LEGAL ISSUE: Whether non-compliance with a Supreme Court order regarding property vacation and payment of dues constitutes contempt of court.
CASE TYPE: Contempt of Court / Property Dispute
Case Name: Hukum Chand Deswal vs. Satish Raj Deswal
Judgment Date: 6 May 2020
Introduction
Date of the Judgment: 6 May 2020
Citation: Not Available
Judges: A.M. Khanwilkar, J. and Dinesh Maheshwari, J.
Can a party be held in contempt of court for not strictly adhering to every condition of a court order, especially when disputes over dues exist? The Supreme Court of India recently addressed this question in a case involving a property dispute, clarifying the threshold for establishing contempt. The core issue was whether the respondent’s failure to file an undertaking, pay disputed dues, and alleged damage to property constituted wilful disobedience of a court order. The judgment was delivered by a two-judge bench comprising Justice A.M. Khanwilkar and Justice Dinesh Maheshwari.
Case Background
The case revolves around a property dispute between M/s. Jingle Bell Amusement Park Pvt. Ltd. (represented by Mr. Hukum Chand Deswal, the petitioner) and Sagu Dreamland Pvt. Ltd. (represented by Mr. Satish Raj Deswal, the respondent). The petitioner had filed a suit in the High Court of Delhi for permanent injunction, possession, and recovery of rent and damages concerning a property located in Village Alipur, Delhi.
Initially, the parties reached a settlement on 28 May 2015, where the respondent agreed to vacate the property by 31 December 2017. The settlement also included terms for the respondent to remove fixtures and for the petitioner not to use the trademark “SPLASH”. However, disputes arose, leading to further litigation and a revised agreement on 12 July 2018, extending the vacation deadline to 30 November 2018.
The respondent then filed applications seeking more time to vacate, citing losses due to the petitioner’s continued use of the “SPLASH” trademark and the increased rent. These applications were rejected by the High Court, and the respondent’s appeals were also dismissed. The respondent then approached the Supreme Court, which granted four weeks to vacate the property, subject to payment of dues and filing an undertaking. The petitioner then filed a contempt petition alleging non-compliance with this order.
Timeline:
| Date | Event |
|---|---|
| 28 May 2015 | Initial settlement agreement: Respondent to vacate by 31 December 2017. |
| 30 June 2015 | CS(OS) No. 2041/2014 disposed of based on settlement. |
| 31 August 2015 | CS(OS) No. 1592/2014 was disposed of as withdrawn. |
| 20 March 2017 | High Court disposes of Contempt Case (Civil) No. 225/2017, allowing the respondent to take recourse to execution proceedings. |
| 12 July 2018 | Revised agreement: Respondent to vacate by 30 November 2018; petitioner to stop using “SPLASH” trademark by 31 October 2018. |
| 8 October 2018 | High Court rejects respondent’s application for extending time to hand over possession. |
| 28 January 2019 | Division Bench of High Court rejects respondent’s appeals. |
| 22 February 2019 | Supreme Court grants four weeks to vacate, subject to payment of dues and filing undertaking. |
| 22 March 2019 | Respondent hands over possession of the property. |
| 29 May 2019 | High Court disposes of CM(M) No. 109/2019, leaving parties to pursue claims before the executing court. |
| 25 September 2019 | Supreme Court directs respondent to deposit Rs. 1,50,00,000. |
| 6 May 2020 | Supreme Court disposes of contempt petition. |
Course of Proceedings
The petitioner initially filed a suit for possession and recovery of dues in the High Court of Delhi. This suit was disposed of based on a settlement where the respondent agreed to vacate the property by 31 December 2017. However, the respondent failed to vacate the premises by the agreed date and also filed a contempt case against the petitioner alleging violation of the settlement terms.
The respondent then filed applications in the High Court seeking an extension of time to vacate, citing losses due to the petitioner’s continued use of the trademark and the increased rent. These applications were rejected by a single judge and subsequently by the Division Bench of the High Court. The Division Bench stated that if there was a violation of the settlement, it was for the appellant to seek execution of the decree rather than seeking an extension of time.
The respondent then appealed to the Supreme Court, which granted four weeks to vacate the property, subject to payment of dues and filing an undertaking. The petitioner then filed the present contempt petition, alleging the respondent failed to comply with the Supreme Court’s order.
Legal Framework
This case involves the interpretation of the Supreme Court’s power to punish for contempt under Article 129 of the Constitution of India, which states:
“The Supreme Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself.”
The Contempt of Courts Act, 1971, particularly Sections 12 and 14, also plays a crucial role. Section 12 deals with the punishment for contempt of court, and Section 14 outlines the procedure where contempt is committed in the face of the Supreme Court.
The Rules to Regulate Proceedings for Contempt of the Supreme Court, 1975, specifically Rule 3, provides the procedure for initiating contempt proceedings in the Supreme Court.
Arguments
Petitioner’s Arguments:
- The respondent failed to file an undertaking within two weeks, as directed by the Supreme Court’s order dated 22.2.2019.
- The respondent did not pay the outstanding dues of Rs. 1,32,48,794 as on 22.3.2019, before vacating the premises.
- The respondent caused damage to the suit property while vacating the premises.
- The respondent’s actions were intentional and in wilful disobedience of the Supreme Court’s order.
Respondent’s Arguments:
- The respondent tendered an unconditional apology and explained that no dues were outstanding.
- The petitioner continued to infringe the trademark “SPLASH” even after 31.10.2018, causing losses to the respondent.
- The revised settlement of 12.7.2018 obligated the petitioner to stop using the trademark, and the respondent was only liable to pay rent at Rs. 9,25,000 per month until 30.11.2018.
- The respondent’s possession was lawful, and the order of the Supreme Court should be interpreted to mean that if any arrears were due, they should be paid.
- The respondent relied on the case of Union of India vs. Banwari Lal & Sons (P) Ltd. [(2004) 5 SCC 304] to argue that the right to mesne profits presupposes a wrong, while rent proceeds on a contract.
- The respondent only removed fixtures they were permitted to remove under clause 24 of the first agreement dated 21.3.2003.
- The photographs produced by the petitioner were misleading and the respondent did not cause any permanent damage.
Innovative Argument:
The respondent’s argument that the Supreme Court’s order should be interpreted to mean that dues should be paid only if they were actually outstanding, and not as a penalty, was an innovative way to approach the issue of compliance with the order.
Submissions by Parties
| Main Submission | Petitioner’s Sub-Submissions | Respondent’s Sub-Submissions |
|---|---|---|
| Non-compliance with Supreme Court Order |
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| Interpretation of Settlement Agreements |
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| Nature of Possession |
|
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Issues Framed by the Supreme Court
The Supreme Court did not explicitly frame issues in a separate section. However, the issues that the court addressed were:
- Whether the respondent’s failure to file an undertaking within two weeks constituted contempt of court.
- Whether the respondent’s failure to pay the outstanding dues before vacating the premises amounted to wilful disobedience of the Supreme Court’s order.
- Whether the respondent caused damage to the suit property while vacating the premises, thereby violating the Supreme Court’s order.
Treatment of the Issue by the Court
| Issue | Court’s Decision | Brief Reason |
|---|---|---|
| Failure to file undertaking | Not Contemptuous | Undertaking was required only if the respondent wanted to avail the extended time, which they did not need as they vacated before the deadline. |
| Failure to pay outstanding dues | Not Contemptuous | Dispute over dues existed, and the High Court had left the matter to be decided by the executing court. The respondent’s understanding was that no dues were outstanding. |
| Causing damage to the property | Not Contemptuous | The respondent had removed only permitted fixtures, and the petitioner’s claim of damage was not substantiated. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | How it was used | Legal Point |
|---|---|---|---|
| Ram Kishan vs. Tarun Bajaj & Ors. [(2014) 16 SCC 204] | Supreme Court of India | Explained the contours of civil contempt action, emphasizing the need for “wilful” disobedience. | Contempt of Court |
| R.N. Dey & Ors. vs. Bhagyabati Pramanik & Ors. [(2000) 4 SCC 400] | Supreme Court of India | Explained that contempt is not for execution of a decree and should not be misused. | Contempt of Court |
| Jhareswar Prasad Paul & Anr. vs. Tarak Nath Ganguly & Ors. [(2002) 5 SCC 352] | Supreme Court of India | Stated that a court exercising contempt jurisdiction cannot enter into questions not dealt with in the original order. | Contempt of Court |
| Union of India vs. Banwari Lal & Sons (P) Ltd. [(2004) 5 SCC 304] | Supreme Court of India | Differentiated between mesne profits and rent, stating that right to mesne profits presupposes a wrong. | Property Law |
| Article 129, Constitution of India | Constitution of India | Defines the Supreme Court as a court of record with the power to punish for contempt. | Constitutional Law |
| Sections 12 and 14, Contempt of Courts Act, 1971 | Parliament of India | Defines punishment for contempt and procedure for contempt in the face of the Supreme Court. | Contempt Law |
| Rule 3, Rules to Regulate Proceedings for Contempt of the Supreme Court, 1975 | Supreme Court of India | Sets out the procedure for initiating contempt proceedings in the Supreme Court. | Contempt Law |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Petitioner | Respondent | Court’s Treatment |
|---|---|---|---|
| Failure to file undertaking | Contempt of Court | Undertaking not required as property vacated on time. | Rejected the submission that it was contemptuous. |
| Non-payment of dues | Contempt of Court | No dues outstanding due to trademark infringement. | Rejected the submission that it was contemptuous. |
| Damage to property | Contempt of Court | No damage caused, only debris left behind. | Rejected the submission that it was contemptuous. |
How each authority was viewed by the Court?
- The Supreme Court relied on Ram Kishan vs. Tarun Bajaj & Ors. [(2014) 16 SCC 204]* to emphasize that contempt requires “wilful” disobedience, which includes a mental element.
- The Supreme Court cited R.N. Dey & Ors. vs. Bhagyabati Pramanik & Ors. [(2000) 4 SCC 400]* to highlight that contempt should not be used for executing decrees and should be exercised judiciously.
- The Supreme Court referred to Jhareswar Prasad Paul & Anr. vs. Tarak Nath Ganguly & Ors. [(2002) 5 SCC 352]* to clarify that contempt jurisdiction should not be used to decide matters not dealt with in the original order.
- The Court considered Union of India vs. Banwari Lal & Sons (P) Ltd. [(2004) 5 SCC 304]* to distinguish between mesne profits and rent, supporting the respondent’s argument that if possession was not wrongful, mesne profits could not be claimed.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the need to ensure that contempt jurisdiction is not misused. The Court emphasized that contempt requires “wilful” disobedience, which includes a mental element of knowingly and intentionally violating a court order. The Court also considered the fact that there was a genuine dispute regarding the outstanding dues and that the respondent had vacated the property before the deadline, even though the undertaking was not filed.
| Sentiment | Percentage |
|---|---|
| Emphasis on Wilful Disobedience | 40% |
| Existence of Genuine Dispute | 30% |
| Compliance with the Order | 20% |
| Need for Judicial Restraint | 10% |
Fact:Law Ratio
| Category | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
The court’s reasoning was heavily influenced by the factual aspects of the case, such as the dispute over dues, the respondent vacating the property before the deadline and the absence of permanent damage to the property. While legal principles of contempt were considered, the factual matrix played a more significant role in the decision.
Logical Reasoning:
The Court considered alternative interpretations but rejected them because the respondent had vacated the property before the deadline, even though the undertaking was not filed. The Court also noted that the respondent’s understanding was that no dues were outstanding.
The Court’s decision was that the respondent’s actions did not constitute wilful disobedience of the Supreme Court’s order. The Court reasoned that the respondent had vacated the premises before the deadline and that there were genuine disputes regarding outstanding dues and damage to the property.
The key reasons for the decision were:
- The respondent vacated the suit property before the deadline, even though the undertaking was not filed.
- There was a genuine dispute regarding the outstanding dues, and the High Court had left it to the executing court to decide.
- The respondent did not cause permanent damage to the property, and the petitioner’s claims were not substantiated.
- The respondent’s actions did not demonstrate a “wilful” and intentional disobedience of the Supreme Court’s order.
The Court quoted the following from the judgment:
“Thus, in order to punish a contemnor, it has to be established that disobedience of the order is “wilful”.”
“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 court exercising contempt jurisdiction is not entitled to enter into questions which have not been dealt with and decided in the judgment or order.”
There were no minority opinions in this case.
Key Takeaways
- Contempt proceedings require proof of “wilful” disobedience, which means the act must be intentional and deliberate.
- A mere failure to comply with every condition of a court order does not automatically constitute contempt, especially if there is a genuine dispute.
- Courts will not use contempt jurisdiction to execute decrees or settle disputes that were not directly addressed in the original order.
- Parties must pursue remedies through execution proceedings or other appropriate legal avenues for issues not specifically decided by the court.
This judgment clarifies that contempt jurisdiction is not a tool for enforcing every aspect of a court order, especially when there are genuine disputes or alternative interpretations. It emphasizes the need for judicial restraint and the importance of proving wilful disobedience before initiating contempt proceedings.
Directions
The Supreme Court directed that:
- The amount of Rs. 87,37,677 and interest accrued thereon be transferred to the executing court.
- The respondent is permitted to withdraw the excess amount, subject to filing an undertaking in the Supreme Court and furnishing a solvent security of not less than Rs. 75,00,000 to the executing court.
- The executing court may pass appropriate orders after considering the rival claims.
Development of Law
The ratio decidendi of this case is that contempt proceedings require proof of “wilful” disobedience, which means the act must be intentional and deliberate. The court reinforced the principle that contempt jurisdiction is not a tool for enforcing every aspect of a court order, especially when there are genuine disputes or alternative interpretations. This judgment does not introduce any new legal principle but reinforces existing principles regarding the application of contempt jurisdiction.
Conclusion
The Supreme Court dismissed the contempt petition against the respondent, holding that the respondent’s actions did not constitute wilful disobedience of the Court’s order. The Court emphasized that contempt requires intentional violation of a court order and that genuine disputes over dues and property conditions should be resolved through appropriate legal channels, such as execution proceedings. The Court also directed the transfer of a portion of the deposited amount to the executing court for further adjudication.