Holding

The respondents are guilty of contempt of court for unauthorised dealing with property in custodia legis and for violating court orders.

Summary

Bank of India sued Vijay Transport for recovery of a sum, while the respondents filed a larger counter‑claim. The High Court stayed the counter‑claim on the condition that the bank deposit Rs 16 lakhs, allowing the respondents to withdraw it only upon furnishing a bank guarantee. After the High Court later decreed in favour of the bank and dismissed the counter‑claim, the respondents unlawfully obtained the deposited amount by transferring the restitution application and encashing a cheque, despite no guarantee being produced. The Supreme Court, acting suo motu, held that the respondents' unauthorized dealing with the money held in custodia legis and their repeated violations of court orders amounted to contempt of court. The Court noted that the respondents repeatedly gave false assurances, obtained adjournments, and rescinded an unconditional settlement offer, compounding their contumacious conduct. Accordingly, both respondents were found guilty of contempt and sentenced to simple imprisonment for two months each, together with a fine of Rs 2,000. The contempt petitions were disposed of, and the bank was allowed to recover the Rs 16 lakhs.

Issues considered

Whether the respondents' withdrawal and use of the Rs 16 lakhs deposited in court constitute contempt of court under the Contempt of Courts Act, 1971.
Whether the respondents' violation of the High Court's order and subsequent failure to comply with Supreme Court directives amount to contempt.

Legislation cited

Contempt of Courts Act, 1971s. 12, s. 2

Subjects

contempt of courtcustodia legisunauthorised dealingbreach of court ordercivil procedurebank guaranteerestitutioncontempt sentencing

Judgment

BANK OF INDIA A
v.
VIJA Y TRANSPORT AND ORS.

OCTOBER 12, 2000

[S.P. BHARUCHA, Y.K. SABHARWAL AND RUMA PAL, JJ.] B

Contempt of Courts Act, I 9 7 I: Sections 2 and I 2.

- Contempt of Court-Bank-Suit for recovery-Counter claim by
defendants-Suit decreed in part and counter claim allowed in its entirety- C
Appeal-High Court staying the counter claim subject to bank depositing
certain amount-Defendants allowed to withdraw the amount after furnishing
bank guarantee for the same amount-Subsequently, High Court decreeing
the suit and dismissing the counter claim-Banks application for restitution
of amount deposited-Guarantor bank depositing the amount in the Court- D
Defendants in a planned manner transferring the restitution application to
another court and withdrawing the amount deposited in the court-Amount
not repaid even after several assurances-Unconditional offer made before

- Supreme Court was resiled from and undertakings given to court were
breached-Held, unauthorisedly dealing with property in custodia legis and
violating orders of court tantamount to contempt-Action of defendants E
amounts to unauthorised dealing with property in custodia legis and violation
of Courts' orders-Thus, they were guilty of contempt of court.

Sentence-Quantum-Determination of-Events taking place subsequent
to contempt notice-Relevancy of-Contemners obtaining adjournments
assuring payment and settlement, but not fuljilling the same-Unconditional F
offer to pay·decretal amount, resiledfrom-Held, contemners have compounded
contumacious conduct with which they were charged with further act of
contumacy-Events taking place subsequent to issuance of contempt notice
are certainly relevant for determining the sentence-Thus, contemners
sentenced to simple imprisonment for two years alongwith fine. G
Words & Phrases

"Custodia legis "-Meaning of

Respondent No. 2 was sole surviving partner of respondent No. 1 firm, H
685
686 SUPREME COURT REPOROfS [2000] SUPP. 3 S.C.R.

A and respondent No. 3 was her husband and power of attorney holder.
Petitioner-bank filed a suit for recovery of ce11ain amount against respondent
No. 1. Respondent No. 1 raised a counter claim for a larger amount. Trial
Court partly decreed the claim of petitioner-bank allowed the counter claim

B
of respondent in its entirety. On appeal, High Court stayed the counter claim
subject to the petitioner-bank depositing Rs. 16 lakhs in the court Respondent
No. 1 was allowed to withdraw the said sum of Rs. 16 lakhs upon furnishing
a bank guarantee for the same amount. However, subsequently High Court
-
decreed the suit of the petitioner-bank and dismissed the counter claim of
the respondent Consequently, petitioner-bank approached the Trial Court for
restitution of the amount deposited pursuant to the order of High Court. On
C the direction of the court, guarantor bank deposited the amount of Rs. 16
lakhs. Respondents in a planned manner transferred the restitution
application to another trial court and wilfully procured a cheque for Rs. 16
lakhs and got the same encashed. High Court initiated recovery proceeding
against respondents but the amount was not repaid. On appeal before this
Court respondents undertook to deposit the amount but failed to do so.
D Consequently, this Court initiated a suo motu contempt proceeding against
the respondents for unauthorised dealing with property in custodia legis and
violating the Court's Order. The Bank also filed a contempt petition against
the respondents.

E Pursuant to the contempt notice, respondents appeared before this
Court and assured that the amount will be deposited within eight weeks. But
·-
despite the said assurance, the amount was not deposited and time was
sought to file reply to the suo motu contempt notice. Respondents after
taking several adjournments ultimately deposited the amount of Rs. 16
lakhs. Thereafter, respondents on the pretext of reaching a settlement with
F the plaintiff for payment of the decretal amount with interest obtained several
adjournments but no settleme~t was reached. On issuance of non-bailable
warrant, the respondents appeared before this court and made an
"unconditional offer" for payment of decretal amount with interest in four
instalments but failed to pay the first instalment itself in time. Thereafter,
G respondents offered certain immovable properties which could be sold to
meet the decretal amount. But later it was revealed that the said properties
were subject matter of litigation with a third party, which fact was
not disclosed earlier. Ultimately this Court allowed the appeal of the Bank
and allowed the Bank to withdraw the amount of Rs. 16 lakhs deposited by
the respondents. Thereafter the Court proceeded to decide the contempt
H matters.
BANK OF INDIA v. VIJA Y TRANSPORT 687
Disposing of the contempt matters, the Court A
HELD. 1.1. Respondents unauthorisedly dealt with the property in
custodia legis aJ:!d thus, they were guilty of contempt of court. (699-F)

1.2. Property in custodia legis means the property that is kept in the
possession.and under the protection of Court and any disturbance of the Court's B
possession without its permission amounts to contempt of its authority.
(698-C)

1.3. The circumstances obtaining in the case leave no manner of doubt
that the respondents have wilfully dealt with property which was custodia legis. C
The amount of Rs. 16 lakhs had been kept according to the directive of the
High Court in the custody of the Sub-Judge pending disposal of the appeal
filed by the petitioner bank. Therefore, when the appeal was allowed, the
' amount deposited by way of security should have been returned to the
petitioner-bank as a matter of course. Restitution of the deposit in the event
of success was implicit in the order. There could be no other interpretation D
of the order of the High Court. From the outcome of the inquiry against the
Sub-Judge, it is clear that the order was tainted and the dishonesty of the
respondents patent. Furthermore, the rush with which the matters were
concluded and the monies withdrawn by the respondents speak for itself, that
this was done in furtherance of a plan to reap an illegal benefit. Thus, the
'error' was committed at the instance of the respondents, and the gravity was E
enhanced by the action of the respondents in appropriating the amount
unconditionally. It is not sufficient for the respondents to set up the order of
the Subordinate Judge, as a shield. A judicial proceeding which is otherwise
permissible may become an engine of fraud. (699-F; 698-D-E; 699-F; 698-F-G)

Everest Coal Company Ltd. v. State of Bihar and Ors., [1978) 1 SCC F
12 and Advocate General State of Bihar v. Madhya Pradesh Khair Industries
Ltd., (1980) 2 SCR 1175, referred to.

2.1. Respondents were also guilty of violating court orders. Respondents
were aware of the order of the High Court which allowed respondent No. 1 to G
withdraw the money only against the bank guarantee for the same amount.
They knew that there was in fact no subsisting bank guarantee furnished by
the respondent No. 1 yet they withdrew the amount. Having got the amount of
Rs. 16 lakhs to which they were and could not, in any view of the law, have
been entitled to, the respondents enjoyed the benefit of the amount for about
15 years despite orders passed by this Court and it was not until this Court H
688 SUPREME COURT REPORTS (2000] SUPP. 3 S.C.R.

A initiated proceedings in contempt against the respondents that the money was
reimbursed in driblets by the respondents. The undertaking to this Court
was lightly given and breached with impunity. [700-G-H; 701-A; 702-B]

2.2. Both the respondents have polluted the stream of justice. The
respondents have continued with the contumacious conduct with impunity even
B after the issuance of the notices to them. The "unconditional offer" made was
resiled from and the undertaking given to the Court was breached.
Adjournments were obtained on the basis of assurance of payment and
settlement which_ they had no intention to fulfil. Thus, it is clear from all the
facts that the respondents have compounded the contumacious conduct with
C which they were charged with further acts of contumacy. Their alleged
'esteem' for this Court and the sincerity of their apology are falsified by their
unrepentant behaviour. (701-D; 702-F]

3. The jurisdiction that the Court exercises in cases of alleged contempt
is quasi-criminal and the Court must be satisfied on the material before it
D that contempt of court was in fact committed. But that satisfaction may be
derived from the circumstances of the case. (699-E]

Ram Avtar Shukla v. Arvind Shukla, (1995) Suppl. 2 SCC 130, referred to.

4. The facts relating to the events which have taken place subsequent
E to the issuance of the notices are not material for the purpose of conviction
but are certainly relevant to the question of sentence. Thus, in the instant
case, given the nature of the contempt, punishment in the nature of a fine is
not enough. Thus, both the respondents are sentenced to simple imprisonment
for two years in addition to payment of fine. (698-A; 702-G]

p Dhananjay Sharma v. State of Haryana and Others, [1995) 3 SCC 757,
referred to.

CIVIL APPELLATE JURISDICTION :

Suo Motu Contempt Petition No. 488 of 1998.

G AND

Contempt Petition (C) No. 281 of 1998.

IN
--
H Civil Appeal No. 1771 of1990.
BANK OF INDIA v. VIJAY TRANSPORT [RUMA PAL, J.] 689
From the Judgment and Order dated 19.8.88 of the Andhra Pradesh High A
Court in C.M.P. No. 103 l of 1986.

G.L. Sanghi, P.H. Parekh, Ms. Bina Madhavan, Sanjay Parikh, V.
Krishnamurthy, Krishnamurthi Swami, V. Ramasubramaniam, A.T. Rao, A. Subba
Rao and T. Harish Kumar for the appearing parties.
B
The Judgment of the Court was delivered by

RUMA PAL, J. This proc~eding in contempt was initiated by this Court
suo motu, on a prima-facie finding that the respondents 2 and 3 were guilty
of contempt not only by dealing with property which was custodia legis but
also by disobeying orders of Court. At the conclusion of the arguments we C
are of the confirmed view that the prima facie conclusion arrived at by us
was correct, and that the respondents 2 and 3 are liable to be punished for
their contumacious conduct.

The respondent No. 2 describes herself as the " sole surviving partner" D
of the respondent No. l. The respondent No. 3 is the husband and power of
attorney holder of respondent No. 2.

The litigation out of which this proceeding arises commenced in 1975
when the petitioner-bank filed a suit against respondent no. l interalia for
recovery ofa sum of Rs. 18,14,817.91. The suit was instituted in the Court of E
the Sub Judge, Eluru in the State of Andhra Pradesh. The respondent No. l
raised a counter claim against the petitioner for a sum of Rs. 34,48,799. On
6th July 1976, the petitioner's claim was decreed only to the extent of a sum
of Rs. 1,00,418.55. The counter claim of the respondent No. l was however
allowed in its entirety with costs.
F
The petitioner-bank preferred an appeal before the High Court and
prayed for stay of the execution of the decree as far as the counter claim was
concerned. The High Court, by an order dated 28.12.1976, granted the stay
subject to the petitioner-bank depositing Rs. 16 lakhs as well as a further sum
of Rs. 48,890.95 towards costs in the Court of the Subordinate Judge, Eluru. G

- The respondent No. 1 was given the liberty to withdraw the sum of Rs. 16
lakhs upon furnishing a bank guarantee for the same amount. The respondent
No. l was also given the liberty to withdraw the amount deposited on account
of costs unconditionally. The petitioner-bank deposited the amount of Rs. 16
lakhs and Rs. 48,890.95 in the Subordinate Judge's Court at Eluru. The
./' - respondent No. l withdrew both sums after furnishing a bank guarantee in H
690 SUPREME COURT REPORTS [2000) SUPP. 3 S.C.R.

A favour of the Subordinate Judge for Rs. 16 lakhs. The bank which guaranteed
the amount was the Kamataka Bank.

On 20th September, 1983 the petitioner-bank's appeal was allowed by
the High Court. The High Court held that the petitioner-bank was entitled to
a decree for a sum of Rs. 18,49,209.70 together with Rs. 8,15,324.92 as interest
B @ 12% p.a. According to the High Court, the petitioner's claim would have
to be scaled down because of the provisions of the Andhra Pradesh (Andhra
Areas) Agriculturists Relief Act, I 938. The counter claim of the respondent
no. 1 was dismissed in toto.

From this decision both the petitioner-bank and the respondent No.
-
C preferred appeals by way of special leave to this Court. No stay was obtained
of the High Court's decision in either of the appeals.

During the pendency of the appeals before this Court, the petitioner-
bank applied to the Subordinate Judge, Eluru for restitution of the amount
D which had been deposited by the petitioner pursuant to the order of High
Court dated 28.12. I 976. The Sub Judge, Eluru directed the Kamataka Bank to
deposit the sum of Rs. I 6 lakhs guaranteed by it together with the interest
accumulated thereon within one month. The Karnataka Bank complied with
the order and the amount so deposited was allowed by the Sub Judge to be
invested with the Eluru Branch of the petitioner-bank in a Double Benefit
E Deposit Account for a period of 12 months.

The facts as subsequently revealed show that it was at this point that
the respondents conceived a plan to whisk away this amount of Rs. I 6 lakhs
- a plan which was cunningly and carefully forged, link-by-link. It started with
an application filed by the respondent No. l before the District Court for
F transferring the application for restitution from the Sub Judge, Eluru to the
Sub Court, Tadepalligudem on the ground that there was an apprehension
that the Sub Judge Eluru, would not do justice to the respondents. The
petition was dismissed by the District Judge on 30th September, 1985. An
appeal was preferred before the High Court on 7th October, 1985. By an ex-
G parte order the High Court of Andhra Pradesh allowed the transfer. The
petitioner-bank unsuccessfully filed a review petition before the High Court
against the ex-parte order of transfer. The review petition was rejected on
18th November 1985.

On the very next day ( that is, I 9th November, I 985) the Sub Judge,
H Tadepalligudem as "full Additional Charge of Subordinate Judge, Eluru",
BANK OF INDIA v. VIJAY TRANSPORT [RUMA PAL, J.] 691

directed the Branch Manager of the petitioner's Elum Branch to prematurely A
encash the Double Benefit Deposit Certificate and to transfer the same to the
Sub Judge, Tadepalligudem because the execution records had already been
transferred there.

On 28th November 1985, the same Judge passed an order on the
application of the petitioner-bank stating that the bank deposit need not be B
encashed until the disposal of the pending applications for restitution. Yet,
before the applicatiuns were disposed of, on 20th December, 1985 the Judge,
on an application moved by the respondents, directed the petitioner-bank to
encash the deposit receipt for Rs. 16 lakhs and to send the same with the
accrued interest by way of Banker's cheque or Demand Draft in the name of C
the Subordinate Judge, Tadepalligudem. The order was communicated to the
Branch Manager of the petitioner-bank at Elum by the Sheristadar and Bench
clerk of the Subordinate Judge who were accompanied by an advocate and
an officer of the State Bank of India, Tadepalligudem. All of them insisted on
the immediate encashment and payment of the proceeds of the fixed deposit.
They refused to leave until the Branch Manager agreed to send one of his D'
officials to the Tadepalligudem Court.

On 24th December 1985, the petitioner's applications for restitution were
taken up for hearing. At the conclusion of the hearing, at the instance of the
respondents, a notice was issued by the Subordinate Judge, Tadepalligudem E
to the petitioner's Branch Manager, Eluru directing him to appear in person
"-.
on 26th December 1985 and explain why he had not complied with the order
dated 20th December 1985. On 26th December 1985, the Branch Manager
appeared before the Subordinate Judge, Tadepalligudem and deposited the
amount of Rs. 16 lakhs in his Court in the form of a pay order.
F
Significantly, on that very day, a current account in the name of the
respondent No. l was opened in the State Bank of India, Tadepalligudem
Branch by the respondent No. 3 as the Power of Attorney holder ofrespondent
No. 1. On 27th December 1985 at about l 0.00 a.m., the Subordinate Judge,
Tadepalligudem handed over the pay order issued in his favour by the G
petitioner-bank to the officer of the State Bank of India Tadepalligudem
,
Branch. The pay order was cleared on the same day and the State Bank of
India deposited the proceeds after encashment in the Civil Court Deposit
Account of the Subordinate Court, Tadepalligudem. On the same day, the
Subordinate Judge issued a cheque on the said current account for a sum of
Rs. 16, 30,619 .1 Sp with the direction to the State Bank to keep the amount in H
F

692 SUPREME COURT REPORTS [2000] SUPP. 3 S.C.R.
I
A term deposit receipt for a period of 15 days and the State Bank of India
complied with the direction.

As to what transpired after this is best stated in the language used by
the Law Officer of the petitioner-bank in his affidavit affirmed on 1st January
1986:
B
"On 30.12.1985 the Sub-Judge, came to the Bench at 10.30 A.M, and
pronounced the orders in all Execution Applications at 10.45 A.M. No.
allowed E.A.207/85 and thus reviewed the orders passed in E.A. 363/
r
84 and dismissed E.A. 363/84 E.A.196/85 E.A. 197/85 but allowed
E.A.199/85 granting interest only at 6% while rejecting E.A.198 and
c 200/85. Immediately our Advocate presented a cheque petition with an
out of order petition after due notice to the Advocate of Vijay Transport
at about 10.50 a.m. In the said petition, we stated that the bank is ,...
entitled for the amount of the orders on the E.As. The learned
Subordinate Judge got down from the Bench after call work at about
D 11.25. Suspecting that the Judge is prepared to pay the amount to the
Vijay Transport our Advocate prepared a stay petition at 1.30 p.m. and
after notice to the respondents Advocate went to the court and sent
a word to the Sub-Judge about the said petition which he intended ,.,
to file. He was asked to wait in the Court hall. Till about 2.55 p.m. there
was no word from the Judge and on the other hand the Advocate was
E informed that the Judge and bench clerk (were) discussing about the
matter. At about 2.55 p.m our Advocate repeatedly enquired with the
court staff the reason for the delay. At 3 p.m. on the instructions of
the Sub-Judge Execution Bench clerk received the said petition from
our advocate. Meanwhile our advocate's clerk also happened to see
the cheque petition filed by Vijay Transport lying on the table of the
F
Bench clerk.

9. I submit that no cheque petition was presented with any out of
order petition in the open court by any of the Advocates of the Vijay
Transport or party person. I also submit that no notice was issued
either to us or to the Karnataka Bank who has deposited Rs. 16 lakhs
G
on the cheque petition. The Advocate for the Vijay Transport was not
present in the court between 10.50 a.m. to 4.15 p.m. on 30.12.1985. Our
Advocate Mr. Ch. S. Kameswararao waited in the hall till 4. IO p.m. and
he was informed that our stay petitions and cheque petitions were
dismissed since a cheque was ordered in favour of Mis Vijay Transport .
H in E.A. 252/85."
BANK OF INDIA v. VIJAY TRANSPORT [RUMA PAL, J.] 693

While the petitioner-bank's representative was kept waiting by the Sub A
Judge, it is seen from the affidavit affirmed on 7th February 1996 by the State
. Bank of India in the proceedings before us that:

"On 30.12.1985, the learned Subordinate Judge, through his letter
dated 30.12.1985, enclosing the said deposit receipt requested this
respondent to cancel the term deposit receipt No. 209215 dated B
27 .12.1985 and adjust the same to the Civil Court deposit challan No.
157 dated 30.12.1985. Accordingly, it was done on the same date. On
30.12.1985 itself, the learned Sub Judge issued a Civil Court cheque
favouring the lst Respondent for a sum of Rs. 16,30,619.18. It was
presented on the same day. Hence accordingly, this respondent (i.e. C
the State Bank of India) debited Civil Court deposit account of Sub
Judge, Tadepalligudem, and credited the same to the account of l st
respondent. On the same day, the 1st respondent presented a cheque
bearing No. 248178 dated 30.12.1985 for Rs. 16,00,000.00 requesting
this respondent to issue.a demand draft on its Guindy Branch, Madras
in favour of 3rd respondent on debiting commission to this account. D
Towards the commission, he issued another cheque bearing No. 248180
dated 30.12.85 for Rs. 800.00. Thereupon, this respondent (SBI) issued
two demand drafts - for Rs. 8,00,000.00 each bearing No. 168997 and
168998 dated 30.12.1985 favouring 3rd respondent. Another cheque
was issued bearing No. 248179 dated 30.12.1985 for Rs. 25,000.00 E
demanding the respondent to pay cash. Accordingly, cash was paid."

The petitioner-bank challenged the order dated 30th December 1985 by
way of a Civil Revision Petition. A stay application was moved at the residence
of the Judge of the High Court and an interim order was passed at 9.35 a.m.
on 2nd January 1996 restraining the State Bank of India, Tadepalligudem F
Branch from paying the sum of Rs. 16,30,619.18 p to the respondents and also
restraining the respondents from withdrawing the amount from the State Bank
of India, Tadepalligudem or their order pending further orders on the petition.
This order was communicated by a Telex message to the State Bank of India.
But the respondents withdrew the amount on 30th December, 1985 itself and
the interim order of injunction was successfully thwarted by the respondents. G
The High Court directed proceedings to be initiated for reccvery of the
amount from respondent No. I and thereafter payment of the money to the
petitioner-bank. Despite this order, the respondents did not repay the amount.

On 3rd March 1986, this Court in the petitioner's pending appeal directed H
694 SUPREME COURT REPORTS [2000] SUPP. 3 S.C.R.

A the sale of vehicles which had been hypothecated by respondent No. 1 to
the petitioner-bank. No vehicles were handed over by the respondent No. I
to the petitioner-bank.

On 22µd September 1986, the following order was passed by this Court
in the appeal filed by respondents:
B
"Shri U.R. Lalit, learned counsel for appellants Mis Vijay Transport &
Ors. states that the amount of Rupees sixteen lakhs and odd will be
deposited with Bank of India, respondent No. I on or before 30th
November 1986. If the amount is not deposited within the aforesaid
period this appeal will stand dismissed."
c
Needless to say, the amount was not deposited. This is recorded in
this Court's order dated 9th December 1986 in the following words:

"Since the amount has not been deposited as ordered by this
Court, the appeal stands dismissed in terms of the order dated the
D 22nd September 1986. The appeal is dismissed."

.1 On 11th November 1987, the petitioner-bank's appeal from the judgment
and order of'the High Court dated 20th September 1983 was allowed and the
bank was given the ~ight to recover the entire amount decreed without any
scaling down under the Andhra Pradesh (Andhra Areas) Agriculturists Relief
E Act, IV of 1938.

The petitioner-bank was, therefore, in a situation where the claim filed
by them in 197 S was ultimately decreed in 1987. But in the process it had not
only not recovered any amount from the judgment debtor, but on the other
F hand, because of the machinations of the respondents, it had been deprived
of a further sum of over Rs. 16 lakhs which had been deposited by it in the
custody of the Court.

The application filed by petitioner-bank before the High Court, for
direction to the respondents including the State Bank of India, Tadepalligu~.em
G Branch to deposit the amount within a week was rejected by the order dated
18th October 1998. The petitioner-bank impugned the order of refusal of the
High Court before this Court on 18th October 1989. Affidavits were filed. It
was during these proceedings that this Court issued the suo motu notice to
the respondent No. 2 on 29th April 1998 as under:

H "We have heard learned counsel for the appellant and learned
BANK OF INDIA v. VIJA Y TRANSPORT [RUMA PAL, J.] 695
counsel for 2nd respondent. Quite apart from whether or not the A
appellant succeeds in this civil appeal, the facts of the civil appeal
reveal a prima facie case of contempt of court in that there appears
to have been flagrant disobedience by the 2nd respondent of court
1
orders and dealings by her in monies which were custodia legis. This
court cannot tum a blind eye to such conduct..
B
Issue suo motu contempt notice to the 2nd respondent returnable
in August 1998. The Civil Appeal is adjourned to be placed on board
along with the contempt notice."

The respondent No. 2 appeared in Court on 12th August 1998 pursuant
to the notice. As recorded in this Court's order: C
"Mr. Ganguli, learned counsel for the second respondent states that
the second respondent is present in Court and has instructed him to
state that the sum of Rs. 16 lacs shall be deposited by her in Court
within eight weeks without prejudice to all other rights and
contentions. D
To enable the second respondent to make the deposit, the appeal
is adjourned for eight weeks."

Despite the express assurance given to and acted on by the Court, the
amount was not deposited. E
When the matter came up after eight weeks the respondent No. 2 asked
for an opportunity to file an answer to the suo motu notice. In her answer
to the notice, the respondent No. 2 for the first time made out, what has
subsequently transpired to be, a wholly sham dispute with the respondent
No. 3. She placed the blame for non-deposit of the money on her husband, F
respondent No. 3, from whom she said she had been living separately with
her son "since the last few years". She feigned ignorance of the position as
far as assets and liabilities of respondent No. I were concerned.

Without going into the question of the actuality of the alleged dispute
between the respondent Nos. 2 and 3, on 3rd December 1998 this Court issued G
a suo motu notice of contempt to respondent No. 3 for the same reasons. The
respondent Nos. 2 was directed by this Court to hand over the draft of Rs.
6 lakhs which she said was with her to the Registrar of the Supreme Court.
The Court also recorded:

" ............ Learned counsel, on instructions, undertakes to Court that H
696 SUPREME COURT REPORTS (2000] SUPP. 3 S.C.R.

A the 2nd respondent shall deposit in Court a further sum of Rs. 10
lakhs within six months, without prejudice to all her rights and
contentions. The sum of Rs. 10 lakhs shall be deposited in two
instalments of Rs. 5 lakhs each, the first deposit to be made on or
before 10.3.1999.............." l

B The undertaking was not complied witlt and on 24th March 1999, the
time to deposit Rs. 5 lakhs was extended till 3rd June 1999. This order was
also not complied with.

On 10th June 1999, the respondent No. 2 came forward with two bank
drafts totalling Rs. 3,50,000 only. This amount was directed to be deposited
C by 11th August 1999. Allowing the prayer of the counsel for respondent No.
2, the balance was directed to be paid within six weeks. This order was also
not complied with within the time specified and ultimately the amount of Rs.
16 lakhs was deposited by 22nd October 1999.

On 27th October 1999, the second and third respondent submitted that
D the amount of Rs. 16 lakhs should be adjusted against the decretal claim of
the petitioner-bank and that they should be given an opportunity to settle the
dispute between the parties. The matter was accordingly adjourned. There
waS/fio settlement nor did the respondents appear on the adjourned date.
Both of them sent fax messages stating that they were ill. By our order dated
E 24th November 1999 we directed non-bailable warrants to be issued. The
respondents appeared before the Court on the returnable date, i.e., 14th
December 1999, and again stated that they wished to settle the matter.

On 15th February 2000, the respondents made an "unconditional offer
of settlement" through their counsel. The respondents offered to pay the
p decretal amount and interest @ 12% p.a. in four equal instalments. The first
instalment (approximately of Rs. 19 lakhs) was to be paid on or before 15th
March 2000 and the subsequent three instalments on or before 15th June
2000, 15th September 2000 and 15th December 2000. The Court recorded this
as well as the further submission of the respondents:

G "Learned counsel for the respondents 2 and 3 states that land outside
Chennai belonging to respondents 2 and 3 has been mortgaged to the
appellant as security in the transaction in appeal and that land shall
be security for payment of the said amount in the manner aforestated."

It was made clear that the payment agreed to be made was exclusive of the
H sum already obtained by the petitioner-bank, namely Rs. 16,92,977 and that
BANK OF INDIA v. VIJA Y TRANSPORT [RUMA PAL, J.] 697

"regardless of whether or not the appellant has communicated to the A
respondents its willingness to accept this offer, the respondent shall deposit
in this court the sum of Rs. 19 lakhs on or before 15th March 2000, which,
if the offer is accepted, will be credited towards the first instalment payable
to the appellant."

Neither of the respondents have deposited the amount of Rs. 19 lakhs B
nor any amount at all in blatant disregard of this Court's mandate and the
respondents resiled from their "unconditional offer" wholly.

From time to time, the matter appeared before this Court and it was
adjourned to give the respondents every opportunity to comply with the C
orders of this Court. Ultimately both the respondents filed two separate
affidavits which were taken on file by this Court on 24th August 2000 in
which they claimed that they had immovable properties situated at
Chettiaragaram Village, Saidapet Taluk, Chengulpet District, bearing Survey
Nos. 13, 14 & 15 which could be sold to meet the decretal claim. However,
the offer was that the sale should be made to a buyer of the respondents' D
choice.

Having regard to the past conduct of the respondents, we were not
prepared to allow the respondents to handle the private sale of properties
admittedly mortgaged to the petitioner bank. Both the respondents then filed
separate affidavits affirmed on 24th August 2000 stating that the land could E
be sold through the District Judge subject to the approval of this Court.

When the matter was again taken up, it was submitted by the respondents
that the property was the subject matter of litigation and was under the
custody of a Receiver. It now appears that a suit was filed in 1990 against F
the respondents and their son by a third party alleging that the property
admittedly mortgaged to the petitioner had been agreed to be sold to such
third party and at the instance of these respondents, their son has been
appointed receiver over the property.

It does not appear at what stage the suit is. There is no explanation why G
the respondents did not state this fact in the several affidavits filed before
this Court. As it was clear that the respondents were merely prevaricating, we
concluded hearing of the appeal of the petitioner from the order of the High
Court dated 18th October 1988 by which the High Court had refused to direct
the respondents to pay the Rs. 16 lakhs by a fixed date. The appeal was
allowed by us and the amount of Rs. 16 lakhs deposited by the respondent H
698 SUPREME COURT REPORTS [2000] SUPP. 3 S.C.R.

A was allowed to be withdrawn by the petitioner.

It is in this background that the contempt proceeding is to be decided.
We make it clear that the facts relating to the events which have taken place
subsequent to the issuance of the notices are not material for the purpose
of conviction but are certainly relevant to the question of sentence.
B
As noted at the outset, the acts of contempt alleged are ( i )
unauthorisedly dealing with property custodia legis and (ii) violating orders
of Court. There is and can be no doubt that either of these two acts if
established would tantamount to contempt. Property in custodia legis means
that the property is kept in the possession and under the protection of Court.
C Monies deposited in Court by way of security are held by the Court in
custodia legis to the credit of the party who is ultimately successful. Any
other person dealing with the account so deposited does so at his or her peril
and " ..... any litigative disturbance of the Court's possession without its
permission amounts to contempt of its authority ..... " (per V.R. Krishna Iyer, J.
D in Everest Coal Company Ltd. v. State of Bihar & Ors. [1978] 1 SCC 12).

The amount of Rs. 16 lakhs had been kept according to the directive
of the High Court dated 28th December 1976 in the custody of the Sub Judge,
Eluru pending disposal of the appeal filed by the petitioner-bank. Therefore,
when the appeal was allowed, the amount deposited by way of security
E should have been returned to the petitioner-bank as a matter of course.
Restitution of the deposit in the event of success was implicit in the order.
There could be no other interpretation of the order of the High Court of 28th
December 1976. In fact, when the petitioner's revision application against the
Sub Judge's order dated 30th December 1985 was ultimately allowed by the
High Court on 27th April 1998, it was said, "The lower Court having allowed
F the revision petition and dismantling thereby the order ofrestitution, strangely
allowed the amount, which was deposited by the Kamataka Bank to be
withdrawn by respondents l to 3, which in my undoubted view resulted in
an act of grave error". We need only add that the 'error' was committed at
the instance of the respondents, and the gravity was enhanced by the action
G of the respondents in appropriating the amount unconditionally.

It is not sufficient for the respondent to set up the order of the
Subordinate Judge, Tadepalligudem as a shield. A judicial proceeding which
is otherwise permissible may become an engine of fraud. Thus in Advocate
General, State of Bihar v. Madhya Pradesh Khair Industries Ltd., [1980] 2
H SCR 1175, it was held that the filing of an application may amount to an abuse
BANK OF INDIA v. VIJA Y TRANSPORT [RUMA PAL, J.] 699
of process. In that case, the respondents obtained interim orders from a Single A
Judge which had the effect of circumventing and nullifying the effect of the
orders of the Division Bench of that High Court. This Court said, "The Court
must take into account the whole course of the continuing contumacious
conduct of the respondents from the beginning of the 'game'." It was concluded
that the conduct of the respondents clearly showed that they were intending B
to and had obstructed the due course of the administration of justice by
abusing the process of Court.

In the case before us, the petitioner-bank anticipating that the
respondents would get payment of the amount had, immediately after the
order was passed by the Subordinate Judge, Tadepalligudem on 30th December C
1985, filed a complaint with the Registrar, District Court, Eluru requesting
immediate intervention. The complaint was not and indeed could not be acted
upon by the Registry. On 7th January 1986 the petitioner-bank lodged a
complaint about the Subordinate Judge, Tadepalligudem with the District
Judge, Eluru. We have been informed that after an inquiry was held, the
Subordinate Judge, Tadepalligudem was dismissed from service in 1986. But D
the damage had been done. With a cynical disregard for the administration
of justice - for which purpose alone Courts exist - the respondents used the
process of the law to defeat that very purpose. No doubt the jurisdiction that
the Court exercises in cases of alleged contempt is quasi-·criminal and the
Court must be satisfied on the material before it that contempt of court was E
in fact committed. But that satisfaction may be derived from the circumstances
of the case. [See: Ram Avtar Shukla v. Arvind Shukla, [1995] Suppl. 2 SCC
130.

The circumstances obtaining in this case leave no manner of doubt that
the respondents have wilfully dealt with property which was custodia legis. F
From the outcome of the inquiry against the Sub Judge, it is clear that the
order was tainted and the dishonesty of the respondents patent. Furthermore,
the rush with which the matters were concluded and the monies withdrawn
by the respondents speak for itself. That this was done in furtherance of a
plan to reap an illegal benefit is evidenced by the fact that even though the G
respondents had not filed any application for payment to them of Rs. 16 lakhs,
anticipating the order that they would obtain, the respondents opened the
current account in the State Bank of India, Tadepalligudem four days prior to
the passing of the order dated 30th December 1985. That the account was
opened in the same Branch of the Bank in which the Subordinate Judge,
Tadepalligudem had an account, that the petitioner- bank's representative was H
700 SUPREME COURT REPORTS [2000] SUPP. 3 S.C.R.

A not given any notice of the respondents 'cheque petition' before the Sub
Judge, and that the cheque was cleared and the money paid out to the
respondents while the petitioner's petition of objection was filed, are all
circumstances pointing to the careful pre-planning involved. Significantly, the
respondents have not been able to show us on what basis they received the
B money. Their counter claims had been rejected by the High Court. In the
appeal preferred from the High Court's decision, the respondents had not
been successful in obtaining any stay. All these factors lead only to one
inference and that is, that the Respondents wilfully dealt with monies in the
possession of the Court without authority of law. We, therefore, have no
hesitation in holding the respondents guilty of the first charge.
c As far as the question of disobedience to orders of Court is concerned,
in his order dated 30th December 1985, rejecting the application of the
petitioner-bank for payment of Rs. 16 lakhs on the ground that it was not
under the appropriate Section, the Subordinate Judge said:

D "Money cannot lie in the Court without any specific order or
contingency. Then, the question arose to whom the money should
go? Since, the petitions are dismissed, the Bank of India is not entitled
to the amount. Kamataka Bank (D-6) is a third party to the suit and
the Court can not pay money to him. The Hon'ble High Court in L.P.A.
Nos. 178176 and 185/76 held that the money should be paid only to
E defendant No. l i.e. Vijay Transport and nobody else against proper
bank guarantee furnished by Vijay Transport. Vijay Transport has
already furnished bank joint guarantee of Kamataka Bank Ltd. which
was accepted by the Court and it should be kept in force and valid.
Therefore, the only way left to this Court is to pay money to Vijay
F Transport in accordance to the directions of the Hon 'ble High Court
in A.P. As. Therefore, the money of Rs. 16,00,000 with interest accrued
there for which in the Court's deposit is to be ordered to pay to Vijay
Transport (R-1) in this case."

The respondents were aware of the order of the High Court dated 28th
G December, 1976 which allowed the respondent No. l to withdraw the money
only against a bank guarantee for the same amount. They knew that there was
in fact no subsisting bank guarantee furnished by .the respondent No. 1 yet
the respondent No. 1 withdrew the amount. The withdrawal was in violation
of the order dated 28th December 1976.

H Having got the amount of Rs. 16 lakhs to which they were and could
BANK OF INDIA v. VIJAY TRANSPORT [RUMA PAL, J.] 701

not, in any view of the law, have been entitled to, the respondents enjoyed A
the benefit of the amount for about 15 years despite orders passed by this
Court on 22nd September 1986 and 12th August 1998 and it was not until this
Court initiated proceedings in contempt against the respondents that the
money was reimbursed in driblets by the respondents. The respondents are
therefore guilty on this count also.
B
We now come to the question of sentence. In Dhananjay Sharma v.
State of Haryana and Ors., (1995] 3 SCC 757, it was said that:

"The stream of justice has to be kept clear and pure and anyone
/
- soiling its purity must be dealt with sternly so that the message
percolates loud and clear that no one can be permitted to undermine C
the dignity of the Court and interfere with the due course of judicial
proceedings or the administration of justice."

It is apparent from the facts already narrated that both the respondents
have polluted the stream of justice. The respondents have continued with the
contumacious conduct with impunity even after the issuance of the notices D
to them. In the narration of facts the phrase " order not complied with" has
recurred with disturbing regularity. In addition the "unconditional offer" made

- was resiled from; the undertaking given to the Court was breached;
adjournments were obtained on the basis of assurances of payment and
settlement which they had no intention to fulfil. E
The alleged dispute between the respondent Nos. 2 and 3 was a red
herring and an attempt to wriggle out of the undertaking given to Court . In
the respondent No. 2's affidavit in answer to the notice of contempt, she said:

"I was under a bonajide belief that I would be Supported by my
husband ( the third respondent in the above Civil Appeal) and expected F
to seek the assistance of my son in my endeavour. I was let down by
my husband who repeatedly kept telling me that he was taking the
necessary efforts without actually doing so. As for my son he expressed
his inability to be of any assistance, particularly in view of the pending
litigation between him and his father. It was only at the last moment G
that I realised that I was being let down and would not be in a
position to fulfill my commitment to this Hon'ble Court. I was also
unable to convey this to my counsel sufficiently in advance, disabling
me from filing an affidavit in this regard."

The statements are ex-facie contradictory. If there were a dispute for H
702 SUPREME COURT REPORTS [2000] SUPP. 3 S.C.R.

A the "last few years" between the respondent No. 2 and respondent No. 3, the
respondent no. 2 could not have been under a bona-fide belief that she would
be supported by the respondent No. 3. Also no particulars of the alleged
litigation between the respondent No. 3 and the son have been given at any
stage. The only litigation referred to before us was a suit for specific
perfonnance filed by a third party against both the respondents and their son.
B It is clear that the undertaking to this Court was lightly given by respondent
No. 2 and breached with impunity.

In any event, on the respondents own showing there was no dispute
between them either when the non compliance 0f orders of Court took place
or when the property of the Court was wrongly dealt with .by them.
c
According to respondent No. 3, he has acted all along "as per the
instructions of 2nd respondent" and that the money which was withdrawn
pursuant to the order dated 30th December, 1985 had been kept by the
respondent No. 2 in a fixed deposit account in the name of their son. In order
to bolster this case, the respondent No. 3 sought to rely upon the alleged
-D public notices published by his son against him and ex-parte injunctions
obtained by his son against his company. No particulars of the news papers

E
or their dates nor of the injunction order have been given. Although, the
documents are said to be annexed to the affidavit of respondent No. 3, there
are in fact no such annexures.

The respondents have all along acted in concert. They had been filing
-
joint affidavits before this Court till the notices to show cause were issued.
Significantly the Power of Attorney executed by respondent No. 2 in favour
of respondent No. 3 has admittedly not been revoked till today.

F It is clear from all these facts that the respondents have compounded
the contumacious conduct with which they were charged with further acts of
contum:cy. Their alleged 'esteem' for this Court and the sincerity of their
apology are falsified by their unrepentant behaviour. Given the nature of the
contempt, punishment in the nature of a fine is not en~mgh. We have therefore
no hesitation in sentencing both the respondents to imprisonment in addition
G to payment of fine. Both of the respondents shall undergo simple imprisonment
for two months in addition to making payment of a fine of Rs. 2,000 each. The
fine is to be paid within a period of two weeks from the date of this judgment.
In default the defaulting respondent will undergo a further period of simple
imprisonment for a period of one month.

H S.V.K Petitions disposed of.