the learned Single

Judge has admitted the contempt petition and has

issued notice to the respondents. It is, at that stage

that the respondents filed an intra-Court appeal under

Section 19 of the Contempt of Courts Act, 1971

(hereinafter referred to as “the Act”). The Court

admitted the appeal, despite the objections regarding

the maintainability, leaving the question of the

maintainability of the appeal to be considered at the

time of final hearing.

4. It appears from the impugned order passed by the

Division Bench that, during the pendency of the appeal

before the Division Bench, a direction was issued to

deposit an amount of Re. 1,00,00,000/- which has

subsequently been withdrawn by the appellant as per

Order dated 21st July, 2017 passed by this Court. 3

5. Learned counsel for the respondents has referred to two

decisions of this Court in R.N. Dey and Others v.

Bhagyabati Pramanik and Others1 and Tamilnad

Mercantile Bank Shareholders Welfare

Association (2) v. S.C. Sekar and Others2 and made

a persuasive submission regarding the maintainability

of the appeal. We are afraid that the decisions relied

upon by the respondents do not further their case, in

the given facts and circumstances. R.N. Dey (supra)

was a case where the High Court declined to accept the

unconditional apology tendered by the contemnor. It

was in that context that this Court held that the

contemnor could file an appeal since he was otherwise

entitled to be discharged in case the unconditional

apology had been accepted. In other words, this Court

was of the view that the decision to reject the

unconditional apology and proceed further was an order

or decision to proceed to punish the contemnor. Hence,

it was held that such a decision or order was

appealable. That is not the situation in the present

case. And in any case, at paragraph 13, the Court made

1 (2000)4 SCC 400 2 (2009)2 SCC 784 4

it clear that “In the present proceedings the question

whether appeal under Section 19 is maintainable or not

is not required to be decided finally as, in our view,

facts of this case are grossly inadequate and the

contempt proceedings were not required to be initiated

at all.” In Tamilnad Mercantile Bank (supra), this

Court referred to Midnapore Peoples' Coop. Bank

Ltd. and Others v. Chunilal Nanda and Others 3 and

took the view that though an appeal under Section 19

of the Act, may not be maintainable against certain

orders, still the aggrieved person can file an intra-court

appeal if in the impugned order an issue has been

decided or a direction has been issued, relating to the

merits of the disputes between the parties, in exercise

of its contempt jurisdiction. No doubt, in paragraph-39,

this Court has held that an appeal would be

maintainable even against a notice to show cause. But

it has to be seen that such a notice is in a case where

the court, preceding the notice, had decided some

disputes raised before it. Hence this Court guardedly

put a caveat as follows: “Thus, in a given situation, an

appeal would be maintainable even against a notice to 3 (2006) 5 SCC 399 5

show cause”. In other words, notice referred in

paragraph-39 is a notice apparently after taking

decision on contempt and proceeding further. For the

sake of completion of the discussion, we have extracted

paragraph-39 also:-

“39. We may repeat that it may be a different matter if the court while passing an order decided some disputes raised before it by the contemnor asking it to drop the proceedings on one ground or the other. Thus, in a given situation, an appeal would be maintainable even against a notice to show cause. Here even such a notice has not been issued and thus the question of satisfying the court by showing cause that the respondent contemnors had not committed any contempt did not arise. Allegations had not been made against the Chairman of the meeting. The contempt proceedings had been initiated only against the Managing Director of the Bank.”

6. In Midnapore Peoples' Coop. Bank Ltd. and

Others v. Chunilal Nanda and Others4 after an

extensive discussion on various case laws, this Court

has summarised the legal position as follows:

“11. The position emerging from these decisions, in regard to appeals against orders in contempt proceedings may be summarised thus:

I. An appeal under Section 19 is maintainable only against an 4 (2006) 5 SCC 399 6

order or decision of the High Court passed in exercise of its jurisdiction to punish for contempt, that is, an order imposing punishment for contempt.

II. Neither an order declining to initiate proceedings for

contempt, nor an order initiating proceedings for contempt nor an order dropping the proceedings for contempt nor an order acquitting or exonerating the contemnor, is appealable under Section 19 of the CC Act. In special circumstances, they may be open to challenge under Article 136 of the Constitution.

III. In a proceeding for contempt, the High Court can decide whether any contempt of court has been committed, and if so, what should be the punishment and matters incidental thereto. In such a proceeding, it is not appropriate to adjudicate or de- cide any issue relating to the merits of the dispute between the parties.

IV. Any direction issued or decision made by the High Court on the merits of a dispute between the parties, will not be in the exer- cise of “jurisdiction to punish for contempt” and, therefore, not appealable under Section 19 of the CC Act. The only exception is where such direction or decision is incidental to or inextricably connected with the order punishing for contempt, in which 7

event the appeal under Section 19 of the Act, can also encom-

pass the incidental or inextricably connected directions.

V. If the High Court, for whatsoever reason, decides an issue or

makes any direction, relating to the merits of the dispute be-

tween the parties, in a contempt proceedings, the aggrieved person is not without remedy.

Such an order is open to challenge in an intra-court appeal (if the order was of a learned Single Judge and there is a provision for an intra-court ap-

peal), or by seeking special leave to appeal under Article 136 of the Constitution of India (in other cases).

The first point is answered accordingly.”

7. Learned counsel for the respondents submits that

before issuing notice, the learned Single Judge had

considered the merits of the case and had already

made his mind to punish the respondents and,

therefore, an appeal would lie, in view of the decisions

referred to above. We are afraid the contention made

by learned counsel for the respondents cannot be

appreciated. The observations made by the learned

Single Judge in the Order dated 22 nd December, 2016,

while issuing notice in the contempt petition, is only for 8

the prima facie satisfaction as to whether the contempt

petition needs to be considered on merits. Only after

such a preliminary stage, notice can be issued. Now, it

is open to the respondents to file their reply and after

considering the defence, the learned Single Judge will

have to take a call as to whether it is a case to be

proceeded against for punishing the respondents. In

case such a decision is taken by the High Court, it is, at

that stage, that the respondents get a right to file an

appeal before the Division Bench in terms of Section

19(1)(a) of the Act. Such a stage having not arisen, the

impugned order passed by the Division Bench is only to

be set aside. Ordered accordingly.

8. Having said so, since it is brought to our notice that the

appellant has also initiated the proceedings for

execution of the decree and since the said matter is

also before us, we request the learned Single Judge who

has exercised the contempt jurisdiction, to consolidate

the execution petition and the contempt proceedings

and take a decision as to what exactly would be the

amount payable by the respondents in terms of the

decree. We also make it clear that nothing said by us or 9

by the learned Single Judge or the Division Bench shall

stand in the way of the parties settling their disputes.

9. With these observations, the appeal is disposed of.

.……........................J. (KURIAN JOSEPH)

……........................J. (R. BANUMATHI)

NEW DELHI NOVEMBER 16, 2017