Rama Narang v/s Ramesh Narang

By:- Kirtika Chakraborty

In Supreme Court Of India

NAME OF THE CASERama Narang vs Ramesh Narang
CITATIONCONTEMPT PETITION (CIVIL) NO. 92 OF 2008 IN CONTEMPT PETITION (CIVIL) NO. 148 OF 2003 IN CIVIL APPEAL NO. 366 OF 1998
DATE OF THE CASE19th January 2021  
APPELLANTRAMA NARANG
RESPONDENTRAMESH NARANG AND OTHERS
BENCH/JUDGEA.M. Khanwilkar, B.R. Gavai, Krishna Murari
STATUTES/CONSTITUTION INVOLVEDCriminal Procedure Code; Companies Act
STATUTES/CONSTITUTION INVOLVEDCriminal Procedure Code (2 of 1974) – Sections 389(1), 482; Companies Act (1 of 1956) – Section 267. Sections 397, 398 and 399 of the Companies Act,

ABSTRACT

The instant contempt petition arose out of an unfortunate family dispute between a father and his two sons from his first wife.

Petitioner in the contempt petition Rama Narang was married to Smt. Motia. The respondent’s 1 and 2 i.e. Ramesh Narang and Rajesh Narang so also Rakesh Narang are sons of the petitioner and Smt. Motia. The petitioner and Smt. Motia divorced in 1963. The petitioner thereafter married Smt. Mona. Out of the said wedlock, two sons Rohit and Rahul, as well as a daughter Ramona, were born.

In accordance with the family settlement, that insofar as ‘Narang International Hotel Limited’ and its subsidiaries were concerned, Rama Narang, Ramesh Narang and Rajesh Narang were to be the only Directors.

Further, it was added that any decision by the Board of Directors was to be taken by the mutual consent of Rama Narang on one hand and Ramesh and Rajesh, on the other hand. Though if the amount of any transaction was exceeding Rs 10 lakhs, then the same could be undertaken only through a cheque signed jointly by Rama Narang on one hand and Ramesh or Rajesh on the other hand.

Though the matter was settled in terms of minutes of Consent Order, there was no quietus to the dispute between the parties

Rama Narang alleged that Ramesh and Rajesh had violated the terms of Consent Order stipulated in clause 3 (c), (d), (e) and (f) of the Minutes of the Consent Order. Violation of the said order amounted to clear disobedience and thus punishable under the Contempt of Courts Act, 1971.

Court held that the petitioner failed to make out a case of wilful, deliberate and intentional disobedience of any of the directions given by the Court or acting in breach of an undertaking given to the Court. Further, the Bench expressed in light of jurisdiction that,“…question of jurisdiction should be decided at the earliest possible time, the interim orders so passed are orders within jurisdiction, when passed and effective till the court decides that it has no jurisdiction, to entertain the suit. It has been held, that those interim orders would undoubtedly come to an end with the decision that the Court had no jurisdiction.”

INTRODUCTION

The present contempt petition arises out of an unfortunate family dispute between a father on one hand and his two sons from his first wife on the other hand. A preliminary objection was taken regarding the maintainability of the contempt petition. According to the Respondents, in the absence of any undertaking given to the Court, present Court could not exercise its jurisdiction on mere violation of the terms of the Consent Order. It is the main contention of the Petitioner that invoking the jurisdiction of the CLB and entertaining the said proceedings by the CLB( Compay Law Bpard) itself amounts to contempt.Merely taking recourse to the statutory remedy available to the Respondents would not amount to contempt. Before punishing the contemnor for non-compliance of the decision of the Court, the Court must not only be satisfied about the disobedience of any judgment, decree, direction, writ or other process but should also be satisfied that, such disobedience was wilful and intentional.

In a contempt proceeding before a contemnor is held guilty and punished, the Court has to record a finding, that such disobedience was wilful and intentional. The contempt proceedings are quasi-criminal in nature and the standard of proof required is in the same manner as in the other criminal cases. The alleged contemnor is entitled to the protection of all safeguards/rights which are provided in the criminal jurisprudence, including the benefit of doubt. There must be a clear-cut case of obstruction of administration of justice by a party intentionally, to bring the matter within the ambit of the said provision. In the case of Debabrata Bandopadbyay and Ors. v. State of West Bengal and Anr., it was observed, that punishment under the law of contempt is called, for when the lapse is deliberate and in disregard of one’s duty and in defiance of authority.

In the present case, the Petitioner has failed to make out a case of wilful, deliberate and intentional disobedience of any of the directions given by this Court or acting in breach of an undertaking given to this Court. On the contrary, the Respondents had taken recourse to the legal remedy available to them under the statutory provisions.Any order passed by the CLB was appellable before the higher forums. Undisputedly, the Petitioner has not challenged the said order. Having not challenged the same, it is not open for the Petitioner to argue, that since the Petitioner has taken objection as to maintainability of the proceedings before CLB, the said orders are without jurisdiction and the initiation of the proceedings and the orders passed thereon, would amount to respondent’s committing contempt of this Court. The argument needs to be rejected, in view of the judgment of this Court in the case of Tayabbhai M. Bagasarwalla. This Court in unequivocal terms has held, that even if the objection is raised to the jurisdiction of a forum, it has jurisdiction to pass interim orders till it finally decides the issue of jurisdiction and such orders are binding on the parties till the issue of jurisdiction is decided.

As could be seen from the order of the CLB dated 10th April 2008, though the CLB by referring to Sections 397, 398 and 399 of the Companies Act, prima facie, has observed, that only if maintainability is challenged either in terms of Section 399 of the Companies Act or on the ground of jurisdiction of the Board, the same will have to be considered first and challenges on other grounds, had to be considered along with the merits of the case. The CLB has further observed, that it was an admitted fact, that the Petitioner qualifies under Section 399 of the Act and the Court has the jurisdiction to deal with the petition under Section 397 or/and 398 of the Act. Having chosen not to challenge the aforesaid observations of the CLB, the argument advanced deserves no merit and needs to be rejected. However, it should not be construed, that, present Court have held that, the proceedings under the CLB were maintainable in law. Since the proceedings are pending final adjudication, the parties would be at liberty to raise all issues available to them including the issue of jurisdiction. The present contempt petition is without any merit and deserves to be dismissed, and is accordingly dismissed.

BACKGROUND

Dalveer Bhandarl, J.- This is an unfortunate litigation amongst the most intimate tamily members where the father has been driven to file a contempt petition against his sons. The parties are intensely involved in inter se litigation for the last two decades. The petitioner, Rama Narang is the father of Ramesh Narang and Rajesh Narang, the respondents herein. Both are the children of his first wife, namely, Motla, whom he divorced in 1963. The petitioner has three children from his second wife Mona, namely, Rohit, Ramona and Rahul. The petitioner has prayed that the respondents herein, namely, Ramesh and Rajesh are guilty of committing gross contempt of the orders of this Court dated 12-12-20011 and 8-1-20022. The petitioner in this contempt petition has also prayed that the order dated 12-12-2001 may be recalled.

The petitioner has further prayed that Respondent 2, Rajesh Narang be restrained from interfering in the affairs of Narang International Hotels Ltd. (for short “NIHL”) and its joint management by the petitioner Rama Narang and Respondent 1, Ramesh Narang. It is further prayed that the bank accounts of the Company hereinafter be operated jointly for all amounts and transactions by the petitioner and Respondent 1 only. The petitioner stated that the disputes between the petitioner and the respondent contemnors inter se were subject-matter of diverse court proceedings with regard to shareholdings and control and management of the Companies, NIHL and Fashion Wears Pvt. Ltd. It is incorporated in the contempt petition that for accomplishing the object of everlasting peace in the family and having regard to the views exchanged in the family, all groups should work, be represented and have trust in one another. All groups should run the Company harmoniously with the active participation of all as a family business. The consent terms dated 12-12- 2001 were entered into, accepted and incorporated by this Court while finally disposing of all the disputes between the parties.

FACTS

The petitioner has prayed that the respondents Ramesh and Rajesh are guilty of committing gross contempt of the orders of this Court dated 12-12-20011 and 8-1-20022.We withdraw all the aforesaid suits to this Court under Article 139-A of the Constitution of India. When the matter appeared in the list on 8-1-2002 the Court recorded that all the eight suits and proceedings withdrawn from other courts had been transmitted.The petitioner’s suits were disposed of in terms of the minutes of the consent order incorporated in the proceedings passed by this Court on 12-12-2001.

 A three-Judge Bench of this Court in Rama Narang v. Ramesh Narang 2006 11 SCC 114 came to a definite finding that violation of the terms of the consent order would amount to violation of the Court’s orders dated 12-12-2001 and 8-1-2002. A violation of the terms of the consent order would amount to a violation of the Court’s orders dated 12-12-2001 and 8-1-2002 and be punishable under the first limb of Section 2(b) of the Contempt of Courts Act, 1971. The petitioner has narrated various instances of violation of the undertaking given to the Court by the respondents leading to contempt of court. The respondents have in a systematic and continuous manner violated this understanding between the parties and in a blatant and defiant manner have breached the order passed by this Court and have till date continued to do so with impunity, which undermines the majesty of the Court as it shows scant regard and respect for the order passed by this Court. According to the petitioner, the following instances would reveal how the Court’s orders have been flouted by the respondents in a clandestine manner both in letter and spirit.

It is submitted that the cars used by Rama Narang are more than 10-15 years old and the very basis of their contention that the cars were purchased to obtain the same perks as Rama Narang is incorrect.It is clear from the above that the consent order is continuously being willfully violated by the respondents even after the filing of the contempt petition before this Court in 2003, after the clarification order issued by this Court dated 25-1-2005 and even after the order and judgment of this Court dated 12-4-2006.”Two cheques were given.

Although the court may be bound to record a compromise, still, when the court passes a decree, it puts its imprimatur upon those terms and makes the terms a rule of the court; and it would be open to the court, before it did so, to accept an undertaking given by a party to the court.There is nothing contrary to any provision of the law whereby an undertaking cannot be given by a party to the court in the consent decree, which undertaking can be enforced by proper committal proceedings.”The breach of an undertaking given to the court by or on behalf of a party to a civil proceedings is regarded as tantamount to a breach of injunction although the remedies were not always identical.

In Rita Markandey v. Surjit Singh Arora 1996 6 SCC 14 this Court came to the conclusion that even if the parties have not filed an undertaking before the court, but if the court is induced to sanction a particular course of action or inaction on the basis of the representation of such a party and the court ultimately finds that the party never intended to act on such representation or such representation was false, even then the party would be guilty of committing contempt of court. Law is well settled that if any party gives an undertaking to the court to vacate the premises from which he is liable to be evicted under the orders of the court and there is a clear and deliberate breach thereof it amounts to civil contempt but since, in the present case, the respondent did not file any undertaking as envisaged in the order of this Court the question of his being punished for breach thereof does not arise.

“The wilful breach of an undertaking given to a court amounts to ‘civil contempt’ within the meaning of Section 2(b) of the Contempt of Courts Act.The respondents having committed a breach of the undertaking given to the Supreme Court in the consent terms they are clearly liable for having committed contempt of court.” The case is of no assistance to the respondents.” the reason why a breach of the clear undertaking given to the court amounts to contempt of court is that the contemnor by making a false representation to the court obtains a benefit for himself and if he fails to honour the undertaking, he plays a serious fraud on the court itself and thereby obstructs the course of justice and brings into disrepute the judicial institution.”

The critical analysis of the decided cases of this Court clearly leads to the conclusion that wilful breach of an undertaking given to the court amounts to contempt of court under Section 2(b) of the Act. In order to maintain sanctity of the orders of the highest court of the country, it has become imperative that those who are guilty of deliberately disregarding the orders of the court in a clandestine manner should be appropriately punished.The majesty of the court and the rule of law can never be maintained unless this Court ensures meticulous compliance with its orders.According to our considered view the respondents are clearly guilty of committing contempt of court by deliberate and wilful disobedience of the undertaking given by them to this Court.

In order to maintain sanctity of the orders of this Court, the respondents must receive appropriate punishment for deliberately flouting the orders of this Court.While keeping in view the peculiar facts and circumstances of this case, the sentence of imprisonment imposed on the respondents is kept in abeyance.The contempt application is disposed of.

ISSUE

The present contempt petition arises out of an unfortunate family dispute between a father on one hand and his two sons from his first wife on the other hand. A preliminary objection was taken regarding the maintainability of the contempt petition. According to the Respondents, in the absence of any undertaking given to the Court, present Court could not exercise its jurisdiction on mere violation of the terms of the Consent Order. It is the main contention of the Petitioner that invoking the jurisdiction of the CLB (Company Law Board) and entertaining the said proceedings by the CLB, itself amounts to contempt.

Merely taking recourse to the statutory remedy available to the Respondents would not amount to contempt. Before punishing the contemnor for non-compliance of the decision of the Court, the Court must not only be satisfied about the disobedience of any judgment, decree, direction, writ or other process but should also be satisfied that, such disobedience was willful and intentional. In a contempt proceeding before a contemnor is held guilty and punished, the Court has to record a finding, that such disobedience was wilful and intentional. The contempt proceedings are quasi-criminal in nature and the standard of proof required is in the same manner as in the other criminal cases. The alleged contemnor is entitled to the protection of all safeguards/rights which are provided in the criminal jurisprudence, including the benefit of doubt. There must be a clear-cut case of obstruction of administration of justice by a party intentionally, to bring the matter within the ambit of the said provision

ARGUMENTS FROM THE APPELANT SIDE

After hearing Mr. Kapil Sibal, learned senior counsel for the petitioner and Mr. Gopal Subramaniam, learned senior counsel for the alleged contemnor, at length, we are satisfied that the contemnor has flouted the order of this Court dated 4th May, 1999 by not transferring 50% of the share (and contending that he could make out the  50% share only by calculating the shares of NIHPL held by M/s. Fashion Wears Private Ltd., which have been forbidden by the order dated 22.01.1998). We call upon the contemnor to show cause regarding the punishment to be imposed on him for which he shall be present in this Court on 29th November, 2001.

It is thus clear that for bringing an action under the ambit of civil contempt, there has to be a wilful disobedience to any judgment, decree, direction, order, writ or other process of a court or wilful breach of an undertaking given to the court. No doubt, that Shri Rohatgi is justified in relying on the judgment of this Court in the case of Rama Narang (V) (supra) decided on 15th March 2007. In the said judgment, this Court held, that according to the terms of undertaking, the petitioner and the respondents were under an obligation to run the company harmoniously with the active participation of all as a family business but unfortunately, the respondents had taken over absolute control to the total exclusion of the petitioner. This Court held, that this was contrary to the terms of the undertaking given to this Court. Shri Rohatgi asserts, that the acts with regard to which the present contempt petition has been filed, are identical to the acts of the respondents, for which, they were held guilty of contempt. According to him, a fortiori, the present respondents should also be held guilty for the acts with regard to which, the present contempt petition has been filed.

earned counsel appearing on behalf of the petitioners has submitted that a decree for injunction whether directory or prohibitory can only be enforced by way of contempt proceedings. It was argued that there was nothing in principle to draw a rational distinction between the orders passed on merits and orders passed by consent. Our attention was also drawn to the language of the order dated 12.12.2001 which directed clause (f) of the minutes to be enforced from that date onwards. In fact the various suits referred to in the order dated 8th January, 2002 had been decreed in terms of the mutual consent order.

It has also been submitted that all the relevant clauses in the consent minutes could be read both as prohibitory and directory. The petitioner has submitted that in a civil contempt, the issue is not so much the punishment of the alleged contemnor, but the execution of the decree. According to the petitioner, all the decisions cited by the respondents were distinguishable. Reliance has been placed on the definition of civil contempt in the Contempt of Courts Act, 1971 as well as on the decisions in Rosnan Sam Boyce Vs. B.R. Cotton Mills Ltd. & Ors. 1990 (2) SCC 636; C.H. Giles V. Morris & Ors. 1972 (1) All ER 1960; and Salkia Businessmen’s Association & Ors. Vs. Howrah Municipal Corporation & Ors. 2001 (6) SCC 688.

In the present case, we are of the considered view, that the petitioner has failed to make out a case of wilful, deliberate and intentional disobedience of any of the directions given by this Court or acting in breach of an undertaking given to this Court. On the contrary, we find that the respondents had taken recourse to the legal remedy available to them under the statutory provisions. No doubt, Mr. Rohatgi has argued, that the proceedings before the CLB are itself without jurisdiction.

ARGUMENTS FROM THE RESPONDENT

Ramesh Narang had approached this Court by filing a Contempt Petition (C) Nos.265-67 of 1999 in Contempt Petition (C) No. 209 of 1998 in Civil Appeal Nos.366 of 1998, 603 of 1998 and 605 of 1998. The present petitioner Rama Narang was respondent No.1 in the said proceedings. This Court passed the following order in the said proceedings on 2 nd November 2001

On 14-11-1990 Respondent 1 Ramesh Narang filed a Company Petition No. 681 of 1990 before the Company Judge in the High Court of Bombay under Sections 397 and 398 of the Companies Act challenging the validity of the Board meeting of 25-6-1990 on the ground that the appellant being convicted for an offence involving moral turpitude could not hold office of the Managing Director in view of the provisions of Section 267 of the Companies Act. That section lays down that no company shall appoint or employ, or continue the appointment or employment of any person as its managing or whole-time Director, who is, or has at any time been convicted by a court of an offence involving moral turpitude.

The appellant was tried by the Additional Sessions Judge, Delhi in Case No. 134 of 1985 (State v. Ram Lal Narang) and was convicted on 22-12-1986 for having committed offences punishable under Section 120-B and Section 420 read with Section 114 of the Indian Penal Code. He was sentenced to rigorous imprisonment for three months on the first count and rigorous imprisonment of two and a half years and a fine of Rs. 5000 on the second count. On appeal, Criminal Appeal No. 17 of 1987; the High Court of Delhi released the appellant on bail and directed stay of the operation of the impugned order

The respondents had filed responses to the said contempt petition. It was contended on behalf of the respondents, that the petitioner was deriving undue advantage from the alleged technical breach of the consent terms; which too was based on interpretation of the consent terms contrary to the mutual understanding of the parties. It was submitted, that the petitioner was attempting to stall the functioning of the company by trying to use the veto power. It was submitted, that it was never the intention of the parties, that the petitioner should enjoy the veto power over the company transactions having value of more than Rs. 10 lakhs and create a deadlock.

Shri Kapil Sibal, the learned Senior Counsel made his submissions in reply to the contempt petition and in support of the application for directions. He submitted, that originally Narang’s family consisted of three brothers, namely Manu, Rama and Rohit. He submitted, that the Terms of Settlement between various members of the family was recorded by an order passed by the Bombay High Court on 3rd July 1997. He submitted, that the proceedings arising out of the settlement had reached up to this Court. This Court vide order dated 4 th May 1999, had called for a report from Justice Lodha, Judge of the Bombay High Court (as His Lordship then was) with regard to, Rama-petitioner herein committing contempt of Justice Dhanuka’s order. He submitted, that after perusal of the report, this Court vide order dated 2 nd November 2001, held the present petitioner guilty for contempt. However, in view of the subsequent settlement between the parties, the order holding the present petitioner guilty was recalled.

Shri Sibal further submitted, that no Director of the Company has propriety rights over the property owned by the Company. The learned Senior Counsel further submitted, that the perusal of the Minutes of the Meeting of the Board of Directors held on 31 st December 2001, which was held in order to give effect to the Consent terms filed before this Court and the order of this Court dated 12th December 2001, so also the explanatory statement to the notice for Extraordinary General Meeting convened on 1 st January 2002, would clearly show, that the residential accommodation provided to Rama Narang and Ramesh Narang at Company’s Bandra property, was in their capacity as a Director of the Company.The learned Senior Counsel reiterated, that no Director can claim ownership over the Company’s property.

Shri Akhil Sibal, the learned Senior Counsel supplemented the arguments on behalf of the respondents in the contempt petition/applicants in the application for directions. He submitted, that insofar as the allegations made by the petitioner with regard to the respondents unilaterally entering into labour contracts, grant of increments to the executives, contract of purchase of equipments etc. are concerned, the respondents, in order to keep the Company running, were required to take several decisions between September 2007 and March 2008, in accordance with the Company Manual. He submitted, that at one point of time, the labourers went on strike and the contempt petitioner was not willing to cooperate in running the affairs of the Company, as such certain emergent decisions were taken during the said period. However, all those decisions have been ratified by the Facilitator and therefore, no case is made out to hold the respondents guilty of contempt.

RELATED PROVISIONS

  • Section 2(b) of the Contempt of Courts Act, 1971:

“2. Definitions. – …..

(b) “civil contempt” means wilful disobedience to any judgment, decree, direction, order, writ or other process of a court or wilful breach of an undertaking given to a court.”

  • Section 397 in The Companies Act, 1956

Application to Company Law Board for relief in cases of oppression.

(1) Any members of a company who complain that the affairs of the company 2 are being conducted in a manner prejudicial to public interest or] in a manner oppressive to any member or members (including any one or more of themselves) may apply to the 1 Company Law board] for an order under this section, provided such members have a right so to apply in virtue of section 399.

(2) If, on any application under sub-section (1), the 1 Company Law Board] is of opinion-

(a) that the company’ s affairs 2 are being conducted in a manner prejudicial to public interest or] in a manner oppressive to any member or members; and

(b) that to wind up the company would unfairly prejudice such member or members, but that otherwise, the facts would justify the making of a winding-up order on the ground that it was just and equitable that the company should be wound up; the 1 Company Law Board] may with a view to bringing to an end the matters complained of, make such order as it thinks fit.

  • Section 398 in The Companies Act, 1956

398. Application to Company Law Board for relief in cases of mismanagement.

(1) Any members of a company who complain-

(a) that the affairs of the company 3 are being conducted in a manner prejudicial to public interest or] in a manner prejudicial to the interests of the company; or

(b) that a material change (not being a change brought about by, or in the interests of, any creditors including debenture holders, or any class of shareholders, of the company) has taken place in the management or control of the company, whether by an alteration in its Board of directors, or of its managing agent or secretaries and treasurers 1 or manager], or in the constitution or control of the firm or body corporate acting as its managing agent or secretaries and treasurers, or in the ownership of the company’ s shares, or if it has no share capital, in its membership, or in any other manner whatsoever, and that by reason of such change, it is likely that the affairs of the company 2 will be conducted in a manner prejudicial to public interest or] in a manner prejudicial to the interests of the company; may apply to the 3 Company Law Board] for an order under this section, provided such members have a right so to apply in virtue of section 399.

(2) If, on any application under sub- section (1), the 3 Company Law Board] is of opinion that the affairs of the company are being conducted as aforesaid or that by reason of any material change as aforesaid in the management or control of the company, it is likely that the affairs of the company will be conducted as aforesaid, the 3 Company Law Board] may, with view to bringing to an end or preventing the matters complained or apprehended, make such order as it thinks fit.

  • Section 399 in The Companies Act, 1956

399. Right to apply under section 397 and 398.

(1) The following members of a company shall have the right to apply under section 397 or 398:-

(a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one- tenth of the total number of its members, whichever is less, or any member or members holding not less than one- tenth of the issued share capital of the company, provided that the applicant or applicants have paid all calls and other sums due on their shares;

(b) in the case of a company not having a share capital, not less than one- fifth of the total number of its members.

(2) For the purposes of sub- section (1), where any share or shares are held by two or more persons jointly, they shall be counted only as one member.

(3) Where any members of a company are entitled to make an application in virtue of sub- section (1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them.

(4) The Central Government may, if in its opinion circumstances exist which make it just and equitable so to do, authorise any member or members of the company to apply to, the 1 Company Law Board] under section 397 or 398, notwithstanding that the requirements of clause (a) or (b), as the case may be, of sub- section (1) are not fulfilled.

(5) The Central Government may before authorising any member or members as aforesaid, require such member or members to give security for such amount as the Central Government may deem reasonable, for the payment of any costs which the 1 Company Law Board] dealing with the application, may order such member or members to pay to any other person or persons who are parties to the application.

JUDGEMENT

It could thus be seen, that though this Court held the respondents guilty of contempt, taking into consideration the fact that immediately sending the respondents to jail would create total chaos in the Company and it would also vitally affect the interest of large number of people including the employees of the Company, the sentence of imprisonment imposed on the respondents was kept in abeyance. This Court further directed the parties to meticulously comply with the undertaking given by them to the Court. It was further observed by the Court, that in case, similar violations of the undertaking given to this Court, was brought to the 3 (2009) 16 SCC 126 notice of this Court, the respondents shall be sent to jail forthwith to serve out the sentence imposed in the said case.

the argument needs to be rejected, in view of the judgment of this Court in the case of Tayabbhai M. Bagasarwalla (supra). This Court in unequivocal terms has held, that even if the objection is raised to the jurisdiction of a forum, it has jurisdiction to pass interim orders till it finally decides the issue of jurisdiction and such orders are binding on the parties till the issue of jurisdiction is decided. As could be seen from the order of the CLB dated 10 th April 2008, though the CLB by referring to Sections 397, 398 and 399 of the Companies Act, prima facie, has observed, that only if maintainability is challenged either in terms of Section 399 of the Companies Act or on the ground of jurisdiction of the Board, the same will have to be considered first and challenges on other grounds, had to be considered along with the merits of the case.

The CLB has further observed, that it was an admitted fact, that the petitioner qualifies under Section 399 of the Act and the Court has the jurisdiction to deal with the petition under Section 397 or/and 398 of the Act. Having chosen not to challenge the aforesaid observations of the CLB, in our view, the argument advanced deserves no merit and needs to be rejected. However, it should not be construed, that we have held that the proceedings under the CLB were maintainable in law. Since the proceedings are pending final adjudication, the parties would be at liberty to raise all issues available to them including the issue of jurisdiction. In the result, we are of the considered view, that the present contempt petition is without any merit and deserves to be dismissed, and is accordingly dismissed. That leaves us with Interlocutory Application No. 87565 of 2019 filed by the respondent No.1. The respondent No.1, by the said application is seeking direction to the petitioner to abide by the decision of the Facilitator dated 30.04.2019.

 Having held, that the present contempt petition deserves no merit and is liable to be dismissed, we find that such an application need not be entertained. Indeed, the respondents may be well- advised to take recourse to the remedies available to them in law. We do not wish to express any opinion one way or the other in that regard. Though, Shri Kapil Sibal has strenuously argued, that this Court should invoke powers under Article 142 of the Constitution and issue directions to the contempt petitioner, we find, that this is not a case wherein directions as sought, should be issued under Article 142 of the Constitution. On Insolvency and Bankruptcy Code 2016, coming in force, the proceedings which are pending before the CLB, now stand transferred to the National Company Law Tribunal (NCLT). It would be appropriate for the parties to invoke the jurisdiction of NCLT for seeking such orders as deemed fit in the facts and circumstances in accordance with law. Without going into the merits and demerits of the said application, we dispose of the same relegating the parties to the statutory remedy available to them in law.

CONCLUSION

Court held that the petitioner failed to make out a case of wilful, deliberate and intentional disobedience of any of the directions given by the Court or acting in breach of an undertaking given to the Court.

“…where an objection is taken to the jurisdiction to entertain a suit and to pass any interim orders therein, the Court should decide the question of jurisdiction in the first instance. However, that does not mean that pending the decision on the question of jurisdiction, the Court has no jurisdiction to pass interim orders as may be called for in the facts and circumstances of the case.”

Further, the Bench expressed in light of jurisdiction that,

“…question of jurisdiction should be decided at the earliest possible time, the interim orders so passed are orders within jurisdiction, when passed and effective till the court decides that it has no jurisdiction, to entertain the suit. It has been held, that those interim orders would undoubtedly come to an end with the decision that the Court had no jurisdiction.”

 Violation of Interim Orders: While in force, the interim orders passed by such Court have to be obeyed and their violation can be punished even after the question of jurisdiction is decided against the plaintiff, provided violation is committed before the decision of the Court on the question of jurisdiction.

 Another Observation made by the Court was that in the present case, the petitioner qualified under Section 399 of Companies Act and that the Company Law Board had jurisdiction to deal with the petition under Sections 397 and 398 of the Companies Act.

“…in the proceedings under Sections 397/398, it is the interest of the Company which is paramount.”

Bench expressing no more opinion in the present matter held that the contempt petition deserves to be dismissed and added that parties may invoke the jurisdiction of NCLT for seeking orders as deemed fit in the facts and circumstances. [Rama Narang v. Ramesh Narang, 2021, decided on 19-01-2021]

REFERENCES

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