HIGH COURT OF DELHI
ASA Agencies (P.) Ltd.
G. Sagar Suri
CCP Nos. 7 of 2010 & 13 of 2009
CP No. 169 of 2006
August 6, 2012
1. By this order I propose to dispose of the two contempt petitions filed by the petitioner under Section 542 of the Companies Act, 1956 read with Rule 9 of the Companies (Court) Rules, 1959 and Section 12 of the Contempt of Courts Act, 1971. The case of the petitioner in CCP No. 13/2009 is that the petitioner has filed the winding up petition against the respondent company under Section 433(e) & (f) of the Companies Act, 1956 and in the said company petition, vide order dated 15.9.2006, the respondent company was restrained from disposing of or parting with and/or renting out any immovable property except with the permission of this Court. As per the petitioner, the said order was extended by this Court from time to time and the same still subsists. It is also the case of the petitioner that at the time of filing of the petition an amount of Rs. 9,60,53,750/- was outstanding against the respondent, which includes the principal loan amount of Rs. 5,75,00,000/- and interest amount of Rs. 3,85,53,750/- due for the period 3.9.2002 to 24.5.2006. It is also the case of the petitioner that since the respondent company had failed to pay the said outstanding dues despite service of demand notice dated 25.5.2006 under Sections 433 and 434 of the Companies Act, 1956, therefore, the petitioner had filed a winding up petition. The petitioner has also claimed that during the pendency of the present winding up proceedings, in order to defeat the legal rights of the creditors including the applicant/petitioner the respondent company and its Directors namely Mr.G. Sagar Suri, Mr. Ujwal Suri and Mr. Narender Suri had sold their huge chunk of land in favour of M/s Amba Realtors Pvt. Ltd., M/s Nipun Builders & Developers and M/s S.R.K. Realtors Pvt. Ltd. through various sale deeds. The petitioner has given the details of such properties, which are as under:-
i. 8500 sq.meters of residential land situated at village Mohiuddinpur Kanawani, Tehsil Dadri, District Gautam Budh Nagar (UP) sold in favour of M/s Nipun Builders & Brothers, 501, Nipun tower, Plot No. 15, Community Centre, Karkardooma, Delhi – 110092/Contemnor No. 7 on 9.11.2006 through a registered sale deed.
ii. 2947 square meters of residential land situated at village Mohiuddinpur Kanawani, Tehsil Dadri, District Gautam Budh Nagar (UP) sold in favour of M/s Amba Realtors Pvt. Ltd., 279, AGCR Enclave, Delhi – 110092/ Contemnor No. 6 on 20.08.2008 vide registered sale deed.
iii. 2469 square meters of residential land situated at Village Mohiuddinpur Kanawani, Tehsil Dadri, District Gautam Budh Nagar (UP) sold in favour of M/s Amba Realtors Pvt. Ltd., 279, AGCR Enclave, Delhi – 110092/ Contemnor No. 6 on 20.08.2008 vide registered sale deed.
iv. 1 ¼ acres of agricultural land situated at Village Arthala, Tehsil and District Ghaziabad sold in favour of M/s S.R.K. Realtors (P) Ltd., 270, AGCR Enclave, Delhi – 110092/Contemnor No. 8 on 02.01.2009 vide registered sale deed.
2. It is also contended by the petitioner that the aforesaid properties have been sold by the Respondents No. 1 to 4 in violation of the interim order dated 15.9.2006 passed by this Court in the winding up petition despite being fully aware of the said interim order. The petitioner further contended that sale of the said properties by the respondents no. 1 to 4 clearly constitute wilful disobedience of the order dated 15.9.2006 passed by this Court and all the contemnors are liable to be punished by this Court for their contemptuous acts.
3. In CCP 7/2010, the petitioner seeks initiation of contempt proceedings against the respondents therein for selling huge land by respondents No.1 to 4 in favour of respondents No. 5 and 6 in terms of sale deed dated 26.2.2008 and 16.4.2008 in defiance of the same interim order dated 15.9.2006. In both the contempt petitions, the petitioner has prayed for punishment, of all the contemnors, for their willful and deliberate violation of the order dated 15.9.2006 in terms of Sections 10 and 12 of the Contempt of Court Act, 1971. The petitioner has also prayed for declaring the said sale transactions as illegal and nullity. The petitioner has also prayed for awarding a separate punishment to respondents No. 1 to 4 for running the business in a fraudulent manner in terms of Section 542 of the Companies Act,1956.
4. Separate replies have been filed by the respondents to these contempt petitions and thereafter, the respective rejoinders were filed to these replies by the Petitioner.
5. Mr. Santosh Kumar, the learned counsel representing the petitioner submitted that on the date of the filing of the winding up petition an amount of Rs. 9,60,53,750/- was due and outstanding against respondent No. 4 company but instead of liquidating their entire outstanding liability, respondent No. 4 came forward to pay an amount of Rs. 5.75 crores, which amount was accepted by the petitioner without prejudice to their rights and contentions. The counsel further argued that in terms of the loan agreement, the respondents No. 1 to 4 are liable to pay interest @ 18% per annum as the same being the contractual rate of interest agreed between the parties. The counsel further submitted that the respondent Nos. 1 to 4 cannot avoid the said liability of paying interest at an already consented rate. The counsel further submitted that as per the settled legal position the payment of Rs. 5.75 crores made by the respondent Nos. 1 to 4 has to be first adjusted against the interest amount, and not against the principal amount, therefore, respondents No. 1 to 4 cannot take a plea that they had already made the payment to the petitioner towards the principal amount. The counsel further argued that under Section 34 of the Civil Procedure Code,1908 this Court can exercise the discretion to order interest at such rate as the Court may deem reasonable on the principal sum adjudged and the principal sum would be the sum which would include the amount of the interest which was over due as on the date of the filing of the suit. The contention raised by the counsel for the petitioner was that so far the pre suit interest is concerned, the Court cannot interfere with the rate of interest as was agreed between the parties but can adjudge the rate of interest, which the Court may deem reasonable, from the date of the filing of the suit till realization of the same, in the exercise of discretionary power conferred under Section 34 of the CPC, 1908. The counsel further argued that the loan advanced by the petitioner was not in the nature of personal or friendly loan to the respondent but the said loan advanced by the petitioner was a commercial loan on which the respondents are liable to pay interest @ 18% per annum. Counsel also argued that both the contempt petitions filed by the petitioner are within the period of limitation, as the same were filed by the petitioner within a period of one year from the date of knowledge of the execution of the sale deeds by the Respondents Nos. 1 to 4 in favour of various buyers. The counsel further argued that the Respondents no.1 to 4 in both the contempt petitions willfully and contemptuously violated and flouted the said interim order dated 15.9.2006 by selling their huge land in favour of the respective buyers through various sale deeds without taking any leave of the Court. The counsel thus urged that severe punishment be awarded to all these contemnors for committing contempt of this Court. The counsel also urged that all these sale deeds as were executed by the respondent No.1 to 4 in favour of other contemnors be declared null and void.
6. In support of his arguments, counsel for the petitioner placed reliance on the following judgments:-
(1) Surjit Singh v. Harbans Singh  6 SCC 50
(2) Satyabrata Biswas v. Kalyan Kumar Kisku AIR 1994 SC 1837
(3) Meghraj v. Bayabai  2 SCC 274
(4) Industrial Credit & Development Syndicate v. Smithaben H. Patel  3 SCC 80
7. Before concluding his arguments, Mr.Santosh Kumar, counsel representing the petitioner did not press the reliefs under Section 542 of the Contempt Act and submitted that the present contempt petitions filed by the petitioner be treated under Sections 10 & 11 of the Contempt of Courts Act read with Article 215 of the Constitution of India.
8. Opposing the present petitions, Mr. Girdhar Govind, counsel representing respondent Nos.1 to 4 at the outset submitted that the petitioner has no locus standi to file these petitions as the petitioner has no existence in the eyes of law, after the amalgamation of the petitioner company with M/s Avanta Realty Ltd. The contention raised by the counsel for the respondent Nos. 1 to 4 was that the petitioner has not taken any steps to place on record the scheme of amalgamation and their prospective rights, if any, derived by the new company for prosecuting the present contempt proceedings. The counsel further argued that a friendly loan was advanced by the petitioner in favour of respondents No 4 with a view to bring the company out of the financial crises and with the mutual understanding of the parties rate of Interest was agreed at 6% p.a. Counsel further argued that a settlement had arrived at between the parties and in terms of the settlement, the respondents no. 1 to 4 had paid an amount of Rs. 5.75 crores towards the principal outstanding amount and only dispute left between the parties was the payment of interest for which the respondents have been giving various proposals to the petitioner showing their willingness to pay reasonable rate of interest from the date of the filing of the suit till the payment of the said principal amount. The learned counsel for the Respondents 1 to 4 also submitted that even as on date these respondents are willing to pay interest @ 6% per annum on the said outstanding amount from the date of the filing of the said petition till its final disposal or any other rate of interest as this Court may deem just and reasonable in the circumstances of the case. The counsel also argued that the petitioner cannot maintain a combined application i.e. under Section 542 of the Companies Act, 1956 along with Contempt petition under Sections 11 and 12 of the Contempt of Court Act,1971 as the parameters for invoking both the said provisions are different. Counsel further contended that the contempt petitions filed by the petitioner are also not maintainable as the same are not filed by the petitioner within the prescribed period of limitation of one year as the interim order was passed by this Court on 15.9.2006 while the said sale deeds were executed by the respondents much after the lapse of period of one year from the date of the interim order. Counsel further argued that the respondents have already tendered unqualified apology for not taking the leave of the Court before selling their properties in favour of the various buyers. Counsel also submitted that such sales were necessary to bring out the respondents from the financial crises and even an amount of Rs. 5.75 crores was paid by these respondents out of the sale proceeds of the said properties. In support of his arguments counsel for the respondent 1to 4 placed reliance on the following judgments:-
(1) Anup Bhushan Vohra v. Registrar General 2011 Law suit (SC) 1010
(2) Prestige Lights Ltd. v. State Bank of India  78 SCL 467 (SC)
9. Arguing for the respondent No.7 in CCP No.13/09 Mr. D.K. Garg, Ld. Counsel argued that the respondent no.7 was never aware of the said interim order dated 15.9.2006 passed by this Court. Counsel further submitted that in fact the respondent No.7 had purchased the property being subject matter of sale deed dated 9.11.2006 vide registered sale agreement dated 4.8.2006 and, therefore, it cannot be said that the said sale in favour of the respondent No.7 is in violation of the Court order dated 15.9.2006. It was further argued that under the said agreement to sell, the transaction was to be completed within a period of 100 days and accordingly the sale deed was executed on 9.11.2006 after the respondent no.1 had completed their part of the obligation, arising out of the registered agreement to sell dated 4.8.2006. Counsel further submitted that respondent No. 7 had further sold the said property in favour of respondents No.10 and 11 vide sale deed dated 22nd April, 2009; and no action was initiated by the petitioner against respondent No. 7 at any stage prior to the execution of the sale deed dated 22nd April, 2009. Counsel also argued that the present petition filed by the petitioner is clearly barred by limitation. Counsel also submitted that in the event of this Court taking a view against the respondents No.1 to 4 holding them guilty of contempt yet respondent No. 7, who was a bona fide purchaser of the property in question, cannot be held guilty of committing any contempt. The counsel also submitted that even in such like case, the Court will not declare such a sale as nullity as any such order will not benefit either of the parties and nor even the petitioner. In support of his arguments counsel for the respondent No.7 placed reliance on the case A.K. Chatterjee v. Ashok Kumar Chatterjee  156 DLT 475 (Delhi), where it has been held that the act of execution of sale deed in violation of interim order of this court in a case, should be of such a nature as to be an impediment in the decision of the suit or grant of a decree as claimed by the plaintiff. Therefore, the knowledge of the applicants thereof is not relevant for the purposes of deciding against the subsequent purchaser, is such subsequent purchaser is for value and has acted in good faith and without notice of the original Contract between the parties.
10. Adopting the same arguments, Mr. Anil Gupta, Ld. counsel representing Respondent Nos. 5, 6, 8 in addition also submitted that the petitioner had not taken any care to inform the Revenue Authorities about the said restraint order passed by this Court and had the petitioner been diligent in this regard then these respondents would not have purchased the said properties/plots forming subject matter of sale deeds dated 26.2.2008 and 16.4.2008.
11. I have heard Learned Counsels for the parties and given my anxious consideration to the arguments advanced by them.
12. The contempt proceedings are quasi criminal in nature and any willful and intentional disobedience of an order of the court will certainly make a person liable for contempt. It is a trite law that the contempt jurisdiction has to be exercised with great care, caution and circumspection and it will not be invoked where the order passed by the court is not complied with by mistake, inadvertence or by misunderstanding or where the disobedience is merely accidental. However, where the court is satisfied after holding a summary enquiry that not only the party has disobeyed the order of the court but such disobedience on the part of the party is willful and deliberate, then the power of contempt has to be exercised by the court to ensure that the dignity of the court and the majesty of law is maintained.
13. In the backdrop of the aforesaid settled legal position, I will proceed to examine the core issue viz. whether the respondents have committed contempt of this court by wilfully disobeying the order dated 15.9.2006. The case of the petitioner in both the contempt petitions in nutshell is that the petitioner had filed a winding up petition under Section 433(e) of the Companies Act, 1956 against the respondent no. 4 company as the respondent no 4 had failed to repay the loan amount of Rs.5,75,00,000/- along with interest @18% p.a., despite service of demand notice dated 25.5.2006 and in the said company petition, vide order dated 15.9.2006 this court restrained the respondent no 4 company from disposing of or parting with and/or renting out any immovable property except with the permission of this court. Since the said interim order is at the heart of the controversy, therefore, the same is reproduced as under:
Present: Mr. D.K. Malhotra & Mr. Rakesh Malhotra for the petitioner.
Mr. Girdhar Govind for the respondent.
At the request of the respondent, five weeks time is granted to file reply. Rejoinder, if any, be filed within four weeks thereafter. In the meanwhile, the respondent is permitted to carry on business in its normal course. However, the respondent will not dispose of, part with or/and rent out any immovable property except with the permission of this court”.
14. As can be seen from the above, the said order was passed by the company court in the presence of the counsel representing the respondent No.4 company and therefore the respondent nos.1 to 3 being the Directors of respondent no.4 were well aware of the said interim restraint order passed by the company court. It is quite apparent from the proceedings in the main petition that the respondent had been seeking adjournment on various occasions. The process of settlement between the parties can be seen to have begun from 26.3.2007 as the order passed on the said date by the company court records the request of the counsel for the respondent who stated that there is likelihood of meeting the liability of the petitioner which could not be finalized on account of non-availability of one of the Directors. Taking note of the said request made by the counsel for the respondent, the learned Company Judge adjourned the matter for 17.4.2007 with the observation that in case the matter is not settled, then the learned counsel for the respondent no. 4 will have to address the arguments. Then on 17.4.2007, the learned counsel for the respondent no.4 had given 16 cheques to the learned counsel for the petitioner and out of the said 16 cheques, one of the cheque was for Rs.50 lacs while the remaining 15 cheques for an amount of Rs.35 lacs each bearing different dates of each succeeding months. The said cheques were accepted by the counsel for the petitioner but without prejudice to the rights and claims of the petitioner. It is not in dispute that the total amount of the 16 cheques comes out to be Rs. 5,75,00,000/- and the principal amount which was outstanding against the respondent company was also exactly the same amount. It is also an undeniable fact that all the sale deeds forming subject matter of both the contempt petitions, were executed by the respondent No.1 to 4 during the subsistence of the said order dated 15.9.2006. The only distinction which has been drawn out by Mr. Garg, counsel representing the respondent No.7, is in respect of the sale deed dated 9.11.2006 which is based on the registered agreement to sell dated 4.8.2006. The contention raised by the counsel was that the said agreement to sell was executed prior to the grant of the said injunction order dated 15.9.2006. The stand taken by the respondent nos. 1 to 4 in reply to both the said contempt petitions is that the sale transactions which took place were not in any manner intentional so as to violate the interim order dated 15.9.2006 but to clear off the liability of the respondent No.4.
15. This court vide order dated 15.9.2006 gave a clear mandate to the respondent no.4 to seek permission of the court before entering into any sale transaction but the respondents no.1 to 4 in utter disregard and blatant defiance of the said injunction order kept on selling its lands to various buyers who are also now facing the brunt of contumacious and contemptuous conduct of the respondents no. 1 to 4. Undoubtedly, the respondents no. 1 to 4 could have approached this court to seek leave for the sale of its properties if at all the respondents no. 1 to 4 felt the necessity of paying off their financial liabilities towards various creditors, but in any case, these respondents could not have sold their properties in violation of the said stay order granted by this court. The respondents no. 1 to 4 by selling the said properties have clearly disobeyed the said injunction order dated 15.9.2006 passed by this court and therefore, the respondent no.4 and its Directors are held guilty of committing contempt of this court.
16. The other controversy raised in this contempt petition is as to whether the amount of Rs.5,75,00,000/- paid by the respondent should be adjusted against the principal amount or the same should be first adjusted against the interest amount leaving the principal amount as outstanding. To support the argument that the said amount should be first adjusted against the interest, counsel for petitioner has placed reliance on Smithaben H. Patel (supra). The legal position as canvassed by the counsel for the petitioner cannot be disputed as in the absence of any agreement, any payment made by the creditors has to be first adjusted against the amount of interest and then against the principal amount. Having said this, this court can hardly believe that no settlement talks had taken place between the parties and the respondent had made payment of Rs. 5,75,00,000/- without there being any understanding. It is not fathomable that the respondent would make the payment of amount which is exactly equivalent to the principal amount as has been claimed by the petitioner in the winding up petition. It is thus quite evident that the petitioner and the respondent had arrived at some understanding that the said payment of Rs. 5,75,00,000/- was being made by the respondent towards the principal amount and it is because of this very reason that the order dated 29.1.2009 records the submission of the counsel for the respondent that the only dispute left between the parties is with regard to the payment of the interest and which contention of the counsel for the respondent was not refuted by the counsel for the petitioner. The petitioner has claimed interest @18% p.a. on the said outstanding principal amount and as per the settled legal position the respondent cannot claim any concession in the rate of interest which was agreed between the parties so far the pre suit period is concerned. As per the petitioner an amount of Rs. 3,85,53,75.00 was outstanding against the respondent towards interest calculated @18% p.a. for the pre-suit period and as per the stand taken by the respondents no. 1 to 4 this court can exercise the discretion to reduce the interest rate even for the pre-suit period. So far the pre-suit interest is concerned, I find in the addendum to the loan agreement dated 29.8.2002 the respondent no. 4 company had duly agreed to pay interest @ of 18% p.a. on the loan amount and therefore the respondents no. 1 to 4 cannot escape from their liability from paying the said rate of interest so far pre-suit period is concerned. However, so far pendente lite and future interest is concerned certainly this court can exercise its discretion under Section 34 of the Code of Civil Procedure, 1908. During the course of arguments, Mr. Girdhar Govind counsel for the respondent has given an offer of paying the amount towards the interest if the same is awarded from the date of filing of the petition after adjusting the amount which is already paid by the Respondent Nos. 1 to 4. The counsel also urged that a reasonable rate of interest may be fixed somewhere between 6% p.a. to 9%p.a. and in any case not @18% p.a. The counsel further submitted that the respondent will liquidate its entire liability maximum within a period of three months. The respondent in their reply has also tendered unqualified apology for having entered into such sale transactions. The counsel for the respondents 1 to 4 has taken a stand that in the event of this court taking a view to hold the respondent no.4 and its Directors guilty of contempt, then unconditional apology of the respondents no. 1 and 2 be accepted. Indisputably, the conduct of the aforesaid respondents, as delineated above, is not of such a nature as may be termed as condonable.
17. So far the rate of interest is concerned as already discussed above, the respondent is liable to pay interest @18% p.a. so far as the pre suit period is concerned. However, pendent lite and future interest @ 6% can be awarded in the exercise of discretion by this court under Section 34 of the Code of Civil Procedure. Since the principal amount was paid by the respondent in various instalments, therefore, so as to ascertain what exact amount would be payable by the respondent, so far the pendente lite interest is concerned, that requires proper calculation. Before this court is called upon to take further decision to award sentence against the respondents no. 1 to 3, it is deemed appropriate and in the interest of justice to offer an opportunity to the respondents no. 1 to 4 to pay amount of the interest i.e. pre-suit amount @18% p.a which would be on the principal amount of Rs. 5,75,00,000/- and the interest @6% p.a. on the principal amount as is found outstanding based on the aforesaid discussion, after giving an adjustment of the payments made by the petitioner through the said 16 cheques.
18. One of the contentions raised by counsel for respondents No. 1 to 4 was that petitioner has no locus-standi to file the present contempt petition as after the amalgamation of the petitioner into Avantha Realty Limited it has no existence in the eyes of law. I do not find any substance in the argument raised by counsel for respondents 1 to 4 as the present company petition was filed by the petitioner before its amalgamation and even the alleged defiance of the stay order has been made by the respondents prior to the amalgamation of the petitioner company with Avantha Realty Limited company. In any case the petitioner has already moved an application under Rule 9 of the Company (Court) Rules, 1959 read with Section 151 of the CPC vide CA No.920/12 to bring on record the said change in the legal entity of the petitioner. Along with the application the petitioner has also placed on record order dated 18.10.2011 passed by the company court sanctioning the scheme of amalgamation of petitioner company with Avantha Realty Ltd. in terms of Sections 391 & 394 of the Companies Act. With the said facts being on record the locus-standi of the petitioner company cannot be challenged by taking a hyper-technical view that M/s Avantha Realty Ltd. has not been substituted in place of the petitioner company.
19. Counsel appearing for the respondents have also challenged the maintainability of these contempt petitions on the ground of limitation. The contention raised by counsel for the respondents was that the petitioners have failed to file the contempt petitions within a period of one year from the date of the passing of the interim order dated 15.9.2006. This contention of counsel for the respondents is also devoid of any merit as the period of one year is not to be reckoned from the date of passing of interim order but from the date when the petitioners came to know about the act of contempt committed by the respondents. The petitioners have filed the petitions within one year from the date of execution of the Sale Deeds although in respect of one of the Sale Deed dated 9.11.2006 objection has been raised that the same was in furtherance of the Agreement to Sell which was executed prior to the passing of the interim order. In any event of the matter this court can also exercise its power of contempt under Article 215 of the Constitution of India and therefore limitation period of one year will not come in the way of this court, if this court ultimately finds that the respondents are in contempt of the said stay order.
20. In the light of the aforesaid discussion this court deem it just and proper to afford opportunity to the said respondent nos. 1 to 4 to clear off their entire outstanding dues within a period of three months from the date of this order in terms of the directions given above and necessary orders on the sentence as well as on the fate of Sale Deeds which were executed after the passing of the interim order shall be passed by this court after completion of three months period. The respondents/contemnors no. 1 to 3 shall remain present in the court on the next date of hearing.
21. List this matter accordingly on 8.11.2012.