Gujarat High Court
Shaw Wallace And Company Ltd. vs Repute Fertilizers And Ors. on 19 September, 1991
Equivalent citations: (1992)2GLR1273
JUDGMENT R.A. Mehta, J.
1. The petitioner had filed a Summary Suit No. 1175 of 1988 in City Civil Court, Ahmedabad for a sum of Rs. 8,16,451.35 and future interest at the rate of 18% p. a. On February 16, 1989, the suit was decreed against the defendant respondents. During the pendency of the execution proceedings, Misc. Civil Application No. 217 of 1989 was filed before the trial Court for setting aside the ex parte decree. Ultimately, the parties settled the matter and filed consent terms in the Court and the Court passed the decree in terms of compromise pursis Ex. 20. The consent terms though dated May 14, 1989, were filed in the Court on September 21, 1989 and the Court had passed the decree on September 21, 1989. The consent terms provided that the defendants shall pay a sum of Rs. 5,42.875.04 towards the full and final settlement of the decretal dues and these payments were to be made by two post dated cheques for Rs. 3 lacs dated December 30, 1989 and for Rs. 2,42,875.04 dated December 30, 1990 drawn on Junagadh District Co-operative Bank Ltd., Vanzari Chowk Branch, being cheques No. 23889 and 23890 and the plaintiff shall acknowledge the receipts of the said cheques and agreed to give due credit on realisation of the cheques; the defendants were at liberty to make advance payment in instalments from time to time against post dated cheques and in such event, the plaintiff was to adjust such payment against the said cheques and exchange the cheques for the balance amount outstanding on the due date. In case of default, the entire decretal dues were to become due at once with compound interest at the rate of 18% p. a. till the date of payment. It was further provided that the partners of the firm shall be jointly and severally liable to pay the decretal amount and the decree shall be executed on the personal properties of the partners of the firm. Terms (vii) to (ix) are relevant for the present purpose and they read as follows:
(vii) The aforesaid settlement shall be without prejudice to the plaintiffs right to take any action under the amended provisions of the Negotiable Instruments Act and also proceedings for contempt and/or criminal offences under the appropriate provisions of law.
(viii) The plaintiff undertake to withdraw the suit and the criminal proceedings against the defendants, subject to the terms of this settlement.
(ix) Defendants No. 3 shall file necessary undertaking before this Hon'ble Court for complying with the terms and conditions of the consent terms.
The undertaking was obviously drafted and signed alongwith the consent terms on May 14, 1989. The consent terms bearing the same date provided for defendant No. 3 to file an undertaking before the Court for complying with the terms and conditions of the consent terms. It is an undertaking on oath and it is given to the Court and the usual title is 'In The City Civil Court, Ahmedabad'. The said undertaking reads as follows:
UNDERTAKING I, Hanubhai T. Mashru, adult, occupation business, residing at Junagadh do hereby undertake as follows:
1. I say that I am the Managing Partner of Repute Fertilizers, Defendant No. 1 in the aforesaid suit. I say that I am authorised to file this undertaking so as to bind the defendant No. 1 firm and its partners
2. I unconditionally agree and undertake to abide by the consent terms arrived at in Summary Suit No. 1175 of 1988.
3. I say that the said consent terms shall be binding on defendant No. 1 firm and its partners jointly and severally and the respective heirs, executors and legal representatives of each of its partners.
4. That in case of any default in making payment of the amounts as agreed to in the consent terms on the respective dates, the decree passed by Hon'ble City Civil Court at Ahmedabad in Summary Suit No. 1175 of 1988 shall forthwith become executable against me and each of the partners of Repute Fertilizers, jointly and severally, against our personal properties, and we shall not raise any objection whatsoever in any manner against the execution of the decree. Solemnly affirmed at Ahmedabad on this 14th day of May.
2. The first cheque for Rs. Three lacs dated December 30, 1989 was presented on the due date. However, it was dishonoured and returned by the bankers with the "remarks insufficient funds". In lieu of the aforesaid cheque of Rs. Three lacs, the respondents issued three cheques of Rs. One lac each payable on February 20, 1990, March 20, 1990 and April 20, 1990. Only first two cheques were presented for payment and both the cheques were returned dishonoured with the remark "payment stopped by the drawer". It is, therefore, submitted that the respondents have deliberately in gross defiance of the Court's order, not complied with the same and committed breach of the undertaking given by the respondent No. 2 to the Court and not complied with the same and the respondents are, therefore, liable to be punished for contempt of the Court.
3. In the contempt petition, notice was issued on April 16, 1990 returnable on May 1, 1990. The original firm and the second respondent who has given the undertaking were parties to this contempt petition. On December 12, 1990, respondent No. 2 filed an affidavit-in-reply and the Court had passed an order directing all the partners of the respondent No. 1 excluding the lady partners to remain personally present on December 26, 1990 and the learned Counsel for the petitioner was directed to inform the parties to remain personally present. Leave to add such partners as respondents was granted and notice to them was made returnable on December 26, 1990 directing them to remain personally present. On December 26, 1999, no partner had remained present and, therefore, the learned Counsel for the respondents was directed to furnish the names and addresses of all the partners and the matter was adjourned to December 28, 1990. On that day, the Court passed an order granting leave to add other partners and rule was made returnable on January 15, 1991 and the respondents were directed to remain personally present in the Court on that day. The respondents did not comply with the directions and did not give names and addresses of the partners, but the petitioner added respondent No. 3-Madhuben H. Mashru as respondent No. 3.
4. The report of the process server dated January 11, 1991 shows that the respondent No. 2-Hanubhai T. Mashru declared before the panchas that no one by the name Madhuben H. Mashru-respondent No. 3 had been residing with him and he did not know any such person and, therefore, the notice to respondent No. 3 was returned unserved.
5. On April 23, 1991, the Court had passed an order directing the matter to be placed for final hearing on May 1, 1991 and the respondent No. 2 was directed to remain personally present.
6. On May 1, 1991, the Court noted that inspite of the Court's orders dated December 28, 1990 and April 23, 1991 for remaining personally present, the respondent No. 2 has not cared to remain present and, therefore, bailable warrant in the sum of Rs. 5000-00 was issued to remain present in the Court on June 13, 1991. Further affidavit-in-reply dated June 8, 1991 was filed by the respondent No. 2 and still further affidavit-in-reply dated June 22, 1991 was also filed by the second respondent. Still further affidavit-in-reply dated July 15, 1991 has also been filed. There is affidavit-in-rejoinder dated July 22, 1991 filed by the petitioner.
7. On September 6, 1991, we had drawn the attention of the respondents' learned Counsel to the fact that the order dated December 26, 1990 directing the respondents to furnish the names and adresses of all the partners has not been complied with and he stated that the order will be complied with by September 9, 1991 and the names and addresses of all the partners of respondent No. 1 from time to time and from the date of undertaking dated May 14, 1989 shall be furnished by September 9, 1991.
8. On September 9, 1991, no one was present on behalf of the respondents and the names and addresses of all the partners were not furnished and the order was not complied with and, therefore, the respondents Nos. 2 and 3 were directed to remain personally present and to secure their presence, non-bailable warrants were directed to be issued. These respondents were further directed to produce with affidavit the income-tax and wealth tax returns, bank pass books, cheque book, counter foil as well as copies of plaints referred to in the reply and the copies of the decrees passed therein and copy of the interim orders, if any, and the matter was adjourned to September 24, 1991.
9. On the next day, the learned Counsel for the second respondent appeared and requested us to cancel the order passed on the previous date and stated that on and from the date of the undertaking dated May 14, 1989 given by the respondent No. 2, respondent No. 2 is the sole owner of respondent No. 1 and there are no partners of respondent No. 1-Firm. When it was pointed out to him that the undertaking is given on behalf of the firm by the second respondent stating that he was the managing partner of the firm and that he was authorised to file undertaking so as to bind the firm and its partners and that the consent terms shall be binding on the defendant firm and its partners jointly and severally, the position seemed to be totally contrary and, therefore, he was required to state the same in writing and, therefore, he gave this statement in writing under his (Counsel's) signature.
10. In view of the new stand taken that he was the sole proprietor of respondent No. 1-Firm which was absolutely contrary to this undertaking given to the Court, we took it seriously because if the undertaking given to the Court seriously misleads the Court and parties and interferes with the administration of justice, it may in itself amount to contempt of Court and, therefore to give an opportunity to the respondent No. 2 to show cause as to why he should not be proceeded with in contempt proceedings, we had suo motu issued rule to him returnable on September 30, 1991 on which date, the learned Counsel for the second respondent stated that the respondent No. 2 will remain personally present.
11. On September 13, 1991, matter was taken up and the respondent No. 2 was present. The respondent No. 2 stated that the name of his wife is Nirmalaben and not Madhuben, but the officer of the petitioner-Company used to address her and know her as Madhuben He also stated that she resides with him, but their relations were strained. The respondent No. 2 assured that he would remain personally present on the next dates of hearing and, therefore, the direction of issuance of warrant was cancelled. He also stated that the order regarding production of documents and list of partners will be complied with by September 16, 1991.
12. On September 17, 1991, the respondent No. 2 produced a partnership deed dated November 4, 1975 showing that there were three partners as per the last partnership deed dated May 8, 1973 being (1) Hasmukh, Tribhovan Mashru; (2) Sureshchandra Girdharlal Sonchhatra, and (3) Smt. Vijayalaxmi and that said Vijayalaxmi had retired from the firm on November 3, 1975 and, therefore, the remaining two partners had reconstituted the firm in the same name and these two partners were the partners of the firm. Respondent No. 2 was to bring necessary capital and Sureshchandra Gildharlal Sonchhatra was a working partner and was not liable to bring any capital. The shares in the Profit & Loss of the firm was 80% so far as respondent No. 2 is concerned and 20% so far as Sureshchandra Sonchhatra is concerned. An extract from the register of firms was also produced so also an intimation from sales tax register was also produced. As far as the accounts are concerned, the following documents are produced:
(1) A brief statement of income for the accounting year 1983-84 in respect of 1st and 2nd respondent; and (2) Vatavkhata for the S.Y. 2042 and 2043, i.e., 1986-87 and 1987-88.
That is all that has been produced and no affidavit has been produced. The matter was heard on 17th and 18th September, 1991 and the respondent No. 2 was present at the hearing. However, no affidavit and no further documents were filed.
13. The facts of giving undertaking and breach thereof are not only obvious, but they are also admitted.
14. However, the learned Counsel for the respondents has submitted that there is no undertaking given to the Court and not accepted by the Court and the undertaking is not such a thing the breach of which can be said to be an act of contempt of Court. It is further submitted that there is no undertaking to pay any amount and, therefore, there is no breach of undertaking by non payment of the amount. It is also submitted that there is no wilful breach of the undertaking. The second respondent is unable and has no means to pay any amount to comply with the undertaking. It is also submitted that after the undertaking, there is acceptance by the petitioner of three cheques of Rs. One lac each and, therefore the, original promise and undertaking has been waived and there is novatio and variation of contract by acceptance of three cheques of Rs. One lac each and dishonouring of these cheques would not constitute breach of the undertaking. It is also submitted that the petitioner has also accepted the fact of the respondent No. 2 being unable to pay and, therefore, there is no question of Court ascertaining as to whether the respondent No. 2 is really unable to pay any amount. A strong reliance has been placed by the second respondent on a note dated July 25, 1990 (during the pendency of the contempt petition) which is produced by the second respondent with his affidavit dated June 8, 1991 at annexure 'X' (page 57). This note recites that as amount of Rs. 50,000.00 has been paid by a Demand Draft dated April 9, 1990 it has been accepted and given credit. It further recites that another Demand Draft of Rs. 50,000.00 dated July 20, 1990 is in possession of the parry and another Demand Draft of Rs. 50,000.00 payable at Poona dated July 27, 1990 is in possession of the party. After taking note of these three Demand Drafts, the officer of the petitioner-Company records that these two Demand Drafts were returned back to party as the party had requested for time to make future payment and the officer thought that these payments would not be as per the directions laid down in the consent terms. The note further states that because a notice had appeared in the newspaper at the instance of the petitioner, the party was facing difficulty as all the creditors were requesting for their amount to be paid immediately. It is further recited that Saurashtra Region was under severe drought condition, but the power of extension of time was not within his competence and, therefore, he had refused the same and, therefore, the respondents were to approach the petitioner's office directly for presenting their case. It is further stated that if the aforesaid payments of Rs. 50,000.00 each are accepted, the total outstanding of Rs. 3,92,825.04 was intended to be paid to the petitioner by the respondents by quarterly instalments of Rs. 40,000.00.
15. This note has been strongly relied by the respondents to show that the respondents have tried their utmost to comply with the undertaking and the breach is not only bona fide, but wholly unintentional and beyond the control and the said breach is not at all wilful or contumacious.
16. Let us now see whether there is any undertaking to pay any amount and whether that undertaking is to the Court. The wordings of the undertaking state that "I, Hanubhai T. Mashru, adult, occupation: business, residing at Junagadh do hereby undertake as follows: xxxxxx I unconditionally agree and undertake to abide by the consent terms arrived at in Summary Suit No. 1175 of 1988." The consent terms provide for payment and it also provides that defendant No. 3 (respondent No. 2 herein) to file necessary undertaking before the Court for complying with the terms and conditions of the consent terms and the consent terms also record and bring to the notice of the parties that the plaintiff has a right to take action under the amended provisions of Negotiable Instruments Act and also the proceedings for contempt and/or criminal offences under the appropriate provisions of law. These provisions have also been incorporated in the decree, that the defendant No. 3 should file an undertaking to comply with the terms and conditions and also that the plaintiff shall have the right to take contempt proceedings. Thus, there cannot be any doubt that not only the parties intended, but the second respondent also knew very well as to why this undertaking was insisted and taken and why it was being given and to whom it was given and for what purpose it was given. It was not intended to remain on paper only, but it was intended to have efficacy to ensure that the consent terms are duly complied with without any further difficulty, obstruction and with due respect to the Court. The original ex-parte decree was for a sum of more than Rs. 8 lacs and there were also criminal proceedings against the defendants. By virtue of these consent terms, consent decree and the undertaking, the plaintiff had not only substantially reduced his claim, but also undertook to withdraw the criminal proceedings, on consideration of the second respondent giving an undertaking before the Court to comply with the consent terms and consent decree. The undertaking of defendant No. 3 was, therefore, also the part of the decree directing him to file such undertaking and such undertaking was in fact drafted and signed along-with the consent terms on May 14. 1989 and were filed simultaneously in the Court on September 21, 1989. Thus, it is clear that this undertaking which is titled "In the City Civil Court at Ahmedabad" is given to the Court and was understood clearly by both the sides that it was an undertaking given to the Court. It was not only the part of the consent terms that the undertaking was to be given to the Court, but it was also a direction in the consent decree that the defendant No. 3 shall file the undertaking before the Court and the defendant No. 3 has filed such undertaking before the Court.
17. la the case of Sardari Led v. Ram Lakha 1984 Cri.LJ 1098, the Full Bench of Delhi High Court considered a similar question and following observations were made in para 13:
The fact that the undertaking does not expressly mention that it was given to the Court is a matter of no consequenses as on the interpretation of the terms of the statement and a long practice understood by the Counsel and Judges of this Court and the Courts subordinate to it, it is clear to us that the undertaking must have been given to the Court. An undertaking recorded in Court has come to acquire a technical meaning that it is always an undertaking to the Court stay order or injunctions prayed are not granted when undertakings are given in Court by the parties or their Counsel. The Courts in Delhi seldom use the words 'undertakings to the Court' when recording the undertaking of the parties or their Counsel.
The Full Bench also noticed that similar practice is prevalent in Bombay High Court also as reported in the case of Bajranglal Gangadhar v. Kapurchand Ltd. and the following observation of the Bombay High Court was quoted:
xxxxx The Clause does not state to whom the undertaking is given and it may be that it would be possible to hold that as the parties were settling the dispute between themselves, the undertaking was given by one party to the other; or at the highest the only thing that could be urged would be that the expression is ambiguous and in a contempt matter, unless the Court is clearly satisfied that the undertaking was given to the Court, the Court would not proceed to commit the person in default to jail. Rut in our opinion, the expression 'undertake' has come to acquire through long practice, a technically meaning In all orders and decrees or the Court, whenever the expression 'a party undertakes' has been used, it has always borne the meaning that the undertaking has been to the Court.
It was also noted that the English practice was also to the same effect. Bhagwati, J. also quoted that it has been the long standing practice on the original side that whenever Counsel wishes to give undertaking to the Court, he never expressly uses the word 'to the Court', but merely states that he undertakes on behalf of his client and that undertaking is always understood to be an undertaking to the Court which could be enforced by committal proceedings. The same practice is being followed in Gujarat. When an undertaking is given in a Court proceeding, it is always understood to be an undertaking to the Court and not to the parties. In the present case, the consent terms provide for an undertaking to be given to the Court. The consent decree also directs the defendant No. 3 to give an undertaking before the Court and in fact the defendant No. 3 has given an undertaking in the Court. In these circumstances, there is no escape from the conclusion that the undertaking is given to the Court. Such undertaking when given to the Court in these circumstances does not require that such undertaking must be shown to have been accepted by the Court. The undertaking may be given by a party on its own without the Court ordering it to give an undertaking. Even such an undertaking would be an undertaking to the Court. The Court may record acceptance of undertaking or Court may direct the undertaking to be given and the Court may not record any acceptance of such undertaking and there is no requirement of law that Court must accept such undertaking or record the acceptance thereof. It is not unusual that the Court directs the undertaking to be given and when the undertaking is given thereafter the Court is not required to pass any order recording acceptance of such undertaking. The efficacy of the same is in the undertaking itself.
17.1 The learned Counsel for the respondent relied on Punjab High Court judgment in the case of Badri Das v. Labhu Mal . In that case of breach of undertaking, the Court held that the undertaking was not given to the Court, but it was given to the plaintiff and the Court observed that the nature of promise or undertaking could never be changed by reason of the compromise being accepted by the Court and a decree passed in its terms. It is not necessary to examine the correctness of this view of the fact that in the present case, there is no difficulty in coming to the conclusion on facts that the undertaking in this case was given to the Court and it was not a private undertaking between the parties.
17.2 In that case, the Court held that the undertaking was between the parties and there was no undertaking given to the Court. In the present case, the facts discussed earlier clearly show that it was an undertaking given to the Court.
17.3 The learned Counsel for the petitioner also relied upon the judgment of Himachal Pradesh High Court in the case of B. Himmat Singka and Anr. v. Mis. Kuldip Industrial Corporation and Ors. 1981 Cri.LJ 1414. In that case, the learned Counsel had shown his willingness to give undertaking that his clients were willing to pay up the arrears of wages or to arrive at some settlement with the Labour Union with regard to the arrears. It was this undertaking which was held to be not express or specific and was vague and on such vague statement, the Court could no held that there was any specific undertaking given to the Court and, therefore, this judgment is of no assistance to the second respondent.
17.4 In the case of Nisha Kanto Roy Chowdhury v. Smt. Saroj Bashini Gohi , the Calcutta High Court held on facts that the agreement and undertaking was not to the Court and it was observed that "it appears to me that each case must be decided on its particular facts and upon the precise words in the compromise under discussion". This judgment of Calcutta High Court was dissented from by the Bombay High Court judgment which was also adopted by the Full Bench of Delhi High Court in the case of Sardari Lal (supra);
18. Therefore, the contention that there is no undertaking or that there is no acceptance of the undertaking by the Court has no merit. There is no merit in the contention that there is no undertaking to pay any amount. As discussed, the undertaking is to comply and abide by the consent terms. Non-compliance of the directions to pay the amount is the breach of the undertaking as well as breach of the directions of the Court.
19. The further contention is that the undertaking to pay a sum of Rs. Three lacs on December 30, 1989 was no more been in existence and the breach was waived because of the acceptance of three cheques of Rs. One lac each and even if these subsequent cheques have been dishonoured, it cannot be said that there is breach of the original undertaking. It is submitted that the original undertaking has been waived and there is a new substitution of contract between the parties by acceptance of three cheques in place of an original cheque of Rs. Three lacs. It is not possible to accept this contention because the undertaking is to comply with the decree and pay a sum of Rs. Three lacs. If by due date that amount is not paid or the cheque is not honoured and fresh cheques are issued, it cannot be said that merely because such cheques are accepted, the undertaking has gone and the breach is waived. The creditor is interested in getting whatever money at whatever time is paid by the debtor. Merely because the creditor accepts that money, it cannot be said that he has been waiving any of his right or condoning the breach. It is also to be noted that the undertaking is given to the Court and if any party wants the undertaking to be revoked or to be relieved therefrom, it is for the Court to consider this issue. There is no automatic relief from undertaking to the Court. Therefore, this argument of the second respondent must fail.
20. The last and the main contention is that there is no wilful breach of the undertaking and the direction of the Court and that the second respondent is in fact and in reality unable to comply with the undertaking and unable to pay any amount. In para 5 of the affidavit in reply dated November 3, 1990, it is stated that on account of severe drought in Saurashtra and Junagadh, the respondents have suffered huge financial losses in recent years and the respondent and other sister concerns have suffered huge loss to the tune of Rupees One crore. It is also submitted that Rallis India Limited has filed a suit against the respondents and there is a consent decree of Rs. 19 lacs. It is also stated that the State Bank of Saurashtra has filed a suit for Rs. 20 lacs and Union Bank of India has filed a suit for recovery of Rs. 30 lacs and it is stated that the respondents have suffered huge losses in the business and are heavily indebted and they have no other means to pay up the decretal amount and, therefore, it is impossible for the respondents to pay instalments and they have not committed any intentional wilful default and he has also offered his unconditional apology. He has also stated that pending the contempt proceedings, an amount of Rs. 50,000.00 has been paid by Demand Draft in April 1990, By his second affidavit dated June 8, 1991, he has pointed out number of civil suits filed against him. Union Bank of India has filed three suits against the second respondent in 1986 in Junagadh Court for recovery of Rs. 19,05,880.00, 3,36,129.00 and 8,64,284.00. There are two suits filed by the Union Bank of India in Jamnagar Court in 1982 and 1983 for recovery of a sum of Rs. 2,60,303.00 and Rs. 1,33,899.00 respectively. He has also referred to a suit of 1981 filed by Union Bank of India against him in Bhavnagar Court for recovery of Rs. 1,05,429.00. He has also referred to four suits pending in Rajkot. Court. They are all of 1980 filed by the State Bank of Saurashtra against him. These suits are for recovery of Rs. 10,62.484.00, 1,92,485.00, 2,00,000.00 and 2,00,000.00 respectively.
21. It is further submitted that after the filing of the contempt petition, a representative of the petitioner-Company had a discussion with the second respondent and he had given a letter and report regarding financial condition of the second respondent. That note dated July 25, 1990 is referred to earlier.
21A. By a further affidavit dated June 22, 1991, the second respondent has submitted that the respondents were dealing in pesticides and fertilizers and the respondents used to purchase pesticides from the applicant-Company and from Rallis India Limited and on account of cyclone and repeated failure of monsoon in Saurashtra, the respondents could not pay either to Rallis India Ltd. or the petitioner-Company and Rallis India Ltd. had filed a suit in the year 1986 and therein, a consent decree of Rs. 19 lacs was passed in favour of Rallis India Ltd. on April 11, 1990. It is further stated that the respondents suffered heavy losses in pesticides during the relevant period which resulted in huge financial loss and the respondents were made liable for the decretal amount of Rs. 24 lacs to 25 lacs. It is further stated that the amount of instalment was to be paid in December 1989 and December 1990 so that during that season, the respondents can recover the amount from agriculturists and on account of the adverse season, the respondents could not meet with the liability of the cheque of Rupees Three lacs and substituted three cheques of Rupees One lac each. It is further stated that a sum of Rs. 50,000.00 has been paid by the respondents during the pendency of the contempt petition. It is also stated that the publication of the advertisement in the newspaper regarding attachment of Gokul Bungalow alleged to be belonging to the second respondent adversely affected the business reputation and the respondents have no business whatsoever and it is impossible for them to make any payment in the near future.
22. All these suits and litigations were prior to the undertaking given by the second respondent. Even though it is alleged that the second respondent and his sister concern incurred loss of crores of rupees, he has not indicated when this loss occurred. He should have pointed out as to what was the loss already incurred on the date of the undertaking, what was the loss incurred by the first and the second respondents and what are the losses incurred by other concerns. On the date of the undertaking, the second respondent had knowledge of his financial circumstances and when he makes a solemn assurance in the Court by giving an undertaking to the Court that he would comply with the terms and conditions providing for payment of money as per the schedule, he makes that promise in spite of knowing the pendency of litigations and accumulated losses. If he was unable to pay and if there was no possibility of making payment as scheduled, he should not have made such a false promise which was impossible of compliance. If there were any subsequent events which disabled him in making payments, he should have pointed out those circumstances. All these circumstances are facts within his special knowledge. With a view to give him an opportunity to substantiate his case and also to find out as to how far he is stating the truth, we had directed him to produce with affidavit income-tax and wealth-tax returns and assessment orders, bank pass books, counter-foil of cheque books, copies of the plaints referred to in his affidavit and copies of the decrees and copies of the interim orders, if any. However, he has avoided producing all this. During the pendency of this contempt petition and after the order of December 26, 1990 directing him to give the names and addresses of all the parties, he has entered into a deed of dissolution which does not indicate any date of execution of the deed, but it purports to dissolve the firm with effect from March 31, 1991 and it is averred therein that Sureshchandra Sonchhatra has retired from the partnership and that accounts are ready upto March 31, 1991 and both the partners have examined and seen the capital accounts, balance sheets etc. and they are found to be in order and other partner Sureshchandra has no longer retained any right, title or interest in the firm and the sole remaining partner (Respondent No. 2) would be entitled to all the rights, liabilities, assets, tax recoveries, tenancy rights, licence, registration etc. Thus, even though the account books are ready upto March 31, 1990, they are not produced. The Bank statements and Bank accounts, cheque books, counterfoils and pass books are also not produced. The Income-tax returns and other things are also not produced. Not only the direction of the Court is not complied with, but the second respondent has failed to avail of an opportunity 10 make good his case by producing documentary evidence which is in existence and which is in his possession. In these circumstances, adverse inference is required to be drawn that if these documents were produced, they would go to show that the plea taken up by the second respondent that he is absolutely unable to pay any amount is not correct and it will not be supported from his own documents. Had all these documents been produced, they would have shown whether the respondents had received any amount at any time and if so, where that amount had gone. If the respondent was expecting large amount to receive, even if some of the debtors failed to pay up some of the dues, it is not likely that all the debtors had failed to pay. The second respondent on his own showing has been dealing with money on large scale. As per his own averment, suit filed against him shows that he has received millions of rupees from public financial institutions and other creditors. The accounts, if produced, would have shown as to where these amounts have gone and whether there is any real business crisis or these amounts are in any manner kept in benami nature and whether the accounts have been in any manner manipulated to show losses. If there was a genuine defence to be supported by his document or witnesses, it was for him to examine them and to show his inability to pay any amount which non-payment would otherwise amount to breach of the undertaking. However, the attitude of the second respondent in not producing these account books and other documentary evidence inspite of the repeated inquiries from the Court shows that he adamantly refused to disclose this material.
23. The second respondent has given solemn undertaking to the Court to comply with the decree and make the payment which shows that either he made the undertaking knowing it to be false or that he made that undertaking and has not kept his promise.
24. The learned Counsel for the respondents has strongly relied on the judgment of the Bombay High Court in the case of K.J. Pathare v. S.J. Pathare 73 BLR 616 wherein it is held that in order to amount to contempt of Court and to be punishable as such, the mere breach of an undertaking given to, or disobedience of the order passed by the Court is not enough and it must be proved that the breach or disobedience was wilful or contumacious and the act of the contemner, therefore, signified disrespect to the Court and in order to prove contempt of Court in respect of breach of an undertaking to pay or deposit money, two things must be proved, viz. (1) breach of the undertaking, and (2) that the alleged contemner had, at the time the undertaking was to be carried out, the means to pay the amount in question, but has wilfully or contumaciously refused to pay the same. In that case, there was an undertaking to the Court to deposit Rs. 4250/- on or before July 10, 1968. As the amount was not so deposited, an application was made to the Court of Magistrate that breach of such undertaking was committed. In the written statement before the learned Magistrate, it was stated by the opponent that he was doing the business of manufacturing bricks and expected to pay up the said amount, but on account of heavy rains, his raw material for manufacturing bricks got completely washed out and he suffered a loss to the tune of Rs. 15,000.00 and it was beyond his capacity and control to pay up the said amount as per the undertaking. The learned Magistrate held that the opponent's statements were merely an excuse for not carrying put the undertaking and if the opponent had really suffered a loss, he should have approached the Court and, therefore, the learned Magistrate held that the opponent had committed breach of the undertak-ingjand referred the matter to the High Court under the Contempt of Courts Act. The High Court held that proceedings in the nature of contempt can be adopted only in the case of wilful breach or disobedience. The case of Suretennessa Bibi v. Chintaharan Das was also considered. In that case, the opponent had given an undertaking to give vacant possession on a certain date and when he failed to give such possession, there was contempt proceeding against him and his contention in the defence was that he had sublet considerable part of the premises long before the institution of the suit itself and, therefore, it was not possible to give vacant possession on the named date and the Court observed that if that condition were correct, the alleged contemner had suppressed that fact from the Court when he gave the undertaking to vacate the premises by a particular date and, therefore, it was held that he had committed breach of the undertaking given to the Court and was guilty of the contempt of Court. The second respondent herein was the person who was in full knowledge of the fact of litigations against him and his financial position. All suits for recovery of lacs of rupees were prior to the date of the undertaking. Knowing full well this position and the accumulated losses, he had given the undertaking to the Court to pay the amount as scheduled. Therefore, it is suggested in the affidavit-in-rejoinder that if the second respondent was really unable to pay the amount when he gave the undertaking having no expectation of fulfilling that undertaking, he had played fraud with the Court by giving a false undertaking or in the alternative if he had given a honest and bona fide undertaking to the Court, he had to show that due to subsequent and supervening circumstances, it had become impossible for him to fulfil the undertaking. The Bombay High Court in the aforesaid case held that the contemner did not dispute that he had failed to pay the money as per the undertaking given to the Court, but he rather vaguely alleged financial loss in his business for not fulfilling the said undertaking. The Bombay High Court, therefore, held that he ought to have substantiated the said allegation by filing an affidavit and giving particulars of such alleged loss which supervened after giving the undertaking and prevented him from complying with the said undertaking. The Bombay High Court, therefore, remanded the matter to the learned Magistrate because the. learned Magistrate had referred the matter to the High Court without insisting upon the accused to file affidavit stating the facts sought to be relied upon by him and, therefore with a view to give him an opportunity to substantiate his allegation of subsequent loss in business and consequent inability to pay the amount, the case was sent back to the trial Court.
25. This judgment does not assist the case of the respondents. In the present case, he has filed three affidavits in reply, but has not produced any supporting and best material in his possession and he has kept back the same. Even when the Court had directed him to produce, he has failed to produce and avail of the opportunity.
26. The learned Counsel for the respondents heavily relied on the note of the representative of the petitioner dated July 25, 1990 and submitted that the petitioner's representative has accepted the financial inability to pay and, therefore, the respondents are not required to show books of accounts and the Court should not undertake any "fishing" inquiry into the accounts to find out whether the second respondent is able or unable to pay any amount. The note of the representative is in the nature of internal communication by representative and averment made therein cannot be said to be in the form of acceptance of financial inability. It also does show that it has been given with a view to help the respondents. Even though the note is dated July 25, 1990, it refers to a Bank Draft of July 27, 1990 and stated to be drafted and written by him and said to be in possession of the respondents. This is obviously inconsistent. We requested the learned Counsel for the respondents to show us as to where from he obtained the Bank Draft of Rs. One lac and after it was returned, what had happened to that money. However, nothing has been pointed out to us. Thus, on that day, i.e., on July 25, 1990, even the second respondent was ready to pay a lac of rupees but the representative had refused to take that money. In that case, the second respondent would have deposited this amount in the Court to show his bona fide and to show the extent to which it was possible for him to pay, but instead of that, he says that it is not possible to pay any amount. It is also further stated in that note that the respondent had proposed to pay balance amount of Rs. 3,92,825.05 by quarterly instalment of Rs. 40.000/- each. By now, another amount of Rs. 2 lacs would have been paid if this quarterly instalments were paid. If the second respondent had any intention to pay the amount and to comply with the undertaking to the extent possible, he would have certainly deposited that lac of rupees in July 1990 and thereafter deposited Rs. 40,000/- in the Court every quarter. Instead of that, he has not only not paid any amount, but he has tried to disregard the undertaking in every possible manner.
27. On December 12, 1990, the Court had directed all the partners of respondent No. 1 to remain personally present in this Court on December 26, 1990 and the learned Counsel was directed to inform the parties to remain personally present, but not only no partner remained present, no names of the partners were disclosed. On December 26, 1990, the learned Counsel for the second respondent was directed to furnish names and addresses of all the partners. However, that was not done for about eight months. As on March 31, 1991, the partnership is dissolved and the second respondent remained the sole partner. However, this fact is not disclosed to the Court. On December 20, 1990, the wife of the second respondent is joined as third respondent who is said to be partner in the said firm. When notice or the rule was sought to be served to her, the second respondent stated to the process server that nobody by that name of Madhuben H. Mashru having the same address as his was residing with him and no such person was known to him. When the second respondent came before us on September 13, 1991, he stated that the name of his wife is Nirmalaben and not Madhuben, but he further stated that the officers of the petitioner-Company used to address her and know her as Madhuben. He also stated that she resides with him, but their relations were strained. In spite of knowing that the officers of the petitioner-Company knew his wife as Madhuben and it was in this proceeding of the Company that she was joined as respondent No. 3, he deliberately mislead the process server by saying that no such person of that name was residing with him and that he did not know such a person. Even when we had issued a non-bailable warrant against these respondents husband and wife, the learned Counsel for the second respondent had strenuously argued for cancellation of warrant for both of them and we had told him that if these respondents remain present on their own, the warrants can be cancelled. However, he stated that the respondent No. 3 was not represented by him and, therefore, he could not give any assurance for keeping her present, but nonetheless, he requested for warrant to be cancelled for her. We had directed both these persons, i.e., husband and wife to produce their accounts with their affidavits. The proceedings against respondent No. 3 will be separately dealt with. However, we indicate the approach of the second respondent and his attitude towards the Court and his conduct. It is difficult to believe, unless some reliable evidence is produced, merely on vague allegation that a person is unable to pay when he had been dealing with crores of rupees and when he is not shown to have filed any insolvency petition. On the contrary, he continues to reside in the same bungalow in spite of these alleged losses and inability to pay. There is clear evidence that even during the pendency of the petition, he was able to pay a lac of rupees and he has not paid. He had indicated his ability to pay by quarterly instalments of Rs. 40,000/- each which by now would have amounted to Rs. two lacs and yet he has not paid a pie. Thus, his plea that he is not able to pay any amount is without any substance. Even if he has some difficulties to pay, he should have shown his bona fide difficulties to show his respect for the Court by making periodical payment and part-payments to show that he is trying his utmost to pay up to his ability. But his stand that he is not able to pay anything and, therefore, would not pay anything is nothing but a dishonest attempt not to pay and utter disregard for the Court and it is a contamacious conduct on his p Article Even though the learned Counsel for the respondent No. 2 asked him in the Court as to whether he was ready and willing to pay any amount at this stage, he has stated that he was not able to pay any amount whatsoever. However, this does not carry any conviction because he has kept back the best evidence which is in his possession and within his special knowledge. The strong plea of evidence relied upon by him in the form of the note of the petitioner's representative also shows that the respondent was ready and willing to pay a lac of rupees during the pendency of the contempt petition and yet he has chosen not to deposit that amount in the Court. He has also not indicated as to whether he would pay the amount if it is rescheduled by quarterly instalments.
28. With regard to his own averment that he has recoveries to be made so as to be enable to fulfil the undertaking, he has not shown as to what attempts he has made for such recoveries and where the monies have gone out of these recoveries. It is not possible to believe in absence of any evidence that each and every debtor of the second respondent has failed to pay any amount and the second respondent has not taken any steps for such recoveries. It would appear that the amounts recovered and received by the second respondent have been diverted elsewhere and this undertaking to the Court to pay the amount has been disregarded.
29. In view of the aforesaid discussion, we find and conclude that the first and second respondent have given an undertaking to the Court and have committed wilful breach of such undertaking and thereby committed contempt of the Court as defined in Section 2(b) of the Contempt of Courts Act and we are also satisfied that this contempt is of such a nature that it substantially interfere with the due course of administration of justice and, therefore, the first and second respondent are required to be convicted punished and sentenced for the contempt of Court. As far as the respondent No. 1 is concerned, it is a firm and the breach committed by it is attributable to the second respondent who is otherwise also personally liable for having committed the breach of undertaking given to the Court. We, therefore, convict the respondents Nos. 1 and 2 of the offence of civil contempt of Court punishable under Section 12 of the Contempt of Courts Act and sentence the respondent No. 1 to pay a fine of Rs. 2000/- and as far as the respondent No. 2 is concerned we sentence him to pay a fine of Rs. 2000/- and in default of payment of fine, to undergo simple imprisonment for two months. We also consider that as far as respondent No. 2 is concerned, the sentence of fine only would not meet the ends of justice and the sentence of imprisonment is necessary. Therefore, under Section 12(3) of the Contempt of Courts Act, we direct that respondent No. 2 shall be detained in the civil prison for a period of four months. He was and has been admittedly in charge of and responsible for the conduct of business of the firm and on conviction of the firm he is liable to be punished in this manner.
30. However, this cannot be the end of the matter. The contemner must himself purge the contempt and he must be directed to purge the contempt. In the case of Mohammad Idris and Anr. v. Rustom Jehangir Bapuji and Ors. , the Supreme Court considered the question whether the High Court was justified in giving certain directions in addition to punishing the contemner for Contempt of Court and the Supreme Court held that the High Court was quite right in giving appropriate directions to close the breach. In that case also, there was breach of undertaking. We, therefore, direct the first and second respondents jointly and severally to fully comply with the undertaking and to pay the decretal dues of the petitioner within a period of six months from today. This is in addition to the order of sentence and not in substitution thereof. However, if these respondents comply with the undertaking and make payment to the petitioner, it would be open to them to apply for remitting the sentence of imprisonment and detention in civil prison within a period of two months from today. As and when such an application is made, it would be considered. The respondents shall also pay cost to the petitioner quantified at Rs. 1000/-.
31. The learned Counsel for the respondents states that the operation of this order be stayed for some time to enable the respondents to approach the Supreme Court by way of appeal and obtain a stay order. It is not necessary to stay the operation of the entire order. Only the order that is required to be stayed is of detention in civil prison. That order will remain stayed for a period of two months from today. It is made clear that the conviction and order of payment of fine is not stayed nor the direction to comply with the undertaking is stayed nor the time granted for applying for remission of sentence is extended. There will be only stay of the order for detention in civil prison.
32. As far as the respondent No. 3 is concerned, we are not passing any orders in respect of respondent No. 3 who is not served and it would be open to the petitioner to take proceedings if they are so advised to do. At one stage, the Court had directed all the partners to be joined as respondents and the names of all the partners were required to be disclosed. It is only at the fag end of the hearing that the second respondent has disclosed that there was another partner Sureshchandra Girdharlal Sonchhatra and according to the respondent, he has retired from the firm with effect from March 31, 1991. The disclosure of his name has been at a very late stage and, therefore, it would be open to the petitioner to take appropriate proceedings against him.
33. As far as Misc. Civil Application No. 1191 of 1991 is concerned, suo moto notice was issued and affidavit in reply has been filed by the second respondent disclosing the name of the partner. However, he has not shown as to how his learned Counsel gave the signed statement that on and from the date of undertaking dated May 14, 1989, the second respondent is the sole owner of the respondent No. 1. Mr. J.R. Nanavati, learned Counsel who has made mat statement states that he has made that statement under some bona fide misapprehension and that he tenders his apology for having made that statement. In view of the same, we drop these proceedings and discharge the rule issued in Misc. Civil Application No. 1191 of 1991.
34. In the result, we, therefore, find the respondents Nos. 1 and 2 guilty of wilful breach of their undertaking to the Court and of civil contempt of Court and sentence each of them to pay a fine of Rs.2000-(Rs. Two thousand only) each and in default to undergo simple imprisonment of two months. Respondent No. 2 is also sentenced to be detained in civil prison for a period of four months. We also direct both the respondents jointly and severally to purge the contempt and to pay the decretal dues of the petitioner within six months from today. These respondents shall also pay costs to the petitioner quantified at Rs. One thousand only.
35. However, if these respondents comply with their undertaking and make payment to the petitioner within a period of two months, it would be open to them to apply to this Court for remission of the sentence of detention in civil prison. As and when such an application is made, it would be considered in accordance with law. Rule made absolute accordingly.
At the request of the learned Counsel for the respondents, the order of sentence of detention in civil prison is stayed for a petiod of two months to enable the respondents to appeal to the Supreme Court and obtain stay. Rest of the order regarding fine and costs is not stayed, nor the time of two months for applying for remission and compliance is extended.