Pritap Singh Grewal & Ors vs S. Gurlal Singh Grewal on 28 January, 2025

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Punjab-Haryana High Court

Pritap Singh Grewal & Ors vs S. Gurlal Singh Grewal on 28 January, 2025

Author: Sureshwar Thakur

Bench: Sureshwar Thakur, Vikas Suri

                                Neutral Citation No:=2025:PHHC:012706-DB


CACP No. 7 of 2018 (O&M)                    -1-
in COCP No. 729 of 2014




      IN THE HIGH COURT OF PUNJAB & HARYANA
                   AT CHANDIGARH.

                                            CACP No. 7 of 2018 (O&M)
                                            in COCP No. 729 of 2014
                                            Reserved on: 8.1.2025
                                            Pronounced on: 28.1.2025

Pritpal Singh Grewal                                          .....Appellant

                                   Versus

Gurlal Singh Grewal                                         ....Respondent

CORAM:       HON'BLE MR. JUSTICE SURESHWAR THAKUR
             HON'BLE MR. JUSTICE VIKAS SURI

Argued by: Ms. Munisha Gandhi, Sr. Advocate assisted by
           Mr. Vaibhav Sharma, Advocate,
           Mr. Adarsh Dubey, Advocate and
           for the appellant.
             Mr. A.S.Narang, Advocate
             Ms. Ishita Kaur, Advocate,
             Ms. Manpreet Kaur, Advocate and
             Mr. Satbir Singh, Advocate
             for the respondent.
                           ****

SURESHWAR THAKUR, J.

1. The instant appeal has been directed against the order dated

30.10.2018, as passed by the learned Contempt Bench of this Court in

COCP No. 729 of 2014.

Brief facts of the case.

2. The respondent herein filed C.P. No. 49 of 2007 under

Sections 397 and 398 of the Companies Act before the Company Law

Board, Principal Bench, New Delhi (for short ‘the CLB’), alleging

thereins opression and mismanagement in the affairs of Upper India

Steel Manufacturing and Engineering Company. On 8.5.2007, the CLB

passed an interim order on the petition (supra). The relevant portion of

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the order (supra) becomes extracted hereinafter.

“(1) The company/respondent shall maintain status quo as
of date of the fixed assets, the composition of the board
and any holding in the company.

(2) In case of sale of any asset, the same should not be
done without being in the agenda and approved by the
board.

(3) A fortnightly statement of receipts and payments is to
be furnished to the petitioners effective from Ist May,
2007.

(4) For all board meetings, 15 days notice should be given
to the petitioners.”

3. Since the order (supra) remained purportedly uncomplied,

thereby the respondent herein preferred COCP No. 729 of 2014, before

this Court, with a prayer therein to intiate contempt proceedings against

the contemnor concerned, thus on account of the appellant herein

purportedly wilfully disobeying the order (supra) passed by this Court.

It has been further alleged therein, that even after the passing of the

order (supra), the respondents concerned have not complied with the

directions of the CLB, which amounts to wilful disobedience on their

part.

4. The learned Contempt Court concerned, vide order dated

30.10.2018, passed the hereinafter order upon the COCP (supra).

“x x x x

9. After having scrutinized the record and hearing
arguments of both the counsels, this Court finds that undisputed
fact emerging from record are that respondents sought
permission of Board of Directors before selling a number of
machines whereas no permission was sought to dismantle
afore-stated rolling mills. The respondents are not disputing the
fact of dismantling the machines which were undisputedly
assets of the company and were subject to interim order passed
by CLB. The Court finds that respondents have violated interim
order of CLB which amounts to contempt of Court. The

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respondents deserves to be punished for their wilful
disobedience of order of CLB.

10. The contention of Ld. Senior Counsel that interim order
of CLB merged into final order and petition of petitioner was
not allowed so there was no contempt is misconceived and
bereft of merits. If contention of Ld. Counsel is accepted, there
would be no need to comply with interim orders which would
result into travesty of justice as well as erode the majesty and
dignity of judicial forums. The Hon’ble Supreme Court in the
case of “Tayabbhai M. Bagasarwalla Versus Hind Rubber
Industries Pvt. Ltd. 1997(3) SCC 443 has clearly held that non
compliance of interim order would entail contempt of Court and
contemnor cannot take plea of passing of final order. Similar
view has been expressed by Allahabad High Court in the case
of Naresh Chandra Kapoor Versus O.P.S. Malik 2004 CriLJ
2392. Therefore, plea of Ld. Senior Counsel is rejected and the
respondents are held guilty of disobedience of orders of CLB.

The respondents are hereby called upon to appear before
this Court in person on 14.11.2018 and show cause as to why
they should not be sentenced to imprisonment as prescribed
under Contempt of Courts Act, 1971. ”

5. The order (supra), passed by the learned Single Judge

(Contempt Court) has caused pain to the appellant herein and has led

him to file thereagainst the instant appeal before this Court.

6. The company petition (supra) became decided by the

National Company Law Tribunal, Chandigrah (for short ‘the NCLT’) on

1.3.2017, after the matter became transferred to it, post the apposite

notification, wherebys all the matters were transferred from the CLB to

the NCLT. The relevant paras of the order (supra) become(s) extracted

hereinafter. However, since the supra interim order became rendered,

thus prior to the constitution of the NCLT, and, also when the interim

order became passed at a phase when this Court enjoyed jurisdiction

over the subject matter, therebys it appears that the instant motion for

contempt became reared before this Court.

“x x x x
3.8 After considering and weighing all the facts, arguments

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made by the petitioners and respondents, and the judgments
cited by them, we are convinced that the petitioners and
respondents cannot get along and conduct business of the
company. Both the parties have agreed to the parting of the
ways by giving exit to the petitioners. We hold that It would be
just and proper that the respondent group namely, R-2 to R-13
and particularly R-2 and R-3, who are admittedly in the control
of the affairs of the company be directed to buy out the shares
held by the petitioners in the company at a fair price to be
determined by an Independent valuer. The instant petition
therefore stands disposed of with the following orders:

A. As discussed in para 1.2 above of the judgement, the
alleged violators of section 314 namely, S.Gursimran Singh
Grewal (R-3), S.Paramvir Singh Grewal (R-4), S.Saminder
Singh Grewal (R-6), S.Mandeep Singh Grewal (R-10) and Mrs.
Harsimran Dutta (R-11) are required to refund to the
respondent company, the amount paid to them in excess of the
permissible limits u/s 314 along with interest payable at the
bank rate enhanced by 2% within 30 days of receipt of this
order. For this purpose, the bank rate applicable as on 31st
March of each of the financial year shall be taken.
B. M/s Ernst & Young, 6th floor, Wing A & B, Worldmark-
1, Aero City, IGI airport Hospitality District, Opp. Holiday
Inn, Mahipalpur, New Delhi 110037 is appointed from out of
the list of valuers submitted by the petitioners and agreed to by
the respondents, as an independent valuer for fair value of the
shares held by the petitioners of the company. The cut- off date
for determining the value of the shares will be 31.3.2007 i.e.
the date nearest to the filing of the petition. While computing
the share value, the Valuers shall also consider the asset based
valuation as the Respondent Company has a large asset base.
C. The date of filing of the petition is April 2007. Hence, the
said valuer will find out the (illegible) value of the shares of the
company as on 31.3.2007 on the basis of going concern by all
recognised methods and applicable rules and regulations as
applicable on the said date in this regard. The respondent
company is being managed by the respondents only since the
filing of the petition and thus, they are alone responsible for
any Increase or decrease in both the profitability and liability
of the company. As the dale of valuation is almost 10 years
ago, the fair price of the shares of the petitioners shall be
enhanced by compound interest payable at the bank rate
enhanced by 2%. For this reason, the bank rate applicable as
on the 31st March of each of the financial year shall be taken.
D. The parties are directed to extend every co-operation to
the said Valuer. The company shall submit all the necessary
documents and papers for the purpose of valuation as desired /

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required by the said Valuer.

E. The valuation report shall be prepared within 90 days
from the date of receipt of copy of this order.

F. Copy of the report shall be supplied to the parties who
shall be entitled to file their respective objections, if any, to the
valuation of the shares. After receipt of the objections the
valuer shall dispose of the same within four weeks and shall
prepare a comprehensive/speaking supplementary report
dealing with each and every objection. Thereafter. the Valuer
shall send final report to the parties.

G. After determination of the value of the shares, the
respondents 2 to 13 shall pay the amount to the petitioners,
other than those who have withdrawn from the petition and
whose application for withdrawal is pending (as per the
petitioners’ shareholding proportions) within 30 days thereof
and upon receipt of the amount, the petitioners shall execute all
the documents / deeds necessary for the transfer of the shares
held by the petitioners of the company in favour of the
respondents and/or their nominees within two weeks.

14. In case, the respondents decline to purchase the shares
of the petitioners as aforesaid at the determined share value,
the petitioners shall have the right to purchase the same from
the respondents. The procedure and the time line as detailed
above shall be followed.

I. The remuneration of the Valuer shall be negotiated and
paid by the company in three equal installments. First
installment shall be paid on the commencement of the valuation
process and the second installment shall be paid after
submission of the valuation report by the Valuer within the
stipulated period. The third and final installment shall be paid
to the valuer after submission of the final report together with
objections and the supplementary report.

J. Other reliefs sought for by the petitioners are declined.
K. Interim order if any stands vacated. This order dispose
off all the pending company applications.”

7. Conspicuously the supra order related to the apposite

valuations being made, qua the listed shares of the Public Limited

Company concerned, and, did not pertain to the making of valuations,

vis-a-vis to the plant and machinery owned by the Public Limited

Company concerned.

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8. The order (supra) passed by the NCLT became challenged

before the National Company Law Appellate Tribunal, New Delhi (for

short ‘the NCLAT’), and, on the said challenge, the following order was

passed.

“35. Even if it is accepted that the parties have agreed to sell
out their shares, in absence of any power vested with Tribunal,
after its specific finding there was no ‘Oppression and
Mismanagement, the Tribunal had no jurisdiction to direct any
party to sell or buyout any share. Further finding about, the
date of valuation/buyout as the date closest to the filing of the
petition i.e. 31st March, 2007 being perverse and contrary to
the offer made by parties in the year 2008, and the order dated
25th February 2009, passed by Tribunal such order cannot be
upheld.

36. For reasons aforesaid, while we uphold the findings of
the Tribunal insofar as it relates to failure of petitioners to
prove ‘Oppression and Mismanagement’, the last part of the
order and direction to the extent of sale of shares, date of
valuation/buyout and the order regarding payment of interest
and the findings that the minority group have systematically
whittled due to non-payment of dividend, and reduction in the
number of directors being perverse, such portion of the
impugned order are set aside.”

Submissions of the learned senior counsel for the appellant

9. The learned counsels for the appellant has argued before

this Court-

(i) That the present case pertains to the makings of

purported violations to an order dated 8.5.2007, as became passed by

the learned CLB. However, since no reference was made to this Court,

by the CLB concerned, pertaining to any alleged violation being made,

vis-a-vis its order, whereas, the assumption of jurisdiction, upon the

present contempt petition rather was so assumable but only on such a

reference becoming made. Resultantly, the wants of makings of the

apposite reference by the CLB concerned, to this Court, thus makes the

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present contempt petition to be a misconstituted contempt petition, and,

also the orders made thereons are non est.

(ii) That the making of a reference to this Court by the

Court concerned, thus is not only directory but rather is mandatory, thus

to enable the Court concerned, to first examine whether there is any

apposite prima facie willful disobedience, thus before any notice for

action for contempt becoming issued vis-a-vis the alleged contemnor.

(iii) That the instant contempt petition is not

maintainable, as the basic jurisdictional requirements, as prescribed in

Rule 9(c) of the Contempt of Court (Punjab and Haryana) Rules, 1974

(for short ‘the Rules of 1974’), provisions whereof become extracted

hereinafter, rather are not satisfied.

“9. In the case of a civil contempt other than a contempt
referred to in section 14, the High Court may take action

(a) on its own motion; or

(b) on a petition presented by the party aggrieved; or

(c) in the case of any civil contempt of a subordinate court,
on reference made to it by that Court.

(iv) That with the provisions of Section 23 of the

Contempt of Courts Act, 1971 (for short ‘the Act of 1971’), provisions

whereof become extracted hereinafter, making contemplations, vis-a-vis

the procedures for regulating the exercise of contempt jurisdiction,

rather becomes permitted to be created by the High Court, whereupons

when this High Court thus formulating the relevant procedural rules,

which become nomenclatured as the Rules of 1974. Resultantly, there

was a dire requirement qua completest adherence theretos becoming

made, rather than the hereafter extracted rules becoming breached, as has

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evidently happened in the instant case.

“23. Power of Supreme Court and High Courts to make
rules.–

The Supreme Court or, as the case may be, any High Court,
may make rules, not inconsistent with the provisions of this
Act, providing for any matter relating to its procedure.”

(v) That in case two interpretations are possible to be

made, vis-a-vis the apposite order, and, if one of the possible

interpretations, thus is favourable to the present appellant, therebys no

actionable contumacy emerges, wherebys the instant contempt petition,

thus was neither maintainable, nor the order passed on the contempt

petition, rather acquired any aura of validity. In support of the said

arguments, she has placed reliance on a judgment rendered by the Apex

Court in a case titled as Ram Kishan versus Tarun Bajaj and others

reported in 2014(03) AJR 567, relevant paragraph whereof becomes

extracted hereinafter.

“13. It is well settled principle of law that if two
interpretations are possible, and if the action is not
contumacious, a contempt proceeding would not be
maintainable. The effect and purport of the order is to be taken
into consideration and the same must be read in its entirety.
Therefore, the element of willingness is an indispensable
requirement to bring home the charge within the meaning of
the Act.”

(vi) That the status quo order dated 8.5.2007, as passed

by the learned CLB, was limited to only place an embargo against the

making of alienations of the assets of the company, but yet the relaxing

thereto condition also became comprised in the factum, that if approval

theretos becomes granted by the Board, therebys the apposite

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alienations being permissible. However, the learned senior counsel

submits, that the supra interim order did not either affect, nor stalled the

taking of such decisions, which would otherwise make the

manufacturing activity undertaken by the company to be

effectively/optimally functional, nor the purported contumacious act, as

attributed to the present appellant, inasmuch as, the movings of the 12″

rolling mill (installed in 1970s) to the company scrapyard after it

became defunct in 2012, and, also the utilization of the parts of the

machinery, thus for upgrading other operational units, rather to improve

efficiency, thus could activate any actionable contempt against the

present appellant. Even otherwise, the said is a routinely made

decision(s), rather only to ensure, that the Public Limited Company

concerned, makes more enriched profiteerings, benefits whereof but

would also become endowed to the present respondent, wherebys, when

no evident loss accrues to the present respondent, therebys an ill

indulged into effort rather to rope the present appellant in the present

contempt, became so efforted by the present respondent.

(vii) That though Section 12 of the Act of 1971, provides that the

accused may be discharged or punishment may be remitted on apology,

being made to satisfaction of Court, and, that an apology shall not be

rejected merely because it is qualified or conditional, if made bona fide.

Resultantly, she submits that irrespective of all the submission which

otherwise restrained the drawings of contempt action(s) against the

present appellant, yet when the present appellant did deliver an

unqualified and unconditional apology rather for any purported

contumacious act, therebys the said apology was required to be

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accepted, than the same being rejected.

Submissions of the learned counsels for the respondent

10. On the other hand, the learned counsel appearing for the

respondent has most vehemently contended-

(i) That the instant contempt appeal is not maintainable

before this Court. In making the said submission, he refers to the

provisions as embodied in Section 19 of the Contempt of Courts Act,

1971, (hereinafter referred to as ‘the Act of 1971’) provisions whereof

becomes extracted hereinafter, whereins, it becomes mandated, that an

appeal against an order passed by the Contempt Bench concerned, is

maintainable, but yet only against such an order or a decision, as

becomes made by the Contempt Bench concerned, wherebys,

punishment for contempt becomes recorded.

“19. Appeals.–(1) An appeal shall lie as of right from any
order or decision of the High Court in the exercise of its
jurisdiction “to punish for contempt”–

(a) where the order or decision is that of a single judge, to a
Bench of not less than two judges of the Court;

(b) where the order or decision is that of a Bench, to the
Supreme Court:

Provided that where the order or decision is that of the Court of
the Judicial Commissioner in any Union territory, such appeal
shall lie to the Supreme Court.

(2) Pending any appeal, the appellate Court may order that–

(a) the execution of the punishment or order appealed against
be suspended;

(b) if the appellant is in confinement, he be released on bail;
and

(c) the appeal be heard notwithstanding that the appellant has
not purged his contempt.

(3) Where any person aggrieved by any order against which an
appeal may be filed satisfies the High Court that he intends to
prefer an appeal, the High Court may also exercise all or any of
the powers conferred by sub-section (2).

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(4) An appeal under sub-section (1) shall be filed–

(a) in the case of an appeal to a Bench of the High Court,
within thirty days;

(b) in the case of an appeal to the Supreme Court, within sixty
days, from the date of the order appealed against.”

(ii) That since no punishment has been imposed upon the

appellant, therebys the supra order is only challengeable, through a

motion cast under Article 136 of the Constitution of India, becoming

made before the Apex Court, than through the filing of the instant

appeal before this Court. Moreover, he also submits that therebys the

impugned order was also challengeable only through an intra-court

appeal becoming raised before this Court. Resultantly, he submits, that

therebys the present appeal is premature, as the appellant would become

bestowed with the able remedy to make a contempt appeal before this

Court only when pursuant to the passing of the impugned order, thus

punishment becomes imposed upon the present appellant, whereas

reiteratedly, no punishment becomes yet imposed upon the present

appellant.

(iii) That in the proceedings for contempt, the High Court

is required to be deciding whether any contempt of Court is committed

and, if so, what should be the punishment and the matter incidental

thereto. He further submits, that since the clear mandamus (supra) as

becomes embodied in the order (supra) rendered by CLB concerned,

rather did evidently become intentionally disobeyed. Therefore, he

argues that through the making of the impugned operative part (supra),

the learned Contempt Bench concerned, thus has remained within the

frontiers of the jurisdiction conferred upon it, therebys there is no

justification for any interference therewith being made, by this Court.

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(iv) That the supra status quo order, thus was passed with

regard to the fixed assets of the company. Therefore, in case the

company wanted to sell any asset, the same could only be done with the

approval of the Board of Directors. He further submits that even the

appellant in his affidavit dated 31.10.2014, thus has admitted that two

rolling mills, out of the four rolling mills, owned and operated by the

company, have been purportedly destroyed. However, in the additional

affidavit a contradictory plea has been taken that a 20″ rolling mill was

purportedly destroyed, and, that too was lying in disuse. The learned

counsel further submits that the appellant has failed to place on record

any resolution of the Board of Directors, thus granting permission for

the destruction of the two rolling mills. Furthermore, he submits that

though there are a few resolutions of the Board of Directors, before the

sellings of small pieces of equipment, however, no permission was

taken before selling two large and costly rolling mills.

(v) That though, the appellant has raised an objection on

the maintainability of the contempt petition, as the same being initiated

at the instance of the present respondent and not on the apposite

reference becoming made to this Court, thus by the CLB concerned.

However, no such objection became raised by the appellant in reply to

the contempt petition. The learned counsel submits that since in a

judgment rendered by the Apex Court titled as E.Bapanaiah versus Sri

K.S. Raju etc. bearing Crl. Appeal No. 002357-002365/2014, the Apex

Court has held the CLB to be a Court subordinate to the High Court, as

such, he submits that for want of makings of apposite reference, yet the

instant contempt petition was maintainable, and, that therebys the supra

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submission addressed by the learned senior counsel for the appellant

relating to the instant contempt petition being misconstituted, thus for

wants of makings of the apposite reference, but is required to be

rejected.

(vi) That even if the main case became dismissed,

therebys too, the contemnor is required to be punished for the willful

violation of the interim order, especially when the same was enforceable

till the same becoming vacated through an order rendered on 1.3.2017.

In support of his argument, the learned counsel has placed reliance on a

judgment passed by the Apex Court in Prithawi Nath Ram versus State

of Jharkhand and others, reported in (2004) 7 Supreme Court Cases

261. The relevant paragraph of the judgment (supra) becomes extracted

hereinafter.

“In a given case, even if ultimately the interim order is vacated
or relief in the main proceeding is not granted to a party, the
other side cannot take that as a ground for dis-obedience of
any interim order passed by the Court.”

Inferences of this Court

11. For the reasons to be assigned hereinafter, this Court is of

the profound and insightful view, that since the instantly raised

contempt petition, thus attributed the commission(s) of civil contempt at

the instance of the present appellant. Resultantly, in terms of the supra

extracted provisions, as embodied in Rule 9 of the Rules of 1974, the

High Court, became empowered to draw action for contempt, in the

following situations-

(i) on its own motion,

(ii) upon evident willful and intentional breaches

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becoming made by the contemnor vis-a-vis the orders

passed by the High Court, thereupon the aggrieved

therefrom becoming also empowered to raise a contempt

petition before the High Court, besides the aggrieved from

the purportedly non complianced with thus the relevant

order, which also encompasses an order passed by the

Court subordinate to this Court, becomes also empowered

to raise a contempt petition before this Court.

(iii) Furthermore, in case any civil contempt is alleged to

become committed vis-a-vis the order rendered by a Court

subordinate to this Court, or vis-a-vis any civil proceedings

raised before a Court subordinate to the High Court, thus

on the making of apposite reference to this Court by a

Court subordinate to this Court, thereupon also, the High

Court becomes empowered to draw an able contempt

action rather for the proven/evident breaches becoming

made to the appositely made orders.

12. Since the instant contempt petition has been reared by the

present respondent against the present appellant upon the latter

purportedly making willful disobedience or intentional violation qua the

supra interim order, therebys when the present respondent but obviously

becomes a person aggrieved from the apposite purported violation. As

such, when vis-a-vis the party aggrieved, there is a bestowment of a

privilege to initiate action for contempt against the contemnor

concerned. Since the present respondent is also aggrieved from the

supra passed interim order. Therefore, in the said situation, thus in

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terms of the supra rules, there was no requirement for any reference

becoming made by the CLB concerned, thus a Court subordinate to this

Court, rather to this Court, nor in the absence of making such a

reference, thus the assumption of jurisdiction on the instant contempt

petition becomes vitiated, nor therebys the impugned order acquires any

vice.

13. Even otherwise, fortification to the said becomes acquired

from the judgment rendered by the Apex Court in E.Bapanaiah‘s case

(supra), relevant paragraphs whereof become extracted hereinafter,

whereins, it has been clearly expostulated, that the Company Law Board

is a Court subordinate to this Court, besides when thereins also becomes

expostulated the fine principle, that even without a reference being

made to the High Court by the Company Law Board, in respect of any

purported willful violation or willful disobedience being made by the

errant litigant vis-a-vis the appositely passed orders, yet an able

contempt petition can be reared by the party aggrieved from the such

purported contumacious conduct. Resultantly, the supra argument raised

before this Court, by the learned senior counsel for the appellant, that a

peremptory necessity became enjoined upon the Company Law Board,

which is the Court subordinate to the High Court, to make a reference to

this Court for therebys making the instant contempt petition to be a well

constituted petition, besides to therebys make the order rendered

thereons to be a jurisdictionally valid order, but is a submission which

requires rejection, and, is so rejected.

14. Be that as it may, thus on the merits of the instant lis, but

for the reasons to the assigned hereinafter, no actionable contumacy did

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become committed at the instance of the present appellant.

15. The order in respect whereof an alleged contumacy

becomes attributed by the present respondent to the present appellant, is

re-extracted hereinafter.

“(1) The company/respondent shall maintain status quo as
of date of the fixed assets, the composition of the board
and any holding in the company.

(2) In case of sale of any asset, the same should not be
done without being in the agenda and approved by the
board.

(3) A fortnightly statement of receipts and payments is to
be furnished to the petitioners effective from Ist May,
2007.

(4) For all board meetings, 15 days notice should be given
to the petitioners.”

16. A reading of the supra order unfolds, that the contesting

litigants were required to be maintaining status quo in respect of the

fixed assets of the company, vis-a-vis the composition of the board, and,

the holding(s) in the company. Moreover, there was also a bar against

the makings of sales of any apposite asset, but the said bar becoming

relaxed, thus on an apposite approval becoming granted by the Board.

Apparently, the respondent was the minor share holder in the company

concerned, whereas, the present appellant was the majority share holder

in the said company. The relevant contempt which is alleged to be

committed by the present petitioner, relates to the movings of the 12″

rolling mill (installed in 1970s), to the company scrapyard, after it

became defunct in 2012, and, qua the utilization of the parts of the supra

machinery, thus for upgrading other operational units but to improve

efficiency.

17. Ex facie, the supra allegedly committed contumacy, but

does not constitute any apposite alienation, nor ex facie was any sale of

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the assets of the company, nor constituted any attempt on the part of the

appellant, thus to defeat the share holding rights of the respondent in the

company concerned, who otherwise evidently holds a minority share

holding in the company concerned, nor also the said is in opposition to

mercantile necessity(ies) so as to further enrich the company.

Contrarily, prima facie, the supra alleged contumacy, as attributed to the

present appellant appears to become generated by mercantile necessity,

so as to further enrich the company, so that therebys, even to the present

respondent, there are enhanced accrual of profits.

18. As stated supra, the dispute which became raised between

the parties, related to mismanagement, and, oppression of the affairs of

the company. Moreover, as stated supra, the valuations, as were

directed to be made, were so directed only in respect of the valuations

of the enlisted shares of the company, thus with the stock exchange

concerned. Therefore, the said directed to be made valuations, did not

cover, the valuations of the assets of the company, nor encompassed the

valuations being made of the plant and machinery of the company, nor

also covered the aspect qua when on account of prima facie redundancy

of but obsolete plant and machinery, thus an eminent requirement

became generated, qua the same being relegated to the scrapyard, but

for facilitating the replacings thereofs being made by installation of

state-of-art plant and machinery, so that, therebys optimum, and, better

apposite production takes place, wherebys there is an enhancement in

the profiteerings of the company, benefits whereof would also accrue to

the present respondent.

19. Now it has to be discerned whether there is any cogent

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evidence adduced on record by the respondent wherefrom an inference

may become sparked to the extent that the above purported contumacy,

as became allegedly committed by the present appellant, did lead to-

(a) Through active practices of malafides by the present

appellant, thus loss accruing to the present respondent from the earlier

thereto profits becoming earned by the company.

(b) That the machinery (supra) despite not becoming

depreciated, nor becoming non-operational yet it becoming relegated to

the scrapyard, so that subsequently it becomes retrieved therefrom, and,

becomes surreptitiously monetized, so that therebys loss becomes

encumbered to the present company, and, also concomitantly to the

present respondent.

(c) That the structures housing the machinery, thus

evidently rather not becoming unsafe owing to rusting. There being also

evidence suggestive to the effect, that the above became not

necessitated to protect the worker safety manner, through removal of the

supra hazardous defective machinery from the factory floor, thus to the

factory scrapyard.

(d) That there existing evidence despite no operational

requirements rather emerging, for upgrading other units for continuous

viability of manufacturing process, yet the supra alleged contumacy

becoming indulged into by the present appellant, wherebys the

declaration qua the plant to becoming deteriorated, and, whereafter its

being relegated to the scrapyard, but being a purely invented and

fictitious ground.

20. Conspicuously, also the supra necessities are argued by the

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learned counsel for the respondent to rather not evidently emerge,

besides it is also argued, that the relevant contumacious act is ridden by

the vice of malafides, whereupon it is contended that therebys the supra

purported contumacious act, did become committed by the appellant.

21. However, since this Court in the supra paragraph has made

therein a conclusion, that the present respondent was required to adduce

cogent evidence suggestive, that the supra premises/parameters, thus not

working as tenable expiatory reared pleas, rather becoming ingrained

with malafides, and/or being a sheer invention or a flimsy pretext, for

somehow or the other, thus causing loss to the business interest of the

present respondent. Moreover when, the present respondent was also

required to adduce cogent evidence, that on account of apposite ill

management and oppressive conduct of the present appellant, who held

the majority share holdings, has therebys abused his majority share

holdings, which has concomitantly resulted in his but mismanaging and

oppressing the management, and, affairs of the company concerned,

thus causing loss to the present respondent.

22. However, no evidence to support the supra argument, as

may become comprised in the balance sheet of the company, rather

became adduced, whereas, therefrom alone it could emanate, that the

business undertaken by the company, after the above purported

contumacious act, becoming committed by the present appellant, did

result in the company business becoming impoverished, nor when any

evidence becomes adduced, that the removal of the 12″ rolling mill to

the company scrapyard after it became defunct, and, qua the parts of the

machinery becoming utilized, thus for upgrading other operational units

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to improve efficiency, but were sheer inventions.

23. Though, therefrom the supra conclusions do work in favour

of the present appellant.

24. However, it is yet painful to note that despite the supra

evidence remaining unadduced, yet an ill drawn impugned order

became drawn against the present appellant. Since for the wants of

adduction of supra evidence, this Court becomes thus led to make a

conclusion, that the supra purported contumacious act rather than being

construed to be a well proven contumacy rather becoming indulged into

by the present appellant, but was heading towards improving the

efficiency, besides became maneuvered to make the business of the

company to be more flourishing.

25. Resultantly therebys, and, furthermore since the supra is a

possible interpretation edging towards the present appellant. Therefore,

in terms of the decision rendered by the Apex Court in Ram Kishan’s

case (supra), relevant paragraphs whereof become extracted above,

whereins, it has been declared that if vis-a-vis any order, thus two

possible interpretations, thus can possibly be made, thereupon no

actionable contempt is drawable against the alleged violator. As such,

when the above is a possible interpretation vis-a-vis the order alleged to

be purportedly disobeyed, therebys also no contempt action was

drawable against the present appellant.

26. The said purported loss of business interest, vis-a-vis the

present respondent, but would have surgeforth only on the balance

sheets of the company becoming placed on record, relating to the profits

earned by it, prior to the supra acts being done, and, the profits earned

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by it subsequently to the supra act. The said balance sheet was the best

evidence to draw a conclusion, that there was thus a detriment to the

financial interest of the present respondent, in the mercantile activities

in the said company. However, the said remain unadduced, therebys,

when even otherwise for the hereinabove reasons, this Court has

concluded, that through the purported contumacious act, there was thus

maneuverings on the part of the present appellant to improve the

efficiency, and, output of the company. Resltantly, the wants of

adduction by the present respondent, of the supra best evidence for

cogently proving the relevant fact, but gives an added momentum to the

supra conclusion.

27. Be that as it may, the respondent has also filed CA No. 75

of 2014 before the CLB, which became decided by the NCLT along

with the contempt petition (supra). The relevant paragraph of the said

order becomes extracted hereinafter.

“26. The petitioners have alleged that despite status quo
orders on Fixed Assets, the respondents have destroyed certain
Fixed Assets during the pendency of the petition. It is stated
that CLB vide its order dated 6.2.2013, permitted the
Respondents to avail a term loan of Rs.55 crores for relocating.
However, the respondents neither availed the term loan for
Rs.55 crores nor relocated the unit. But they started
dismantling the machinery which was stated to be in good
condition and selling the same by stating that it was not
required. The decisions to sell the machinery was taken in
various Board of Directors meetings despite the status quo
order of CLB dated 8.5.2007. The petitioners have stated that
in Dec 2013, they noticed that the respondents had started
dismantling the shed covering the 12 inch rolling mill and the
said mill was not seen in the factory premises. It is stated that
the 12-inch mill was a running mill as per the production

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figures given in CA 75/2014. They were also Informed that the
motor of the 20-inch mill had been removed by the respondents
thereby destroying that mill as well. Petitioners have stated
that they have filed a contempt petition in this regard before the
Hon’ble High Court.”

28. A reading of the supra extracted para reveals, that there

were allegations that the appellant herein had purportedly violated the

supra interim order. Moreover, in the relevant paragraph, para whereof

becomes extracted hereinafter, the NCLT has observed, that since the

subsequent events relate to business decisions, therefore it declined to

interfere.

“x x x x
As for the instances listed in the main petition, the petitioners
have claimed that these actions were chiefly business and
management decisions and do not come under the purview of
Sections 397 and 398. The subsequent event filed by CA
75/2014 are being considered as they are also connected with
the instances of oppression and mismanagement referred in the
main company petition. These have been listed on pre pages
45 to 46 and have been discussed thereafter in detail. The same
is not being repeated for brevity. We find that these subsequent
events also relate to business decisions and hence we decline to
interfere”

29. The order (supra) passed by the NCLT became challenged

before the NCLAT. The decision on the said appeal was made on

14.11.2017. The relevant paragraphs of the order (suprar) become

extracted hereinabove.

30. Though in the order passed in the main appeal, there is a

declaration that there was no active oppression or mismanagement, at

the instance of the appellant, qua the business affairs of the company,

besides when thereins an averment became raised, thus alike the one, as

becomes raised in the present contempt petition. However, when the

said averment did not become countenanced, rather when the supra

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interim order became vacated. Though therebys, the instant contumacy,

as attributed to the instant appellant becomes subsumed within the supra

made order of the NCLT. However, the learned counsel for the

respondent submits, that when in the judgment rendered by the Apex

Court in Prithawi Nath Ram‘s case (supra), a view has been taken, that

once an evident contempt or violation is made qua an interim order,

therebys the action for contempt is drawable, irrespective of the fact that

the said interim order becomes vacated.

31. For the reasons to be assigned hereinafter, the verdict

(supra) rendered by the Apex Court, is confined to the facts detailed

thereins. Since, therebys there is inter se contra distinctivity inter se the

facts thereins, and, the facts at hand, therebys the ratio decidendi

(supra), as propounded thereins is not applicable to the instant case. In

the facts detailed in the verdict (supra), the Apex Court, was dealing

with a situation, wherebys the learned Single Judge of the High Court

concerned, while dealing with an application for initiation of contempt

proceedings against the contemnor concerned, rather had declined to

initiate contempt action against the contemnor concerned. The reason

which became so formed by the learned Single Judge concerned,

emanated from the factum, that the jurisdiction to initiate proceedings

for contempt against the contemnor concerned, but was not confined to

a question of any willful disobedience to any judicial order, but also

extended to analyzing the correctness of the order, which became

purportedly disobeyed.

32. The said undertaken exercise by the learned Single Judge

concerned, became not accepted by the Apex Court in the verdict

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(supra). It rather became expounded in the verdict (supra) that once an

order acquires binding and conclusive effect, and/or, that there is no

ambiguity or incorrectness in the order, therebys when the same but

requires compliance being made theretos, thus there is no requirement

for going behind the said order. Resultantly therebys, the factual matrix

thereins is distinct to the factual matrix in the instant case, therebys the

decision (supra) is inapplicable to the present case.

33. Even otherwise, paragraph 9 in the verdict (supra) prima

facie appears to be in the nature of observations, and, it did not

obviously cover the factual situation, embodied in the verdict (supra),

therebys, but the obiter dicta embodied in paragraph 9 of the verdict

(supra), whereons the supra argument is erected by the learned counsel

for the respondent, but when does not encapsulate a binding ratio

decidendi, nor the obiter dicta (supra) is required is to be applied to the

instant case.

34. Furthermore, the preponderant reason, for this Court

concluding that the above submission addressed before this Court by the

learned counsel for the respondent, as appertains to the maintainability

of the present appeal, is required to be rejected, whereas, in this Court

declaring that the instant appeal rather is maintainable, thus becomes

hinged upon the hereinafter principles, relating to the maintainability of

appeals by the Appellate Court concerned, principles whereof, become

engrafted in paragraph No.11 of the verdict made by Hon’ble Apex

Court, in case titled as “Midnapore Peoples’ Coop. Bank Ltd. And

others V. Chunilal Nanda and others” reported in (2006) 5 SCC 399,

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paragraph whereof becomes extracted hereinafter.

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

I. An appeal under section 19 is maintainable only against an
order or decision of the High Court passed in exercise of its
jurisdiction to punish for contempt, that is, an order imposing
punishment for contempt.

II. Neither an order declining to initiate proceedings for
contempt, nor an order initiating proceedings for contempt nor
an order dropping the proceedings for contempt nor an order
acquitting or exonerating the contemnor, is appealable under
Section 19 of the CC Act. In special circumstances, they may be
open to challenge under Article 136 of the Constitution.

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

the parties.

IV. Any direction issued or decision made by the High Court on
the merits of a dispute between the parties, will not be in the
exercise of ‘jurisdiction to punish for contempt’ and therefore,
not appealable under section 19 of CC Act. The only exception
is where such direction or decision is incidental to or
inextricably connected with the order punishing for contempt,
in which event the appeal under section 19 of the Act, can also
encompass the incidental or inextricably connected directions.

V. If the High Court, for whatsoever reason, decides an issue or
makes any direction, relating to the merits of the dispute
between the parties, in a contempt proceedings, the aggrieved
person is not without remedy. Such an order is open to
challenge in an intra-court appeal (if the order was of a learned
Single Judge and there is a provision for an intra-court appeal),
or by seeking special leave to appeal under Article 136 of the

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Constitution of India (in other cases).

The first point is answered accordingly.”

35. Exceptions to the arguments raised (supra) by the learned

counsel for the appellant against the maintainability of the present

appeal, thus become well grooved in principle No. IV, whereins, it is

expounded that any direction or decision which is incidental to or is

inextricably connected with the order punishing for contempt, therebys,

the said does make the contempt appeal maintainable. Conspicuously

also when for all the reasons (supra), the learned Contempt Bench

concerned, through the making of the impugned order, has evidently

proclived towards punishing the contemnors for contempt, wherebys

also the instant appeal is maintainable.

36. Furthermore, when the judgment (supra) in Prithawi Nath

Ram‘s case (supra) became rendered by a Bench strength of two

Hon’ble Judges of the Apex Court, whereas, the subsequent thereto

judgment rendered by the Apex Court in Midnapore Peoples’ Coop.

Bank Ltd.‘s case (supra), thus became also rendered by a quorum of

two Hon’ble Judges of the Apex Court. However, when supra paragraph

9, as borne in Prithawi Nath Ram‘s case (supra), is but obiter dicta,

whereas, the Apex Court in Midnapore Peoples’ Coop. Bank Ltd.’s

case (supra) has conclusively summarized the principles relating to the

exercisings of contempt jurisdiction, principles whereof become

extracted hereinabove. Therefore, the latter judgment when has

omnibusly settled the ratio decidendi in respect of the exercisings of

contempt jurisdiction, therebys the said principles, as settled thereins

become the ratio decidendi, than the obiter dicta (supra), as embodied

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in paragraph 9 in Prithawi Nath Ram‘s case (supra).

37. Resultantly, and, moreover also, when through the making

of the impugned order, the learned Contempt Court of this Court has

prohibited the appellant from either asking for extensions of time, if

required, besides also has untenably restrained them, thus from

purveying justifiable reasons for the order (supra) made by this Court,

may be not requiring preemptory compliance, rather may be for the

reason that the directions made thereins were not well banked upon the

reasons referred to thereins. Importantly also when an appeal had been

filed against the decision (supra) recorded by the NCLT, whereupon, it

was required for the learned Contempt Bench to rather than at the very

threshold make the impugned order, thus await the outcome of the

appeal (supra).

38. Moreover when in a judgment rendered by the Apex Court

in case titled as Modern Food Industries (India) Ltd and another

versus Sachidanand Dass and another reported in 1995 Supp (4)

Supreme Court Cases 465, it has been expounded, that since investment

of contempt jurisdiction of the High Court is to ensure the majesty of

the orders passed by the High Court or to ensure the majesty of the

orders passed by the Court subordinate to it, and, that when the appeal

became reared against the appositely passed orders, thereupon, before

the initiation of contempt, the learned Contempt Bench is required to be

awaiting the outcome of the decision on the relevant appeal. The

relevant paragraphs of the judgments (supra) become extracted

hereinafter.

“2. The learned single Judge of the High Court by his

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order dated 10.1.1992 quashed the order of termination of
the services of the first respondent, by the appellants and
directed his reinstatement and payment of back-salary.
Appellants preferred an appeal to the Division Bench and
also sought a stay, pending appeal, of the operation of the
learned single Judge’s order. The Division Bench did not
take up the appeal for admission nor considered the prayer
for interlocutory stay. In the meanwhile, on the allegation
that the learned single Judge’s order had not been obeyed,
the first respondent moved for initiation of proceedings for
contempt against the appellants pursuant to which the High
Court directed the Chairman of the first appellant to appear
in person so that the complaint of contempt be proceeded
with.

3. Before the High Court, appellants urged that before any
contempt proceedings could be initiated, it was necessary
and appropriate for the Division Bench to examine the
prayer for stay, or else, the appeal itself might become
infructuous. This did not commend itself to the High Court
which sought to proceed with the contempt first. We are
afraid, the course adopted by the High Court does not
commend itself as proper. If, without considering the prayer
for stay, obedience to the Single Judge’s order was insisted
upon at the pain of committal for contempt, the appellants
may find, as has now happened, the very purpose of appeal
and the prayer for interlocutory stay infructuous. It is true
that a mere filing of an appeal and an application for stay do
not by themselves absolve the appellants from obeying the
order under appeal and that any compliance with the
learned single Judge’s order would be subject to the final
result of the appeal. But then the changes brought about in
the interregnum in obedience of the order under appeal
might themselves be a cause and source of prejudice.
Wherever the order whose disobedience is complained about
is appealed against and stay of its operation is pending
before the Court, it will be appropriate to take up for
consideration the prayer for stay either earlier or at least
simultaneously with the complaint for contempt. To keep the
prayer for stay stand-by and to insist upon proceeding with
the complaint for contempt might in many conceivable cases,
as here, cause serious prejudice, this is the view taken in
State of J. and K. v. Mohammad Yaqoob Khan, (1992) 4
SCC 167.

39. In the wake of the said trite expostulation of law, made in

the judgment (supra), and, which thus is a ratio decidendi covering the

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instant facts which but synchronize with the said made expostulation of

law, therebys this Court is of the view that rather than the Contempt

Bench concerned, proceeding to initiate contempt action against the

contemnor concerned, it was required to be awaiting the outcome of the

appeal filed before the NCLAT, as became reared by the present

appellant against the order rendered by the NCLT on 1.3.2017, on the

company petition.

Final order

40. Hence, there is merit in the instant appeal and the same is

allowed, and the impugned order dated 30.10.2018, as becomes drawn

by learned Single Bench is quashed, and, set aside, and, the present

appellant is discharged accordingly.

41. The miscellaneous application(s), if any, is/are also

disposed of.

(SURESHWAR THAKUR)
JUDGE

(VIKAS SURI)
JUDGE
January 28th, 2025
Gurpreet

Whether speaking/reasoned : Yes/No
Whether reportable : Yes/No

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