Madras High Court
M/S.P.K.Film Factory vs Mr.J.Selvakumar on 23 March, 2023
Author: Senthilkumar Ramamoorthy
Bench: Senthilkumar Ramamoorthy
Cont.P.No.19 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Order reserved on 14.11.2022
Order pronounced on 23.03.2023
CORAM
The Hon'ble Mr. Justice SENTHILKUMAR RAMAMOORTHY
Contempt Petition No.19 of 2021
M/s.P.K.Film Factory
Rep. by Proprietor Mr.G.Vittal Kumar
New No.6, 3rd Cross Street,
Minor Trustpuram,
Kodambakkam, Chennai – 24. ... Petitioner
vs.
Mr.J.Selvakumar
Prop. of M/s.Kenanya Films,
Flat No.8, Door No.31, Sai Flats,
1st Cross Street, Trustpuram,
Kodambakkam, Chennai -24. ... Respondent
This petition is filed under Section 11 of Contempt of Court Act,
praying that this Court may be pleased to punish the Respondent for wilfully
disobeying the order dated 05.07.2019 passed in O.S.A.No.621 of 2018 by
this Court.
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Cont.P.No.19 of 2021
Petitioner : Mr.S.R.Rajagopal
for M/s.P.Shiva
Mr.U.Sidharth
Respondent : M/s.S.Sivaraman
ORDER
The petitioner alleges wilful disobedience of the order dated 05.07.2019 in O.A.No.621 of 2018. The said original application was to restrain the respondents therein from releasing the movie ''SERVER SUNDARAM''. While the application was pending, the parties executed and presented a joint compromise memo dated 05.07.2019. The joint compromise memo was signed by G.Vittal Kumar, Proprietor of P.K. Film Factory, the contempt petitioner herein, and J.Selvakumar, Proprietor, M/s.Kenanya Films, the respondent/alleged contemnor.
2. As per the joint compromise memo, the respondent herein agreed to pay a sum of Rs.3,03,00,000/- towards settlement of the entire claim of the applicant in about four installments. Out of the above mentioned aggregate sum, the joint compromise memo recorded that a sum of Rs.50,00,000/- was paid on the date of execution thereof by a demand _____________ https://www.mhc.tn.gov.in/judis Page No.2 of 22 Cont.P.No.19 of 2021 draft dated 27.05.2019. As regards the second installment of Rs.60,00,000/- , it was recorded therein that the respondent had executed a General Power of Attorney dated 19.06.2019 in respect of a property situated in Choolaimedu, Chennai. The said Power of Attorney was registered as Document No.2335 of 2019. In case the second installment of Rs.60,00,000/- was not paid along with interest thereon at 24% p.a. within six months from the date of the joint compromise memo, the agent under the power of attorney was empowered to alienate the property.
3. The respondent further agreed to get clearance from Abhishek Films for the broadcasting rights in the movie ''ULKUTHU'' towards settlement of a sum of Rs.25,00,000/-. If such clearance was not obtained, the respondent agreed to pay a sum of Rs.25,00,000/- along with the fourth installment. The joint compromise memo provided for the payment of a fourth installment of Rs.1,68,00,000/-. If the third and fourth installments were being paid jointly, it provided for the payment of a sum of Rs.1,93,00,000/- (Rs.25,00,000/- + Rs.1,68,00,000) with interest thereon at 24% p.a. within eight months from the date of joint compromise memo. As security for the third and fourth installments along with interest thereon, the _____________ https://www.mhc.tn.gov.in/judis Page No.3 of 22 Cont.P.No.19 of 2021 respondent agreed to transfer his undivided share of 33.3% in a property at Ambattur, Chennai.
4. By order dated 05.07.2019, this Court recorded the submissions of learned counsel for the contempt petitioner and the respondent herein that the application may be disposed of in terms of the joint compromise memo. By acceding to the said request, this Court disposed of the application in terms of the joint compromise memo and recorded that the joint compromise memo shall form an integral part of the order.
5. On the ground that the order was not complied with, the contempt petitioner issued the lawyer's notice dated 04.03.2020 to the respondent. The said notice was replied to by the respondent through his lawyer on 27.07.2020. Along with the said reply, two cheques for Rs.30,00,000/- each were forwarded to the contempt petitioner. The said cheques were dishonoured because payment was stopped by the drawer. Thereafter, the contempt petitioner issued a further notice dated 02.12.2020 through his lawyer. This notice was replied to on 07.12.2020 by the _____________ https://www.mhc.tn.gov.in/judis Page No.4 of 22 Cont.P.No.19 of 2021 respondent through his lawyer. After issuing a rejoinder notice on 14.12.2020, the present contempt petition was filed.
6. In the affidavit in support of the contempt petition, the contempt petitioner alleged that the respondent wilfully disobeyed the order dated 05.07.2019 in O.A.No.621 of 2018 by failing to comply with the requirements of Clauses 'b' to 'e' of paragraph 3 of the order. In response, the respondent herein filed counters on 22.03.2021 and 08.12.2021. In addition , the respondent filed an affidavit dated 18.07.2022.
7. Oral arguments on behalf of the petitioner were addressed by Mr.S.R.Rajagopal, learned counsel; and on behalf of the respondent by Mr.S.Sivaraman, learned counsel.
8. After providing an overview of the facts and circumstances leading to the filing of the contempt petition, learned counsel for the contempt petitioner submitted that the order dated 05.07.2019 was passed on the basis of the joint compromise memo dated 05.07.2019. He pointed _____________ https://www.mhc.tn.gov.in/judis Page No.5 of 22 Cont.P.No.19 of 2021 out that the joint compromise memo was duly signed by the proprietor of the contempt petitioner and the proprietor of the respondent. As per the terms of compromise, the first installment of Rs.50,00,000/- was paid by the respondent and received by the contempt petitioner. The subsequent terms of compromise involving fulfillment of specific obligations, including payment obligations, were not adhered to by the respondent.
9. This resulted in the contempt petitioner issuing a lawyer's notice dated 04.03.2020. Upon receipt of this notice, learned counsel pointed out that a reply dated 27.07.2020 was issued through the respondent's lawyer. In the said reply, the respondent stated that it was unable to pay amounts payable as per the terms of compromise because of the non-release of the movie, ''SERVER SUNDARAM'' and the COVID-19 pandemic. Two cheques for sums of Rs.30,00,000/- each were forwarded by enclosing the same with the reply. Learned counsel also pointed out that the respondent agreed to pay the remaining amount of Rs.1,93,00,000/- on or before 31.10.2020. When the cheques were presented for encashment, the same were returned unpaid because payment was stopped by the drawer/respondent. This resulted in the issuance of lawyer's notice dated _____________ https://www.mhc.tn.gov.in/judis Page No.6 of 22 Cont.P.No.19 of 2021 02.12.2020. Learned counsel submitted that the said notice was replied to on 07.12.2020. For the first time, in the reply dated 07.12.2020, the respondent alleged that the contempt petitioner and his associates forced the respondent to sign the joint compromise memo.
10. Learned counsel contended that the respondent made either contradictory or inconsistent pleas both in the replies to notices that preceded this petition and in the counters and affidavit filed before this Court. After admitting liability in the reply dated 27.07.2020 and enclosing two cheques towards the second installment, the respondent alleged, in the reply dated 07.12.2020, that he was forced to sign the joint compromise memo. Similarly, in the counter dated 22.03.2021, he pointed out that the respondent asserted therein that the genuineness of the joint compromise memo is doubted, whereas, in the counter dated 08.12.2021, the respondent alleged that he was forced to sign the earlier agreement dated 29.07.2017 and that he signed the joint compromise memo under pressure. In the affidavit of 18.07.2022, the respondent reiterated that he was forced to sign the settlement agreement dated 29.07.2017 and the joint compromise memo. The respondent further stated that he was not provided a copy of the joint _____________ https://www.mhc.tn.gov.in/judis Page No.7 of 22 Cont.P.No.19 of 2021 compromise memo and that such joint compromise memo was not filed in the Court.
11. Thus, learned counsel for the contempt petitioner submitted that the respondent wilfully disobeyed the order of this Court and, thereafter, set up untenable and inconsistent defences to the petition. Since the respondent did not show any remorse in spite of violating the order of this Court, learned counsel contended that the respondent is liable to be punished, including by framing charges for criminal contempt.
12. In support of the contention that the wilful disobedience of a consent decree amounts to contempt of court, the judgment of the Hon'ble Supreme Court in Rama Narang v. Ramesh Narang and another(Rama Narang), (2006) 11 SCC 114 was relied upon.
13. In response, learned counsel for the respondent submitted that the contempt petition is liable to be rejected for more than one reason. By inviting my attention to the order of this Court, learned counsel pointed out that Clause 'h' of the joint compromise memo stipulates that any dispute _____________ https://www.mhc.tn.gov.in/judis Page No.8 of 22 Cont.P.No.19 of 2021 should be resolved through arbitration in accordance with the Arbitration and Conciliation Act,1996. Therefore, he submitted that the contempt petition is liable to be dismissed. In the alternative, he submitted that the contempt petitioner should initiate appropriate proceedings to execute the order of this Court.
14. Without prejudice to these preliminary objections, learned counsel for the respondent submitted that the contempt petitioner had agreed to invest 25% of the cost of production in two movies, namely, ''ULKUTHU'' and ''ORU NAAL KOOTHU''. It is further submitted that both the above mentioned movies were not successful. Consequently, the contempt petitioner could not earn anticipated profits. Therefore, O.A.No.621 of 2018 was filed to restrain the respondent from releasing the movie ''SERVER SUNDARAM''.
15. Learned counsel next contended that the respondent was under tremendous pressure on account of the attempt by the contempt petitioner to restrain the release of ''SERVER SUNDARAM''. By exploiting _____________ https://www.mhc.tn.gov.in/judis Page No.9 of 22 Cont.P.No.19 of 2021 the said situation, the contempt petitioner coerced the respondent into executing the joint compromise memo. Learned counsel further submitted that the order of this Court was not wilfully disobeyed but the respondent was unable to make payments because he could not generate the necessary revenue. Learned counsel also pointed out that the contempt petitioner misused the general power of attorney by executing a sale agreement on 04.07.2019. He pointed out that the general power of attorney was executed as security for the second installment of Rs.60,00,000/-, which was to be paid within six months from the date of execution of the joint compromise memo. Without waiting for the six months period to expire, he submitted that the contempt petitioner executed a sale agreement in favour of Mr.Muni Muralidara Gupta K.P.
16. In support of these contentions, learned counsel for the respondent referred to and relied upon the following judgments:
(1) R.N. Dey and others v. Bhagyabati Pramanik and others, (2000) 4 SCC 400.
(2) Urban Infrastructure Real Estate Fund v. Dharmesh S.Jain and another(Urban Infrastructure), (2022) 6 SCC _____________ https://www.mhc.tn.gov.in/judis Page No.10 of 22 Cont.P.No.19 of 2021 662. (3) Kanwar Singh Saini v. High Court of Delhi, MANU/SC/1111/2011.
(4) D.N.Taneja v. Bhajanlal, MANU/SC/0115/1988
17. Upon taking into account the above contentions, the questions that arises for consideration are whether the order dated 05.07.2019 was disobeyed by the respondent and, if so, whether such disobedience was wilful. Since the respondent alleged that the joint compromise memo was not filed by the contempt petitioner, I examined the records. The joint compromise memo is available on record. The said joint compromise memo has been signed by G.Vittal Kumar, the proprietor of the contempt petitioner, and by Mr.Selvakumar, the proprietor of the respondent. Therefore, the said objection is rejected.
18. By the order dated 05.07.2019, O.A.No.621 of 2018 was disposed of in terms of the joint compromise memo. The terms of compromise, which are set out therein, are as under:
"1. The Applicant and the Respondent respectfully _____________ https://www.mhc.tn.gov.in/judis Page No.11 of 22 Cont.P.No.19 of 2021 submits that the parties have amicably arrived at a settlement on mutually negotiated terms. Both the parties have entered into a Memorandum of Agreement dated 02.07.2019 (hereinafter referred to as MOA) on the said terms.
2. The Respondent agreed to settle the entire claims of the Applicant for a sum of Rs.3,03,00,000/- (Three Crores Three Lakhs Only). Both the parties mutually agree for the compromise on the following terms:
Terms and Conditions:
a) To pay the Applicant a sum of Rs.50,00,000/-
(Rupees Fifty Lakhs only) which sum the respondent has paid the applicant on this day by way of Demand Draft dated 27.05.2019 bearing number 100197, drawn on Kotak Mahindra Bank, K.K. Nagar Branch, Chennai to and in favor of he party of the FIRST PART, the receipt of which sum the Applicant thereby admits and acknowledges.
b) To execute a General Power of Attorney in favour of the Party of the FIRST PART with respect to the property situated No.6/52,F2, Kings Enclave, Nehru Street, Avvai Nagar, Choolaimedu, Chennai 600 094 as a collateral towards settlement of Rs.60,00,000/- (Rupees Sixty Lakhs only) and in furtherance to the same, the Applicant admits _____________ https://www.mhc.tn.gov.in/judis Page No.12 of 22 Cont.P.No.19 of 2021 and acknowledges that the Respondent has already executed a General Power of Attorney dated 19-06-2019 with respect to the property situated at No.6/52,F2, Kings Enclave, Nehru Street, Avvai Nagar, Choolaimedu, Chennai 600 094 registered vide Document No.2335 of 2019 at SRO, Kodambakkam in favour of the Party of the FIRST PART. It is further confirmed by the Applicant that upon the payment of the sum of Rs.60,00,000/- (Rupees Sixty Lakhs only) by the Respondent with interest of 24%p.a. within 6 months from the date of this Joint Compromise Memo, the General Power of Attorney shall be revoked. It is further agreed by the Respondent that upon non-payment of the above mentioned sum of money, the Applicant becomes the absolute POWER HOLDER/AGENT of the above mentioned property as such he has all rights to alienate the property to any third parties.
c. The Respondent has agreed to get clearance from Abhishek Films represented by its Managing Director, Mr.Ramesh for the broadcasting rights in the film "ULKUTHU" before the release of the film ''SERVER SUNDARAM" towards the settlement of sum of Rs.25,00,000/- (Rupees Twenty Five Lakhs Only). If the Respondent is unable to obtain the clearance as mentioned _____________ https://www.mhc.tn.gov.in/judis Page No.13 of 22 Cont.P.No.19 of 2021 herein then the Respondent agrees to pay to pay a sum of Rs.25,00,000/- (Rupees Twenty Five Lakhs) to the Applicant along with the payment mentioned in clause d below.
d. AND for the Balance amount a sum of Rs.1,68,00,000/- (Rupees One Crore Sixty Eight Lakhs Only) The Respondent undertakes and agrees to pay the sum of money along with interest at 24% per annum calculated from the date of this Joint Compromise memo within 8 months from the date of this Joint Compromise memo. The Respondent confirms that if the Respondent fails to obtain the clearance for broadcasting Rights as mentioned in clause (c) above, then the Balance Amount as referred herein shall be reckoned as Rs.1,93,00,000/- (Rupees One Crore Ninety Three Lakhs Only) with applicable interest rate of 24% p.a. within 8 months from the date of this Joint Compromise memo.
e. It is agreed that if the Respondent fails to repay the Balance Amount of Rs.Rs.1,93,00,000/- (Rupees One Crore Ninety Three Lakhs only) along with interest at the rate of 24% p.a. as stated herein within 8 months from the date of this Joint Compromise memo, then the Respondent hereby agrees to transfer his Undivided share of 33.3% (one third _____________ https://www.mhc.tn.gov.in/judis Page No.14 of 22 Cont.P.No.19 of 2021 share in the property) on the property situated at Northern Side of the Plot No.7/10(SP), Numbered as Plot No.7/10-B, Ambattur Industrial Estate, MTH Road, Chennai- 600 058 comprised in Survey No.408 to 413, 415, 417-421 and 424 of Ambattur Village to and in favour of the Applicant.
f. This Joint Compromise memo shall supersede all previous negotiations, representations and agreements whether written or oral.
g. Based on the above arrangements the Applicant agrees to withdraw the pending application in O.A.No.621 of 2018 before the Hon'ble High Court and confirms No objection for the release of the film "Server Sundaram" by the Respondent.
h. Both the Parties agree that any dispute, difference shall be resolved through a single member Arbitration in accordance with Arbitration and Conciliation Act, 1996 appointed by mutual consent and the venue shall be Chennai."
After setting out the terms of compromise, the Court disposed of the application as follows:
''5. In view of the amicable settlement between the parties, the Joint Memo of compromise is recorded, which _____________ https://www.mhc.tn.gov.in/judis Page No.15 of 22 Cont.P.No.19 of 2021 shall form part of the order and there shall be an order in terms of the compromise arrived at between the parties. Accordingly, the Original Application is disposed of in terms of the Joint Compromise Memo.''
19. From the above, it is clear that the respondent agreed to settle the claims of the applicant/contempt petitioner by paying an aggregate sum of Rs.3,03,00,000/-. Out of the sum, the first installment of Rs.50,00,000/-
was admittedly paid by way of demand draft dated 27.05.2019, which was drawn on Kotak Mahindra Bank, K.K. Nagar Branch, Chennai. As regards the payment of the second, third and fourth installments, the admitted position is that the amounts due and payable towards these installments were not paid.
20. When the second installment was not paid, the contempt petitioner issued a notice dated 04.03.2020. This notice was replied to by the respondent through his lawyer on 27.07.2020. Paragraphs 1 & 5 of the said reply are pertinent. Therefore, the said paragraphs are set out below:
''1. At the outset, our Client confirms that it had agreed to pay a sum of Rs.3,03,00,000/- _____________ https://www.mhc.tn.gov.in/judis Page No.16 of 22 Cont.P.No.19 of 2021 (Rupees Three Crores and Three Lakhs only) to your Client and had already paid Rs.50,00,000/- (Rupees Fifty Lakhs only) as mentioned by you. It was agreed by our Client that the balance sum of Rs.2,53,00,000/- (Rupees Two Crores Fifty Three Lakhs only) would be paid to you in tranches, one in the month of January 2020 and the other in the month of March 2020. Our Client also does not wish to traverse your notice on a para wise basis.
5. Our Client further states that the remaining amount of Rs.1,93,00,000/- (Rupees One Crore Ninety three Lakhs only) shall be paid by our Client to your Client on or before 31 st October, 2020.'' From the above reply, it is evident that the respondent accepted liability as per the joint compromise memo. By citing the non release of the movie ''SERVER SUNDARAM'' and the COVID-19 pandemic, as the reasons for the delay in payment of the second installment of Rs.60,00,000/-, the respondent enclosed two cheques for Rs.30,00,000/- each. After taking the _____________ https://www.mhc.tn.gov.in/judis Page No.17 of 22 Cont.P.No.19 of 2021 said payment of Rs.60,00,000/- into account, the respondent agreed to pay the remaining sum of Rs.1,93,00,000/- on or before 31.10.2020. It is significant to notice that the respondent did not allege that the joint compromise memo was entered into on account of undue influence or coercion in the reply dated 27.07.2020.
21. The two cheques that were enclosed with the reply dated 27.07.2020 were admittedly dishonored. For the first time, in response to the subsequent lawyer's notice dated 02.12.2020, the respondent stated that he was forced to sign the joint compromise memo agreeing to pay a sum of Rs.3,03,00,000/-to the contempt petitioner. The contempt petition was filed in these facts and circumstances.
22. As stated earlier, the respondent filed two counters and an affidavit in response to the contempt petition. In the first counter dated 22.03.2021, which was signed and filed about 20 months after the joint compromise memo was filed, he merely stated that the filing of the joint compromise memo on 05.07.2019 creates suspicion about the genuineness of the said document. In paragraph 5 thereof, the respondent stated that the _____________ https://www.mhc.tn.gov.in/judis Page No.18 of 22 Cont.P.No.19 of 2021 amount claimed under the settlement agreement dated 29.06.2017 was Rs.92,50,000/-, whereas the amount specified in the joint compromise memo was Rs.3,03,00,000/- and that there was no explanation for the increase in the amount. It was also stated that the joint compromise memo was not filed in Court. But, significantly, the respondent did not state that he was forced or coerced or even unduly influenced into signing the joint compromise memo. The position changed in the counter dated 08.12.2021, which was filed about nine months later. At paragraph 3 of this counter, the petitioner asserted that he was forced to signed the settlement agreement on 29.07.2017. In paragraph 5 of this counter, he stated that he was under
pressure and, therefore, had no alternative other than signing the compromise memo. He also stated that he was not provided a copy of such compromise memo. In the affidavit dated 18.07.2022, the respondent reiterated, in paragraph 4 thereof, that he was forced to sign the settlement agreement dated 29.07.2019. In paragraph 6 thereof, the respondent stated that he had no alternative other than signing the compromise memo and that he was not provided a copy of the same. In paragraph 7 thereof, he stated that the contempt petitioner executed a sale agreement in favour of Mr.Muni Muralidara Gupta, the father-in-law of the contempt petitioner, on _____________ https://www.mhc.tn.gov.in/judis Page No.19 of 22 Cont.P.No.19 of 2021 04.07.2019, so as to grab the immovable property of the respondent.
23. On examining the stand of the respondent in the reply notices and counters, it is abundantly clear that the respondent has changed his position more than once. Initially, the respondent enclosed two cheques for Rs.30,00,000/- each and stated that the remaining amount of Rs.1,93,00,000/- would be paid on or before 31.10.2020. In the reply dated 27.07.2020, there was not even an indication that the joint compromise memo was signed under undue influence or coercion. It is significant to notice that the reply dated 27.07.2020 was issued by the Advocate on behalf of the respondent. The respondent evidently changed his stand, thereafter, while issuing the reply dated 07.12.2020.
24. Even in the counters filed before this Court, there are inconsistencies. While the counter dated 22.03.2021 refers to suspicion with regard to the genuineness of the joint compromise memo, the respondent does not allege that he was unduly influenced or coerced into signing the joint compromise memo. Subsequently, in the counter dated 08.12.2021 and the affidavit dated 18.07.2022, the respondent alleges that he was _____________ https://www.mhc.tn.gov.in/judis Page No.20 of 22 Cont.P.No.19 of 2021 forced to sign the earlier settlement agreement and asserts that he was left with no alternative other than signing the joint compromise memo.
25. On examining the order dated 05.07.2019 and the material documents on record, there is no doubt that the respondent did not comply with the terms of compromise incorporated in the order. Learned counsel for the respondent contended that the joint compromise memo provides for dispute resolution through arbitration and that, therefore, the contempt petition is liable to be rejected. In Rama Narang, the Hon'ble Supreme Court concluded that a violation of the terms of a consent order would amount to a violation of the Court's order and, therefore, punishable under the first limb of Section (2)(b) of the Contempt of Courts Act,1971. In fact, in Urban Infrastructure, which was relied upon by the respondent, the court rejected the contention that contempt proceedings would not lie because the order may be executed. No doubt, contempt proceedings are between the alleged contemnor and the Court and the role of the contempt petitioner is limited; however, that does not lead to the conclusion that a contempt petition is not maintainable or sustainable in respect of a consent order.
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26. On the basis of the material on record, I conclude that the respondent violated the order dated 05.07.2019. In spite of violating the order, the respondent has failed to exhibit contrition or remorse and has raised inconsistent and contradictory defences, when called upon to comply with the order of the Court. Even the pleadings before the Court were not consistent and the respondent changed his stance. The respondent even endeavoured to deny the existence of the joint compromise memo. Therefore, I further conclude that the respondent wilfully disobeyed the order of this Court. Consequently, the respondent is held guilty of civil contempt. This order is without prejudice to the petitioner's right to initiate appropriate proceedings, including arbitral proceedings, to recover its dues. I intend to provide an opportunity to the respondent to show cause on punishment. List for this limited purpose on 21.04.2023.
23.03.2023
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