Balwantbhai Somabhai Bhandari Vs Hiralal Somabhai Contractor (Deceased) Rep. By Lrs. & Ors. (Supreme Court of India)
The Supreme Court of India, in Balwantbhai Somabhai Bhandari Vs Hiralal Somabhai Contractor (Deceased) Through LRs & Ors. (2023 INSC 805), examined whether the deliberate breach of an undertaking given by an advocate on behalf of a litigant constitutes civil contempt under Section 2(b) of the Contempt of Courts Act, 1971. The dispute arose from the execution of several registered sale deeds relating to immovable property despite an assurance recorded by the Gujarat High Court that the disputed property would not be sold until the main proceedings were decided. The Supreme Court considered three connected civil appeals, including two statutory appeals under Section 19 of the Contempt of Courts Act filed by the persons punished for contempt and a third appeal filed by purchasers whose sale transactions had been invalidated. The judgment addressed the binding nature of undertakings made through counsel, wilful disobedience, the consequences of transfers made during litigation, the rights of subsequent purchasers, and the circumstances in which an apology may be rejected.
The underlying proceedings concerned land in Survey Nos. 63 and 65 at Majura, Gujarat, forming the subject matter of Special Civil Application No. 16266 of 2013 before the Gujarat High Court. On 14 October 2015, senior counsel appearing on instructions from the concerned parties stated before the High Court that the property forming the subject matter of the disputed entry and petition would not be sold until the main petition was heard and decided. This statement was expressly recorded in the judicial order. In reliance on that assurance, the opposing parties did not pursue further interim relief, and connected appellate proceedings were withdrawn. Notwithstanding the undertaking, the concerned property holders, acting through their power-of-attorney holder, subsequently executed multiple sale deeds in favour of different purchasers. The transactions were undertaken between November 2015 and October 2018, including transactions after contempt proceedings had commenced.
Aggrieved by the transfers, the respondents initiated contempt proceedings through Miscellaneous Civil Application No. 121 of 2018. By judgment dated 13 July 2022, the Gujarat High Court held the concerned parties guilty of deliberate and wilful disobedience of the undertaking recorded on 14 October 2015. It imposed monetary penalties and costs on certain contemnors and sentenced others to two months’ simple imprisonment, together with the prescribed fines and default consequences. The High Court also declared the impugned sale deeds non est, directed cancellation of the transactions and restoration of the position prevailing before their execution, and permitted purchasers to recover their sale consideration from the responsible parties. The High Court rejected the contention that the contempt proceedings were barred by limitation under Section 20 of the Contempt of Courts Act, treating the wrongful conduct as continuing in nature.
Before the Supreme Court, the contemnors contended that the statement made by their advocate was merely an assurance to the opposite party rather than an undertaking to the Court. They argued that its breach could not amount to civil contempt under Section 2(b). Certain appellants maintained that they had entrusted the litigation and property transactions to a power-of-attorney holder and were unaware of the undertaking. They further claimed that the relevant transactions had effectively been completed in 2012 and that the subsequent registered instruments merely formalised earlier arrangements. The appellants questioned the finding of wilful disobedience, invoked the quasi-criminal character of contempt proceedings and submitted that the allegations had not been established beyond reasonable doubt. They also challenged the imposition of imprisonment under Section 12(3), contending that a fine should ordinarily suffice in civil contempt cases unless exceptional reasons justify imprisonment.
The appellants additionally argued that they had tendered unconditional apologies at an early stage and had offered alternative land and other remedial arrangements to protect the respondents’ interests. They relied on the statutory proviso and explanation to Section 12 concerning acceptance of apologies and remission of punishment. The purchasers, appearing separately in Civil Appeal No. 4869 of 2023, submitted that a transfer of property during pending litigation is not automatically void merely because it violates an injunction or undertaking. Claiming to be bona fide purchasers for value without notice, they argued that the High Court could not invalidate their registered sale deeds without giving them an opportunity of hearing. The respondents opposed these submissions, emphasising that the undertaking was given to the Court, that the property was knowingly transferred despite the restriction, and that the subsequent apologies were inconsistent with the contemnors’ continued conduct.
On the principal legal issue, the Supreme Court held that an undertaking given to a court by an advocate on behalf of a client is binding on that client, and its wilful breach constitutes civil contempt under Section 2(b) of the Contempt of Courts Act, 1971. The Court distinguished an undertaking furnished to the Court from a private assurance or contractual commitment given to another litigant. An undertaking to the Court engages the authority of the judicial institution and may attract contempt jurisdiction, whereas a promise made merely to the opposite party does not automatically have the same consequence. Examining the circumstances in which the statement was recorded, the Court found that the assurance had been made on instructions, formed part of the judicial proceedings and influenced the opposing parties’ decision to withdraw their challenge. The subsequent execution of sale deeds, without first seeking clarification or permission from the High Court, therefore amounted to deliberate disobedience.
The Supreme Court further considered the consequences of alienating disputed property during litigation. It recognised that a transfer pendente lite is not necessarily void ab initio merely because litigation is pending or an injunction has been breached. Nevertheless, it held that a court exercising contempt jurisdiction may invalidate transactions undertaken in deliberate defiance of its orders or undertakings when such action is necessary to prevent a contemnor from retaining the benefits of disobedience and to preserve the authority of the judicial process. The Court also rejected the purchasers’ claim to participate in the contempt proceedings solely on the ground that they were bona fide purchasers for consideration without notice. It explained that contempt proceedings concern the relationship between the Court and the alleged contemnor, and third-party beneficiaries of contemptuous transactions do not acquire an independent right to be heard in those proceedings merely by asserting such purchaser status.
Regarding the apologies, the Supreme Court held that an apology is not a device by which a party may deliberately violate a court’s order, secure an advantage and subsequently avoid the consequences. Even an unconditional, unqualified or ostensibly bona fide apology need not be accepted where the conduct seriously undermines the dignity and authority of the Court. The contemnors had knowingly executed the transactions and obtained the benefit of sale consideration despite the undertaking. The Court found their explanations and apologies insufficient to justify interference with the contempt conviction or punishment. In its final conclusions, the Supreme Court upheld the binding character of the advocate’s undertaking, the power to nullify contemptuous transfers, the rejection of the purchasers’ objections and the refusal to accept the apologies. Accordingly, all three appeals were dismissed on 6 September 2023. The appellants were granted two weeks to surrender and serve the sentences imposed by the Gujarat High Court, and no order as to costs was made.
Cases Discussed
- Municipal Corporation of Greater Mumbai Vs Abhilash Lal & Ors., Civil Appeal No. 6350 of 2019 (Supreme Court) — Relied upon by MHADA and certain homebuyers. The Supreme Court distinguished the decision because it concerned a resolution plan affecting municipal property and a show-cause notice preceding CIRP, unlike the post-moratorium termination notice in the present case.
- Sushil Kumar Agarwal Vs Meenakshi Sadhu & Others, (2019) 2 SCC 241 (Supreme Court) — Distinguished because it concerned specific performance of development agreements and the creation of interests in property, whereas Section 14(1)(d) protects actual occupation.
- The Member, Board of Revenue Vs Arthur Paul Benthall, [1955] 2 SCR 842 (Supreme Court) — Considered regarding the distinct meanings of different statutory expressions.
- Koteswar Vittal Kamath Vs K. Rangappa Baliga & Co., (1969) 1 SCC 255 (Supreme Court) — Discussed concerning the distributive interpretation principle, reddendo singula singulis.
- Kailash Nath Agarwal & Others Vs Pradeshiya Industrial & Investment Corporation of U.P. Ltd. & Another, (2003) 4 SCC 305 (Supreme Court) — Considered regarding the distinct meanings of statutory expressions and the application of the distributive principle.
- Industrial Supplies Pvt. Ltd. & Another Vs Union of India & Others, (1980) 4 SCC 341 (Supreme Court) — Examined for the meaning of actual occupation and the position of a contractor holding and using property under an agreement.
- Dunlop India Limited Vs A.A. Rahna & Another, (2011) 5 SCC 778 (Supreme Court) — Discussed concerning the distinction between actual occupation and legal possession.
- Ude Bhan & Others Vs Kapoor Chand & Others, AIR 1967 P&H 53 (Full Bench, Punjab and Haryana High Court) — Considered regarding the contextual meaning of the expression “occupied by”.
