Bombay High Court
Santosh Dattaram Nadkarni And Ors. vs New India Industries Limited And Ors. on 26 February, 2004
Equivalent citations: 2004(5)BOMCR341, (2004)IIILLJ178BOM, 2004(2)MHLJ931
Author: R.M.S. Khandeparkar
Bench: R.M.S. Khandeparkar
JUDGMENT R.M.S. Khandeparkar, J.
1. The petitioners were the employees of the respondent No. 1/company. The respondent Nos. 2 and 3 are Directors of the said Company since 15th July, 2002, and prior to that date, the respondent No. 4 was its Chairman, while the respondent No. 5 was the Accounts Manager. A complaint under MRTU and PULP Act bearing No. 185 of 2001 came to be filed by the petitioners against the said company on 26th February, 2001. Since the application for interim relief filed in the said complaint was rejected by the Industrial Court on 30th July, 2001, a petition was filed being Writ Petition No. 2473 of 2001. In the said petition, the parties arrived at amicable settlement and accordingly filed consent terms in the form of minutes of the order and the learned Single Judge of this Court, by its order dated 30th December, 2001, while accepting the undertaking given in the said consent terms, disposed of the said writ petition in accordance with the said consent terms. The undertaking by the respondent No. 1 was to pay to the petitioners on or before 30th November, 2002, the amount of VRS, with interest as stated in Clause (1) of the consent terms, the order passed on 3rd December, 2001 specifically recorded that the undertaking given in Clause (2), was accepted by the Court. The relevant clauses viz. (1) and (2) of the consent terms read thus :--
"(1) The respondent Company agrees to pay VRS amount eligible to the petitioner Nos. 1 to 4 after adjusting the amount as deposited by the respondent Company towards their retrenchment compensation in the Industrial Court, which has been duly withdrawn by the petitioner Nos. 1 to 4 from the Industrial Court. The respondent Company undertakes to pay the said amount to the petitioner Nos. 1 to 4 along with interest at the rate of 10% per annum from 16th March, 2001.
(2) The respondent Company undertakes to pay the amount with interest as mentioned in Clause 1 hereinabove to the petitioner Nos. 1 to 4 on or before 30th November, 2002."
2. It is the case of the petitioners that till this date, the respondents have not paid the said amount and the interest thereon to the petitioners and thereby have wilfully violated the said order and have committed breach of the undertaking given by them to the Court and accepted by the Court, and therefore, they are liable to be punished for Contempt of Court. Prima facie case being made out, show cause notice came to be issued to the respondents/contemners on 13th February, 2003 in response to which the respondents fitted their replies.
3. The reply by the respondent Nos. 1 to 3 is that they joined as the Directors of the respondent No. 1 since 15th July, 2002 and, therefore, they were not the Directors at the time of signing of the consent terms. At the time of change in management of the company from the respondent No. 4 to the respondent Nos. 2 and 3, the alleged claim of the workers i.e. the petitioners herein, was not disclosed to them. They came to know about the writ petition and the consent terms filed therein by the earlier management only when they received the show cause notices in these proceedings. It is their further case that the claim of the petitioners has not been adjudicated and even the contents of the consent terms does not specify as to what is the exact amount claimed by the petitioners. Apart from the fact that there is no executable order, in any case, the contempt proceedings cannot be allowed to be substitute for the execution proceedings.
4. The defence of the respondent No. 4 is that he has ceased to be the Director of respondent No. 1 since 15th July, 2002, and therefore, he cannot be held liable for the dues of the respondent No. 1 to the petitioners. It is his further case that the respondent No. 3 was duly appraised of the liability of the company to the petitioners as also the order passed in writ petition. In any case, the order in question being executable one, it is not permissible for the petitioners to seek remedy by way of the contempt proceedings.
5. The respondent No. 5 in his reply has stated that he was merely an Accounts Manager of the respondent No. 1 company at the relevant time, and he has ceased to be so since 1st June, 2002 pursuant to his resignation tendered by him on 2nd May, 2002 and accepted by the respondent No. 1. It is his case that he was not the Director or Principal Officer of the Company even at the time of execution of the consent terms, and therefore, cannot be held liable to pay the dues of the respondent No. 1 and for the same reason, he is not guilty of contempt of Court.
6. Reliance is sought to be placed in the decision in the matter of Kapildeo Prasad Sah and Ors. v. State of Bihar and Ors., , R.N. Dey and Ors. v. Bhagyabati Pramanik and Ors., , Dulal Chandra Bhar and Ors. v. Sukumar Banerjee and Ors., and Manish L. Bhakta v. The State of Maharashtra and Ors., reported in 1991 (2) BCR 1 in support of the contentions sought to be raised by the respondent.
7. The first point which arises for consideration is whether there was any undertaking by and/or on behalf of the respondent No. 1 on 3rd December, 2001, and if so, what was the undertaking. The Clauses (1) and (2) of the consent terms quoted above, clearly disclose the undertaking by the respondent No. 1 to pay the amount with interest on or before 30th November, 2002. The said clause No. (2) refers to the Clause (1) which in terms specifies the subject matter in relation to which the dues are payable as well as the details about the amount which is payable and further undertaking to pay the same to the petitioners by the respondent No. 1. It specifies the amount being payable as VRS amount and further states that the same should be upon deductions of the amount already deposited in the Industrial Court by the respondent No. 1 company towards the retrenchment compensation payable to the petitioners, and further that the same would be paid with interest at the rate of 10% per annum from 16th March, 2001. The order dated 3rd December, 2001 in Writ Petition No. 2473 of 2001, apparently discloses acceptance of the undertaking given by and on behalf of the respondent company to pay VRS amount to the petitioners along with the interest at the rate of 10% per annum from 16th May, 2001, on or before 30th November, 2001, after deducting therefrom the amount of retrenchment compensation already deposited by the company in the Industrial Court. Therefore, there is no ambiguity or vagueness of whatsoever nature in the order or undertaking dated 3rd December, 2001. The parties giving the undertaking had full knowledge about their liability and its extent and knowing well the same, the said undertaking was given to the Court, and it was accepted by the Court, and it was accepted by the Court.
8. It is sought to be contended that the undertaking and the order do not disclose the exact amount payable thereunder and that the same requires adjudication to arrive at the figure relating to the amount due and payable in terms of the consent terms. Once it is clear from the order that the amount which is payable thereunder was the amount of VRS and the same was to be paid after deducting the retrenchment compensation already paid to the petitioners, it is then a matter of arithmetical calculation and not adjudication of any dispute. The adjudication implies the decision of a dispute by judicial authority whereas the arithmetical calculation is merely the work of counting and calculations which would require merely, addition, subtraction, multiplication and division of known figures. Undisputedly, the respondent company had floated the Voluntary Retirement Scheme and all other workers were relieved on the said scheme in August/September, 2000, except the petitioners. The amount payable according to the said VRS was calculated and after giving credit to the amount already, paid the petitioners had given details about the same in the annexures annexed to the writ petition which was filed by them and wherein the consent terms were filed and the undertaking was given. The contents of the annexures to the Writ Petition No. 2473 of 2001 in the form of Exhibits B-2 to B-4 reveal that upon deductions of retrenchment compensation, the amount payable as on the date of the filing of the petition was quantified as 7,31,786/-, 7,54,964/-, 7,02,175/-, 7,02,175/-, and 3,56,766/- of the petitioner Nos. 1 to 5, respectively. None of the respondents had even disputed those figures. Being so, the amount of VRS payable to the petitioners was known to the parties before and at the time of filing of the consent terms. The amount deposited by way of retrenchment compensation payable to the petitioners was also known to the parties. Therefore, mere absence of figures of amount payable under the said undertaking by itself cannot render the order or undertaking to be vague nor it can be said that it is sufficient to give rise to an issue pertaining to quantification of such amount for adjudication thereof. That apart, there was solemn assurance to pay the said dues on or before 30th November, 2001 and that itself reveals that the amount was fully known to the parties who had executed the undertaking and there was no dispute between the parties on the said issue. This is further revealed from the undisputed quantification of the respondent company's liability to the petitioners i.e. the workers at Mulund factory by the respondent No. 4 at the time of change in the management of the respondent company in favour of the respondent Nos. 2 and 3. The contention regarding the vagueness of the order or non-quantification of the amount due in terms of the undertaking is, therefore, devoid of substance and has been obviously raised with the sole intention of attempting to frustrate the order and the undertaking.
9. The next point which is to be considered is whether the said order and the undertaking have been complied with or not. Undisputedly, the respondents have not paid any amount to the petitioners till this date in terms of the said order and the undertaking. However, mere non-compliance of the said order or even the breach of the undertaking, as rightly submitted by the learned Advocate for the respondents, would not amount to contempt of Court. Such non-compliance or breach has to be wilful and not unintentional or bona fide or accidental or on account of genuine inability to comply the order or the undertaking. It is therefore necessary to ascertain whether the non-compliance of the order and the breach of undertaking is wilful and/or deliberate or otherwise. While considering the point as to whether the non-compliance of the order and the breach of undertaking to be wilful or deliberate and not otherwise, it would be necessary to consider the defence of the contemners to the charge of contempt.
10. The defence summarized above, as reveal from the affidavits in reply and records, discloses technical pleas rather than there being any substantial defence raised on merits. The first ground of defence by the respondent Nos. 1 to 3 is that the order is not executable being not disclosing the figure pertaining to the amount payable thereunder. The contention is devoid of substance for the reasons already stated hereinabove, and need not be repeated.
11. The second ground is that the respondent Nos. 2 and 3 were not the Directors when the undertaking was signed or given. Undoubtedly, the respondent Nos. 2 and 3 assumed management of the respondent No. 1 since 15th July, 2002 along with the full responsibility regarding the assets and liabilities of the said company. The liability of the respondent No. 1 as on 15th July, 2002, included the liability pertaining to the dues to the petitioners and the said liability was required to be discharged on or before 30th November, 2002. Therefore, the respondent Nos. 2 and 3 cannot be heard to say that they are not liable to pay the said amount to the petitioners in terms of the order and the undertaking dated 3rd December, 2001 on the above grounds.
12. It is however sought to be contended that the respondents Nos. 2 and 3 were not appraised of the said liability of the respondent No. 1 by the respondent No. 4 at the time of change in the management. A clear statement in trial regard by the respondent No. 3 in his affidavit in reply dated 11th December, 2003 is to be found in paragraph 10(b), which reads thus :--
"10(b) I say that the respondent No. 4 entered into a Memorandum of Understanding with the respondent No. 2 agreeing to transfer the shares of himself and his family to the respondent No. 2. The respondent No. 4 represented these respondents that the total liability of company amounted to Rs. 2,120 lakhs but after change of management of and the respondent No. 4's resignation as Director on scrutiny of the details, these respondents found that the liability of the company was more than Rs. 4,710.83 lakhs. I say that at that time, the alleged claim of the workers was not disclosed to these respondent."
13. Annexure Exhibit-B to the further affidavit filed by the respondent No. 3 on 20th January, 2004, however, discloses that the sum of Rs. 2120 lakhs which were declared as liability of the company as on 15th July, 2002 by the respondent No. 4 to the respondent Nos. 2 and 3 included the liability to the petitioners under the caption "Mulund Workers" Dues - 60 lakhs," which naturally included the claim amount of Rs. 32,47,866/- of the petitioners which was disclosed in the Annexures to the Writ Petition No. 2473 of 2001 wherein an undertaking was given and the order was passed on 3rd December, 2001. It is not the case of the respondent Nos. 1 to 3 that the said liability of Rs. 60 lakhs related exclusively to the workers other than the petitioners. Further, the copies of the affidavit by the respondent No. 4 dated 15th July, 2002 and the affidavit of the respondent No. 2 himself executed on 17th July, 2002 revealed that the respondent Nos. 2 and 3 were fully appraised of all the liabilities of the company including the assets and liabilities of the company which included the liability of Rs. 60 lakhs towards the Mulund Workers' Dues. Undisputedly, the petitioners are amongst the Mulund workers. Being so, the contention of the respondent Nos.2 and 3 that they were not informed about the said liability by the respondent No. 4 on 15th July, 2002 is not only incorrect but patently false. Apparently the respondent No. 3 does not hesitate to make a false statement with an intention to avoid the compliance of the said order or the undertaking, which is otherwise binding upon the said respondents.
14. It is then sought to be contended that even assuming that the respondents had knowledge of the order that by itself will not lead to the conclusion that there has been wilful disobedience of the order or deliberate breach of undertaking, more particularly the order and the undertaking being related to the monetary claim and there is no execution proceedings filed by the petitioners prior to approaching the Court with the complaint of contempt of Court. It is sought to be contended that in case the petitioners had filed execution proceedings then all the issues regarding executability of the order/undertaking could have been gone into and only upon conclusion of such adjudication, if the respondents were to fail to comply with the ultimate order on such adjudication, then in those circumstances, there would have been a case for accusing the respondents of contumacious conduct or wilful disobedience of order or breach of undertaking so as to warrant an action for Contempt of Court and not otherwise.
15. Undoubtedly, the claim under the undertaking or the order relates to the amount due to the petitioners. It cannot be therefore disputed that the matter relates to the monetary claim and certainly the parties are entitled to recover the same by way of execution proceedings. Equally it is true that the contempt proceedings cannot be allowed to be a substitute for execution proceedings. The learned Advocate for the respondents is also justified in contending that in a given case, non-compliance of order passed in execution proceedings may ex facie reveal contumacious conduct on the part of judgment debtor. However, it is to be remembered that once the Court accepts the undertaking and/or puts it imprimatur upon the content terms, the undertaking and/or order partakes the colour of decree of the Court and wilful violation or breach thereof would certainly amount to contempt of Court, irrespective of the fact that it is open to the decree holder to seek execution of such decree. It is so because the contempt of Court is a matter between the Court and the person accused of contempt of Court and is not entertained as a matter of right of the parties in whose favour the order or undertaking stands nor it is meant for securing the benefit to the decree holder under the decree. The law in that regard is amply clear by number of decisions of the Apex Court including the one in Bank of Baroda v. Sadruddin Hasan Deya and Anr. reported in AIR 2003 SCW 7223. Being so, the availability of the execution proceedings to the decree holder and/or failure to explore the said remedy by itself would not enure to the benefit of the party who seeks to raise technical plea to avoid compliance of the order or performance of undertaking.
16. In the case in hand, the undertaking clearly specified the last date by which the amount would be paid to the petitioners. The quantification of amount being to the knowledge of the respondents and having assured the payment by specific date and yet they had not paid the same nor had shown sufficient genuine cause for non payment of the same; it is apparently discloses contumacious conduct and deliberate omission to pay by the respondents with the sole intention to avoid the compliance of the order and undertaking. Resisting the contempt petition, without disclosing genuine ground to dispute the liability and without disclosing sufficient genuine cause for non compliance of the order would itself reveal wilful disobedience of the order by the respondents and wilful breach of undertaking, and would warrant necessary action.
17. The last ground of defence raised by the respondent Nos. 1 to 3 is the absence of means to meet the liability. However, apart from expressing inability to meet the demands, no cogent material in support of such plea has been revealed or placed on record. The affidavit disclosed sale of office premises of the respondent No. 1 and generation of income to the extent of Rs. 225 lakhs therefrom. Certain expenditure has been claimed by the respondents. However, neither details thereof are given nor it is revealed as to when the said expenses were incurred nor the proof in support of such expenditure has been produced. There is no explanation for not giving priority for clearance of the liability arising under the undertaking given to the Court and order passed by this Court, nor it is disclosed as to why heads of other expenditure were preferred over the liability arising pursuant to the order and undertaking. The defence of inability to meet the demand under the order and undertaking in question is therefore without any substance.
18. As regards the decision in R.N. Dey's case, it was held that the decree holder who does not take steps to execute the decree in accordance with the procedure prescribed by law should not be encouraged to invoke contempt jurisdiction of the Court for non-satisfaction of money decree and further that the weapon of contempt is not to be used in abundance or misused as normally it cannot be used for execution of decree or enforcement of an order for which alternative remedy in law is prescribed for. At the same time, it was also ruled that the discretion given to the Court is to be exercised for maintenance of the Court's dignity and majesty of law. The case before the Apex Court was relating to the failure on the part of the Government officials in complying with the award relating to the payment of compensation for acquisition of land. The Apex Court had disapproved the approach of the High Court in not accepting the unconditional apology tendered by the officials of the Government.
19. The decision in Kapildeo Prasad Sah's case (supra), it was held that "Jurisdiction to punish for contempt exists to provide ultimate sanction against the person who refuses to comply with the order of the Court or disregards the order continuously. Initiation of contempt proceedings is not a substitute for execution proceedings though at times that purpose may also be achieved." It was further held that "No person can defy the Court's order. Wilful would exclude casual, accidental, bona fide or unintentional acts or genuine inability to comply with the terms of the order. A petitioner who complains breach of the Court's order must alleged deliberate or contumacious disobedience of the Court's order." Referring to the facts of the case, it was held that it was not a case where proceedings for contempt could have been initiated against the respondents, and therefore, the High Court was right in dismissing the contempt petition. However, since there was a serious dispute whether any vacancy existed or not as on 1-1-1992 against which the appellants or any one of them in the petition before the Apex Court could have been appointed, the matter was referred for examination of the said question while upholding the order of the High Court.
20. In Dulal Chandra Bhar's case (supra), the Calcutta High Court has held that "No proceedings for contempt can be founded on the alleged violation of an order which is not clear and specific and which is by its own terms of a contingent character, the direction contained in it being dependant on certain other facts which are left undetermined by the order and remain to be determined." As already seen above, no facts are left to be determined in the matter. Applying the law laid down in the above referred decisions to the case in hand, it is evident that the respondent Nos. 1 to 3 have deliberately refused to comply with the order and has acted in wilful breach of the undertaking.
21. As regards the respondent No. 4, the only defence raised by him is that he has ceased to be Director of the respondent No. 1 since 15th July, 2002, and therefore, not liable to be held guilty of contempt of Court. In the alternative, he has pleaded that if his conduct is held to be in breach of the order dated 3rd December, 2001 then his unconditional apology may be accepted as the breach for disobedience, if any, is due to inadvertent and unintentional. As far as the reliance placed in Manish L. Bhakta's case (supra) is concerned, the same has no application to the matter in hand. The said case was relating to the Director's' non-liability for employees' contribution on account of expression "owner or occupier" used in Section 2(17), and relying upon the decision of the Division Bench in Suresh Tulsidas v. Collector of Bombay, reported in 1984 Mh.L.J. 117, it was held that the liability of the company cannot automatically be also of the occupier and the arrears under ESI Act due from the company cannot be recovered from the Directors personally. In the case in hand, it is undisputed fact that when undertaking was given and order was passed, the respondent No. 4 was Director of the respondent No. 1. The respondent No. 4 had full knowledge about the liability and the undertaking as well as the order. It is his own case that the said fact was brought to the notice of the respondent Nos. 2 and 3 at the time of change in management of the company. It is his case that the office premises of the respondent No. 1 at Mumbai were worth Rs. 5 crores. The undertaking and the order were required to be complied with on or before the 30th November, 2001. There is no explanation as to what prevented the respondent No. 4 either to pay the said dues prior to 15th July, 2002 or to take effective steps to ensure compliance of order or undertaking or before 30th November, 2001 and to take necessary steps in that regard at the time of change of management of the company. In tact, the defence raised by the respondent Nos. 1 to 3 and one raised by the respondent No. 4 appear to be ploy to frustrate the order and the undertaking and in furtherance thereof, they are trying to blame each other. However, by the said act, they are lending support to the accusation regarding wilful disobedience of order and wilful breach of undertaking by each of them.
22. As regards the respondent No. 5, undisputedly the undertaking and the consent terms were duly signed by the said respondent on behalf of the respondent No. 1. In other words, the respondent No. 5 had assured the Court of due compliance of the said undertaking on behalf of the respondent No. 1. Being so, merely because he was not Principal Officer or Director of the respondent No, 1 at the relevant time and that he resigned from the service of the respondent No. 1 since 1st June, 2002, the same does not relieve the said respondent from his liability under the said order and undertaking. His defence in that regard is without any substance. The solemn assurance was given by the respondent No. 5 knowingly well the liability of the respondent No. 1 and consequences of such undertaking.
23. Evidently all the respondents have knowingly and wilfully disobeyed the said order and are guilty of committing wilful breach of the said undertaking, warranting punishment for Contempt of Court. The respondents are accordingly held guilty of wilful disobedience and breach of undertaking given to this Court on 3rd December, 2001 in Writ Petition No. 2473 of 2001, and, therefore, they are held liable to be punished for the same. As regards the so called apology sought to be tendered by the respondent No. 4, the same is clearly unacceptable as it is a conditional one and has been sought to be tendered with the sole aim to avoid the punishment. In my considered opinion, the punishment in the nature of fine and civil imprisonment for a period of 30 days would be appropriate in the facts and circumstances of the case. Hence, each of the respondents shall pay fine of Rs. 2,000/- and each of the respondent Nos. 2 to 5 shall undergo civil imprisonment for a period of 30 days. Order accordingly. The contempt petition stands disposed of.