SUMAN CHADHA & ANR.versusCENTRAL BANK OF INDIA

370                      [2021]REPORTS
               SUPREME COURT    8 S.C.R. 370              [2021] 8 S.C.R.


A                        SUMAN CHADHA & ANR.
                                       v.
                         CENTRAL BANK OF INDIA
                 (Special Leave Petition (C) No. 28592 of 2018)
B                               August 09, 2021
       [INDIRA BANERJEE AND V. RAMASUBRAMANIAN, JJ.]
             Contempt of Courts Act, 1971: ss. 2(b), 19 – Contempt of
      court – Wilful breach of the undertaking given to the Court – On
      facts, bank filed a petition u/ss. 10 and 12 for punishing the
C
      petitioners for wilful and deliberate breach of their undertaking –
      Petitioners case that breach of an undertaking made with a view to
      secure a conditional order of stay may not tantamount to contempt,
      especially when the consequences of breach of such undertaking
      are spelt out in the Court order itself – Single judge of the High
D     Court held the petitioners guilty of contempt and sentenced to simple
      imprisonment for three months with fine – Division Bench upheld
      the said order – On appeal, held: Held: Wilful breach of the
      undertaking given to the Court amounts to contempt of Court
      u/s. 2(b) – However, the Court has to see, the nature of the
      undertaking made; the benefit if any, reaped by the party giving
E
      the undertaking; and whether the filing of the undertaking was
      with a view to play fraud upon the court or to mislead the opposite
      party – Series of acts committed by the petitioners, subsequent to
      the undertaking given by the petitioners, convinced the High Court
      to believe that the undertaking given was not based upon good
F     faith but intended to mislead the Court – Subsequent conduct of
      the petitioners seems to have tilted the balance against them –
      Thus, the Single Judge as well as the Division Bench of the High
      Court rightly held the petitioners guilty of contempt of court,
      however, the period of sentence is reduced from three months to the
      period of imprisonment already suffered/undergone by the
G
      petitioners.
            Disposing of the SLP, the Court
             HELD: 1.1 The undertaking dated 08.04.15 given by the
      first petitioner was also accompanied by an affidavit sworn to by
H     the second petitioner. On the basis of the undertaking filed, the
                                     370
  SUMAN CHADHA & ANR. v. CENTRAL BANK OF INDIA                         371


High Court passed an order in the Writ Petition on the same day,       A
namely, 08.04.2015. It is seen from the portion of the order of
the High Court that it was not an order passed on the basis of an
affidavit/undertaking. It was on the basis of an offer made by the
petitioners, the first of whom was actually present in Court. The
offer so made was accepted by the Bank and hence the order was
                                                                       B
actually based upon the consent of parties. [Para 13-15][379-G-
H; 380-G-H]
      1.2 This Court has held that the wilful breach of the
undertaking given to the Court amounts to contempt of Court
under Section 2(b) of the Contempts of Courts Act, 1971. But
the Court has always seen (i) the nature of the undertaking            C
made; (ii) the benefit if any, reaped by the party giving the
undertaking; and (iii) whether the filing of the undertaking was
with a view to play fraud upon the court or to hoodwink the
opposite party. [Para 16][381-D-E]
      1.3 It is true that an undertaking given by a party should be    D
seen in the context in which it was made and (i) the benefits that
accrued to the undertaking party; and (ii) the detriment/injury
suffered by the counter party. It is also true that normally the
question whether a party is guilty of contempt is to be seen in
the specific context of the disobedience and the wilful nature of      E
the same and not on the basis of the conduct subsequent thereto.
While it is open to the court to see whether the subsequent
conduct of the alleged contemnor would tantamount to an
aggravation of the contempt already committed, the very
determination of an act of contempt cannot simply be based upon
the subsequent conduct. But the subsequent conduct of the party        F
may throw light upon one important aspect namely whether it
was just the inability of the party to honour the commitment or it
was part of a larger design to hoodwink the court. [Para 25-26][384-
A-D]
       1.4 The subsequent conduct of the petitioners after the order   G
dated 08.04.2015, seems to have tilted the balance against the
petitioners. All the events that happened after 08.04.2015,
convinced the High Court to come to the conclusion that the
petitioners had actually played a fraud upon the Court. This is
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372           SUPREME COURT REPORTS                      [2021] 8 S.C.R.


A     why the Single Judge as well as the Division Bench of the High
      Court held the petitioners guilty of contempt of court. [Para 19,
      24][382-F; 383-G-H; 384-A]
             1.5 In the instant case, the series of acts committed by the
      petitioners (i) in issuing post-dated cheques, which were dated
B     beyond the date within which they had agreed to make payment;
      (ii) in allowing those cheques to be dishonoured; (iii) in not
      appearing before the Court on the first date of hearing with an
      excuse that was found to be false; (iv) in coming up with an
      explanation about their own debtors committing default; and (v)
      in getting exposed through the report of the SFIO, convinced
C     the High Court to believe that the undertaking given by the
      petitioners on 08.04.2015 was not based upon good faith but
      intended to hoodwink the Court. Therefore, there is no fault with
      the High Court holding the petitioners guilty of contempt. [Para
      27][384-D-F]
D            1.6 The submission that the failure to honour a commitment
      made while securing a conditional order of stay, cannot be treated
      as wilful disobedience, could have been accepted, but for the fact
      that the petitioners issued post-dated cheques purportedly in
      compliance of the undertaking, but allowed them to be
E     dishonoured. The story cooked up for the dishonor of the cheques
      having been found to be false, it is not open to the petitioners to
      raise the submission that there was no wilful disobedience. [Para
      28][384-G-H]
            1.7 The submission based upon the language of
F     Section 13(a) of the Act also does not appeal in the light of what
      had happened after 08.04.2015. The fact that the order dated
      08.04.2015 also indicated certain other consequences to follow,
      may not take away the contempt jurisdiction of the Court. In
      appropriate cases where a party had acted bonafide while giving
      an undertaking, but could not honour the undertaking on account
G     of reasons that are reasonable and genuine, the Court could
      certainly withhold its stick from being wielded. But in this case
      there are findings of fact to the effect that the petitioners did
      not act bonafide. Therefore, the submission is also unsustainable.
      [Para 29][385-A-C]
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  SUMAN CHADHA & ANR. v. CENTRAL BANK OF INDIA                        373


      1.8 The submission that if the order dated 08.04.2015 is        A
capable of being interpreted and understood in more than one
way as to the consequences flowing out of the same, the party
understanding and interpreting the said order in one particular
manner must be allowed the benefit, is perfectly correct, as a
pure and simple proposition of law. But in the instant case, the
                                                                      B
same cannot be permitted to be used, tocover up whatever the
petitioners have done. On the submission was that the
disobedience, if any, was not wilful and intentional, less said the
better. [Para 30][385-C-D]
      1.9 The finding of the High Court that the petitioners are
guilty of contempt, does not call for interference under              C
Article 136. It is not disputed that the mortgaged properties
have now been sold and with extraordinary efforts, the Bank has
also taken possession. The petitioners have also spent 11 days
in custody out of the total period of imprisonment of three months
imposed by the High Court. In such circumstances, it is sufficient    D
punishment for the petitioners. The finding of the Single Judge
and the Division Bench of the High Court that the petitioners
are guilty of contempt of court is upheld, but the period of
sentence is reduced from three months to the period of
imprisonment already suffered/undergone by the petitioners.
[Para 31, 33, 34][385-E; 385-F-H; 386-A]                              E

      Narain Singh v. Lala Rajendra Lal & Ors. (1976) SCC
      Online All 425; Indian Overseas Bank v. Lalit Kumar
      Aggarwal & Anr. (2000) SCC Online Del 710;
      K.Saravankumar v. Sheela & Ors. 2008 (3) CTC 669;
      National Agricultural Cor.Marketing v. Reliance                 F
      Polycrete Ltd. (2009) 163 DLT 441; Dinesh Kumar
      Gupta v. United India Insurance Company Limited
      (2010) 12 SCC 770 : [2010] 13 SCR 599; Niaz
      Mohammad v. State of Haryana (1994) 6 SCC 332 :
      [1994] 3 Suppl. SCR 720; Bank of Baroda v. Sadruddin            G
      Hasan Daya & Anr. (2004) 1 SCC 360 : [2003] 6 Suppl.
      SCR 764; Rama Narang v. Ramesh Narang & Another
      (2006) 11 SCC 114 : [2006] 3 SCR 1068; Rama
      Narang v. Ramesh Narang and Another (2009) 16 SCC
      126 : [2007] 3 SCR 1099; Babu Ram Gupta v. Sudhir
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374            SUPREME COURT REPORTS                         [2021] 8 S.C.R.


A           Bhasin 10, (1980) 3 SCC 47 : [1979] 3 SCR 685 –
            referred to.
                              Case Law Reference
      (2008) (3) CTC 669                   referred to             Para 8
B     (2009) 163 DLT 441                   referred to             Para 8
      [2010] 13 SCR 599                    referred to             Para 9
      [1994] 3 Suppl. SCR 720              referred to             Para 9
      [2003] 6 Suppl. SCR 764              referred to             Para 10
C     [2006] 3 SCR 1068                    referred to             Para 10
      [2007] 3 SCR 1099                    referred to             Para 10
      [1979] 3 SCR 685                     referred to             Para 16
            CIVIL APPELLATE JURISDICTION: Special Leave Petition
D     (C) No. 28592 of 2018.
            From the Judgment and Order dated 27.09.2018 of the High Court
      of Delhi at New Delhi in Cont. App. (C) No. 3 of 2017.
            Santosh Kumar - I, Adv. for the Petitioners.
            Anuj Jain, Mukesh Verma, Anurag Agarwal, Yash Pal Dhingra,
E
      Advs. for the Respondent.
            The Judgment of the Court was delivered by
            V. RAMASUBRAMANIAN, J.
             1. Upon being found guilty of committing contempt of Court, the
F     petitioners who are husband and wife respectively, were sentenced to
      simple imprisonment for three months along with a fine of Rs.2000/-
      each, by a learned Judge of the Delhi High Court. The said Order
      having been confirmed by the Division Bench of the High Court in an
      appeal under Section 19 of the Contempt of Courts Act, 1971 (‘Act’ for
G     short), the petitioners have come up with the above Special Leave
      Petition.
             2. We have heard Mr. Santosh Kumar, learned counsel appearing
      for the petitioners and Mr. Anuj Jain, learned counsel appearing for the
      respondent-Bank.
H
   SUMAN CHADHA & ANR. v. CENTRAL BANK OF INDIA                               375
            [V. RAMASUBRAMANIAN, J.]

       3. The background facts which led to the petitioners being held        A
guilty of contempt of Court, are lucidly recorded in the Order dated
18.07.2017 of the learned Judge. They are as follows:
       (i) The petitioners were Directors of a company by name Parul
Polymers Private Limited, which availed loan/credit facilities from the
respondent Bank. The petitioners guaranteed the repayment of the loan         B
and had also offered immovable properties as security.
       (ii) On 24th July, 2014, the loan of the respondents was categorized
as a Non Performing Asset due to defaults in repayment. On 18 th August,
2014, a notice under Section 13(2) of SARFAESI Act was issued for
recovery of Rs. 28,82,25,942.24 plus interest. It was followed by a
possession notice under section 13(4) in respect of two properties.           C
       (iii) Aggrieved by the same, the petitioners filed S.A. No. 367/
2014 before the Debts Recovery Tribunal-III, New Delhi (‘DRT-III’
for short), under Section 17 of the SARFAESI Act. However, the
DRT-III declined to grant any interim relief against the physical
possession of the aforesaid properties.                                       D
       (iv) The petitioners filed an appeal but could not deposit Rs. 7
crores being 25% of the amount demanded in the notice under
Section 13(2). Eventually the appeal was dismissed as withdrawn on
31.03.2015.
       (v) However, on 01st April, 2015, the petitioners secured a            E
conditional order of stay from DRT-III, New Delhi in S.A. No. 367/
2014 whereby the petitioners were required to deposit a sum of Rs. 5
crores within thirty days. The order also stipulated that Rs. 2 crores
would be deposited by 03rd April, 2015.
       (vi) On 03rd April, 2015, the petitioners gave a letter to SHO,        F
Police Station Katju Marg, Rohini, Delhi showing their intention to
deposit the amount of Rs. 2 crores by way of four cheques. Therefore,
the Receiver was unable to take possession of the properties.
       (vii) Thereafter, the petitioners challenged the conditional order
of stay passed by DRT-III on 01 st April, 2015 before the High Court
                                                                              G
by way of W.P. (C) No. 3406/2015 stating that the Bank and DRT-III
were acting unfairly and unjustly in not accepting their cheques totalling
to Rs. 2 crores.
       (viii) When the writ petition came for admission and interim orders
on 8th April, 2015, the petitioners admitted liability and offered, by way
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376            SUPREME COURT REPORTS                          [2021] 8 S.C.R.


A     of a statement under oath, to deposit Rs. 7 crores, i.e. 25% of the notice
      amount in three instalments on or before 30th June, 2015. The Bank
      gave its assent and thereafter the Court ordered that the possession of
      the properties of the petitioners shall not be disturbed subject to the
      petitioners depositing Rs. 7 crores on or before 30th June, 2015, i.e.
      Rs. 2 crores on 30th April, 2015, Rs. 2.5 crores each on 31st May, 2015
B
      & 30th June, 2015.
            (ix) On 29th April, 2015, the petitioners gave a letter along with
      four cheques for Rs. 50 lakhs each dated 06th May, 2015 purportedly
      in compliance of the order dated 08th April, 2015.

C           (x) Accordingly, the possession proceedings for one property
      scheduled for 30th April, 2015 were deferred by the Bank. But on 08th
      May, 2015, all the four cheques bounced.
             4. Therefore, the respondent-Bank filed a petition under Sections
      10 and 12 of the Contempt of Courts Act, 1971 for punishing the
D     petitioners for wilful and deliberate breach of their undertaking dated
      08.04.2015. Though the petitioners resisted the contempt petition on
      the ground that breach of an undertaking, made with a view to secure
      a conditional order of stay may not tantamount to contempt, especially
      when the consequences of breach of such undertaking are spelt out in
      the order of the Court itself, the learned Judge was not convinced.
E     Therefore, by an Order dated 18.07.2017, the learned Judge of the High
      Court held the petitioners guilty of contempt and sentenced them simple
      imprisonment for three months with a fine of Rs. 2000 each. The Division
      Bench upheld the said order and the petitioners are before us.
            5. Before we proceed further we should record certain
F     developments which have taken place after the order of single Judge
      dated 18.07.2017. They are as follows:-
             (i) The learned Judge himself granted suspension of the sentence
      of imprisonment till 26.07.2017, to enable the petitioners to move an
      intra-court appeal;
G            (ii) The petitioners moved an intra-court appeal, which came up
      before the Division Bench on 25.07.2017. The Division Bench wanted
      the petitioners to comply at least with a part of their undertaking before
      the sentence could be suspended. But the petitioners could not. Therefore,
      the Division Bench did not grant suspension of sentence on 25.07.2017;
H
   SUMAN CHADHA & ANR. v. CENTRAL BANK OF INDIA                                     377
            [V. RAMASUBRAMANIAN, J.]

      (iii) The petitioners filed a Special Leave Petition along with an            A
application for exemption from surrendering. But the said application
was dismissed by an order in Chamber dated 31.07.2017;
      (iv) On 03.08.2017, the Division Bench of the High Court dismissed
the miscellaneous application seeking suspension of sentence;
      (v) Challenging the said order dated 03.08.2017, the petitioners              B
moved a Special Leave Petition along with an application seeking
exemption from surrendering. This application was dismissed vide order
in Chamber dated 18.08.2017.
      (vi) On a subsequent application seeking extension of time, this
Court granted three weeks’ time vide order dated 11.09.2017;                        C

      (vii) Eventually, the petitioners surrendered and were taken into
custody on 06.11.2017. After being in custody for 11 days, the petitioners
were released on interim bail by Order dated 16.11.2017;
       (viii) The contempt appeal was thereafter dismissed by the Division          D
Bench of the High Court by an Order dated 27.09.2018, with a direction
to the petitioners to surrender within 10 days. However on 01.11.2018,
this Court ordered notice in the present SLP and also granted stay of
the impugned order.
        6. The reason why we have noted certain events post the order
                                                                                    E
of the learned single Judge is to bring on record the fact that the petitioners
have already served simple imprisonment for a period of 11 days, out
of the penalty of simple imprisonment for three months. They have also
paid the fine.
       7. The main grounds of attack of the petitioners to the impugned
                                                                                    F
order, as articulated by Mr. Santosh Kumar, learned counsel for the
petitioners, are: (i) that the failure of a party to comply with an
undertaking, on the basis of which a conditional order of stay was
granted, cannot be treated as a wilful disobedience warranting the
invocation of the contempt jurisdiction; (ii) that the failure of the petitioners
to honour the undertaking cannot be taken to substantially interfere with           G
the due course of justice and, hence, the case would fall under
Section 13(a) of the Act; (iii) that when an order indicates the
consequences of the failure of a party to comply with a condition or
honour the undertaking, the invocation of the contempt jurisdiction may
not be appropriate; and (iv) that in any case if the defaulting party has
relied upon an interpretation of the order that the consequences of failure         H
378             SUPREME COURT REPORTS                          [2021] 8 S.C.R.


A     are already inbuilt in the order, such an understanding of the order is to
      be treated as reasonable and rational and he cannot be held guilty of
      contempt.
             8. In support of his first contention, the learned counsel for the
      petitioners, relies upon the decisions of a few High Courts. They are: (a)
B     Narain Singh vs. Lala Rajendra Lal & Ors.1; (b) Indian Overseas
      Bank vs. Lalit Kumar Aggarwal & Anr.2; (c) K. Saravankumar vs.
      Sheela & Ors.3; and (d) National Agricultural Cor. Marketing vs.
      Reliance Polycrete Ltd.4.
             9. In support of his third contention, the learned counsel relies
C     upon the decision of this Court in Dinesh Kumar Gupta vs. United
      India Insurance Company Limited5. In addition, the learned counsel
      also submitted that in the light of the decision of this Court in Niaz
      Mohammad vs. State of Haryana6, the disobedience should be wilful
      and intentional, to tantamount to contempt.

D            10. In response to the aforesaid, Shri Anuj Jain, learned counsel
      for the respondent submitted that the petitioners had several opportunities
      to honour their commitments, but they repeatedly adopted dilatory tactics.
      The learned counsel took us through various orders passed by the High
      Court and the orders passed in various proceedings before other forums
      including the DRT and the Chief Metropolitan Magistrate and sought to
E     impress upon us that the conduct of the petitioners throughout, has been
      one of deceit and that such persons do not deserve any leniency. Inviting
      our attention to the decisions in (i) Bank of Baroda vs. Sadruddin
      Hasan Daya & Anr7.; (ii) Rama Narang vs. Ramesh Narang &
      Another 8 and (iii) Rama Narang(5) vs. Ramesh Narang and
F     Another9, the learned counsel contended that the availability of other
      modes of enforcement need not deter the Court from invoking its contempt
      jurisdiction and that the deliberate failure to comply with a solemn
      undertaking given to a Court has always been frowned upon by Courts.
      1
        1976 SCC Online All 425
      2
G       2000 SCC Online Del 710
      3
        2008 (3) CTC 669
      4
        (2009) 163 DLT 441
      5
        (2010) 12 SCC 770
      6
        (1994) 6 SCC 332
      7
        (2004) 1 SCC 360
      8
        (2006) 11 SCC 114
      9
H       (2009) 16 SCC 126
   SUMAN CHADHA & ANR. v. CENTRAL BANK OF INDIA                                379
            [V. RAMASUBRAMANIAN, J.]

      11. We have carefully considered the rival submissions.                  A
        12. Before we analyze the rival contentions, it will be useful first
to see the actual undertaking given by the petitioners on 08.04.2015,
which led to the contempt proceedings. The undertaking given by the
first petitioner on 08.04.2015 reads as follows:-
      “Statement of Mr. Suman Chadha S/o Jangi Lal Chadha R/o                  B
      H-3/50 Sector-18, Rohini, Delhi
             I am the petitioner and the director of the third petitioner
      in this case. I am duly authorised to make a statement on its
      behalf. I have also filed an affidavit in support of the petition
      and have taken advice from my lawyer who is present with                 C
      me in Court.
            I hereby state and confirm that the sum of
      Rs.28,82,25,942.24 (Twenty Eight Crores Two Lakh Twenty
      Five thousand Nine Hundred Forty Two and Paise Twenty
      Four only) as on 18.8.2014 is due and payable to the                     D
      respondent i.e. the Central Bank of India as per notice
      u/s 13(2) of SARFAESI Act. I request that in view of the demand
      I may be granted relief of some deferment with regard to the
      repayment of the loan liability. I hereby agree on behalf of
      self and other petitioners to deposit a total amount of                  E
      Rs.7 (seven) crores with respondent –Bank on or before
      30.6.2015. An amount of Rs. 2 (two) crores of the said amount
      shall be paid on or before 30.04.2015; the balance would be
      paid in equal instalments i.e. Rs. 2.5 (Two and a half) crores
      on or before 31.5.2015 and 30.06.2015.
                                                                               F
            I also agree and affirm that in the event of default, the
      Bank is free to initiate any such proceedings and avail of
      legal remedies as are available.”
       13. The above undertaking given by the first petitioner was also
accompanied by an affidavit sworn to by the second petitioner. In the
                                                                               G
said affidavit, it was stated by the second petitioner that her husband has
made a statement before the Court which she had understood from him
and that she and her husband undertake to abide by the same.
      14. On the basis of the undertaking filed as aforesaid on 08.04.2015,
the High Court passed an order in W.P (C) No. 3406 of 2015 on the
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380            SUPREME COURT REPORTS                          [2021] 8 S.C.R.


A     same day, namely, 08.04.2015. Paragraphs 6 to 8 of the said order of the
      High Court dated 08.04.2015 read as follows:-
            “6. In view of the submission of the parties, it is ordered
            that the possession of the petitioners over the property in
            question shall not be disturbed subject to their compliance
B           with the following conditions:
            (1) Deposit by the petitioners on or before 30.04.2015 – the
            sum of Rs. 2 crores with the respondent Bank and thereafter
            deposit of Rs.2.5 crores each on or before 31.05.2015 and
            30.06.2015.
C           (2) The second petitioner shall file an affidavit/ undertaking,
            to comply with the above said arrangement.
            (3) In the event of default, the respondent Bank shall be at
            liberty to take recourse to law including the enforcement of
            further action in follow up order of appointment of the receiver
D           by the Chief Metropolitan Magistrate (CMM). The order to
            such effect passed by CMM shall be kept in abeyance to
            ensure compliance in the meanwhile till 30.6.2015.
            7. Petitioners’ counsel requests that after compliance of the
            above order, any application for relief to the Bank including
E           the restructuring of the account may be considered
            reasonably. The Bank shall consider such application if made
            on its merits independently having regard to its applicable
            policy. This will not in any way preclude the rights of the
            Bank for recovering the amounts due.
F           8. Subject to the petitioner filing the necessary affidavit/
            undertaking copy of which shall be provided to the counsel
            for the respondent within a week from today, the writ petition
            is disposed of.”
             15. It is seen from the portion of the order of the High Court
G     dated 08.04.2015 that it was not an order passed on the basis of an
      affidavit/undertaking. It was on the basis of an offer made by the
      petitioners, the first of whom was actually present in Court. The offer so
      made was accepted by the Bank and hence the order was actually based
      upon the consent of parties. This is made clear by what is recorded by
H
      SUMAN CHADHA & ANR. v. CENTRAL BANK OF INDIA                             381
               [V. RAMASUBRAMANIAN, J.]

the Court in Paragraph 5 of its order dated 08.04.2015. Paragraph 5            A
reads as follows:-
         “5. During the course of hearing counsel for the petitioner
         Dr. Sharma stated that the petitioners are admitting the liability
         provided some time is granted in order to settle the matter
         finally. It was suggested by the counsel that the petitioners         B
         may be afforded opportunity of depositing Rs. 7 (seven) crores
         i.e. 25% of the notice amount in three instalments on or before
         30.06.2015. The first petitioner is present in Court. He is a
         director of the third petitioner and authorised to depose on
         its behalf. His statement to above effect has been recorded
         under oath separately and has been kept on record. The                C
         second petitioner is directed to file an affidavit/undertaking
         within one week confirming the statement of the first petitioner.
         The counsel for the respondent submitted his assent to the
         disposal of the writ petition on terms offered.”
       16. It is true that this Court has held in a series of decisions that   D
the wilful breach of the undertaking given to the Court amounts to
contempt of Court under Section 2(b) of the Act. But the Court has
always seen (i) the nature of the undertaking made; (ii) the benefit if
any, reaped by the party giving the undertaking; and (iii) whether the
filing of the undertaking was with a view to play fraud upon the court or      E
to hoodwink the opposite party. The distinction between an order passed
on consent terms and an order passed solely on the basis of an undertaking
given to court and the distinction between a person playing fraud on the
court thereby obstructing the course of justice and a person playing
fraud on one of the parties, was brought out by this Court in Babu Ram
Gupta vs. Sudhir Bhasin10, in the following words:-                            F

         “…Indeed, if we were to hold that non-compliance of a
         compromise decree or consent order amounts to contempt of
         court, the provisions of the Code of Civil Procedure relating
         to execution of decrees may not be resorted to at all. In fact,
         the reason why a breach of clear undertaking given to the             G
         court amounts to contempt of court is that the contemner by
         making a false representation to the court obtains a benefit
         for himself and if he fails to honour the undertaking, he plays

10
     (1980) 3 SCC 47                                                           H
382                SUPREME COURT REPORTS                        [2021] 8 S.C.R.


A              a serious fraud on the court itself and thereby obstructs the
               course of justice and brings into disrepute the judicial
               institution. The same cannot, however, be said of a consent
               order or a compromise decree where the fraud, if any, is
               practised by the person concerned not on the court but on
               one of the parties. Thus, the offence committed by the person
B
               concerned is qua the party not qua the court, and, therefore,
               the very foundation for proceeding for contempt of court is
               completely absent in such cases.”
             17. But the decision in Babu Ram Gupta (supra) was clarified
      and held in part to be obiter by a three member Bench of this Court in
C     Rama Narang vs. Ramesh Narang and Another11. In Rama Narang
      (supra), this Court pointed out the distinction between two categories of
      cases covered by Section 2(b) of the Act namely (i) wilful disobedience
      to a process of court; and (ii) wilful breach of an undertaking given to a
      court.
D            18. In fact, in Rama Narang (supra), this Court went to the extent
      of holding that it would neither be in consonance with the statute, judicial
      authority, principle or logic to draw any distinction between the wilful
      violation of the terms of a consent decree and wilful violation of a decree
      passed on adjudication. We have our own doubts whether the first
E     category of cases covered by Section 2(b) can be stretched so far.
      Anyway, that question does not arise in this case and hence we leave it
      at that.
             19. But what has happened in this case is that the subsequent
      conduct of the petitioners after the order dated 08.04.2015, seems to
F     have tilted the balance against the petitioners. Purportedly in compliance
      of the undertaking given to Court on 08.04.2015 and the order passed
      thereon, the petitioners issued four cheques for Rs.50 lakhs each. These
      cheques were handed over to the Bank on 29.04.2015 along with a
      covering letter. But all the four cheques were post-dated, bearing the
      date 06.05.2015, though the undertaking given to the Court was to deposit
G     the amount on or before 30.04.2015.
            20. On 08.05.2015, all the four cheques bounced. The conduct of
      the petitioners first in issuing post-dated cheques and then in allowing
      them to be dishonoured, showed the petitioners in poor light. The
      11
H          (2006) 11 SCC 114
   SUMAN CHADHA & ANR. v. CENTRAL BANK OF INDIA                              383
            [V. RAMASUBRAMANIAN, J.]

petitioners could have at least mend their ways thereafter. However          A
they did not.
      21. On 14.07.2015, the learned Single Judge seems to have
ordered the issue of notice in the Contempt Petition. The notice was
made returnable by 05.11.2015 and the petitioners were directed to be
present personally in Court. But what happened on 05.11.2015, as brought     B
on record by the learned Judge reads as follows:-
           “When the matter was taken up at first call, this Court
      was informed that none of the respondents were in Station
      and even summons had been received by their daughter.
            However, a perusal of the file reveals that notices/             C
      summons had been received by respondent No. 1 personally
      and by respondent No. 2’s husband by dasti as well as by
      speed post.
            Though this Court was inclined to issue warrants against
      the respondents No. 1 and 2, yet as learned counsel for                D
      respondents states that he would ensure that not only the
      respondents are personally present in Court on the next date
      of hearing, but the matter is amicably resolved, matter is
      adjourned to 16th November, 2015.”
       22. On the next date of hearing, the petitioners raised a defence     E
that they had issued post-dated cheques in the hope of receiving amounts
due to them from their debtors and that their debtors failed to make
payment. The petitioners also named three debtors from whom they
were expected to receive money.
       23. Doubting the genuineness of the claim made by the petitioners,    F
the learned Judge before whom the Contempt Petition came up, passed
an order on 07.12.2015 directing an investigation by Serious Fraud
Investigation Office (‘SFIO’ for short). To the misfortune of the
petitioners, SFIO submitted a report that the alleged debtors of the
petitioners are only shell entities of Parul Polymers Private Ltd., of
                                                                             G
which the petitioners were Directors.
      24. All the above events that happened after 08.04.2015, convinced
the High Court to come to the conclusion that the petitioners had actually
played a fraud upon the Court. This is why the learned Single Judge as
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384             SUPREME COURT REPORTS                           [2021] 8 S.C.R.


A     well as the Division Bench of the High Court held the petitioners guilty
      of contempt of court.
             25. It is true that an undertaking given by a party should be seen
      in the context in which it was made and (i) the benefits that accrued to
      the undertaking party; and (ii) the detriment/injury suffered by the counter
B     party. It is also true that normally the question whether a party is guilty
      of contempt is to be seen in the specific context of the disobedience and
      the wilful nature of the same and not on the basis of the conduct
      subsequent thereto. While it is open to the court to see whether the
      subsequent conduct of the alleged contemnor would tantamount to an
      aggravation of the contempt already committed, the very determination
C     of an act of contempt cannot simply be based upon the subsequent
      conduct.
            26. But the subsequent conduct of the party may throw light
      upon one important aspect namely whether it was just the inability of
      the party to honour the commitment or it was part of a larger design to
D     hoodwink the court.
             27. In this case, the series of acts committed by the petitioners (i)
      in issuing post-dated cheques, which were dated beyond the date within
      which they had agreed to make payment; (ii) in allowing those cheques
      to be dishonoured; (iii) in not appearing before the Court on the first
E     date of hearing with an excuse that was found to be false; (iv) in
      coming up with an explanation about their own debtors committing
      default; and (v) in getting exposed through the report of the SFIO,
      convinced the High Court to believe that the undertaking given by the
      petitioners on 08.04.2015 was not based upon good faith but intended to
F     hoodwink the Court. Therefore, we are unable to find fault with the
      High Court holding the petitioners guilty of contempt.
             28. The 1st contention of Mr. Santosh Kumar, learned counsel for
      the petitioners that the failure to honour a commitment made while
      securing a conditional order of stay, cannot be treated as wilful
G     disobedience, could have been accepted by us, but for the fact that the
      petitioners issued post-dated cheques purportedly in compliance of the
      undertaking, but allowed them to be dishonoured. The story cooked up
      for the dishonor of the cheques having been found to be false, it is not
      open to the petitioners to raise the contention that there was no wilful
      disobedience.
H
   SUMAN CHADHA & ANR. v. CENTRAL BANK OF INDIA                                385
            [V. RAMASUBRAMANIAN, J.]

       29. The 2nd contention based upon the language of Section 13(a)         A
of the Act also does not appeal to us, in the light of what had happened
after 08.04.2015. The fact that the order dated 08.04.2015 also indicated
certain other consequences to follow, may not take away the contempt
jurisdiction of the Court. In appropriate cases where a party had acted
bonafide while giving an undertaking, but could not honour the
                                                                               B
undertaking on account of reasons that are reasonable and genuine,
the Court could certainly withhold its stick from being wielded. But in
this case there are findings of fact to the effect that the petitioners did
not act bonafide. Therefore, the 3rd contention is also unsustainable.
       30. The last contention that if the order dated 08.04.2015 is capable
of being interpreted and understood in more than one way as to the             C
consequences flowing out of the same, the party understanding and
interpreting the said order in one particular manner must be allowed the
benefit, is perfectly correct, as a pure and simple proposition of law.
But in this case, the same cannot be permitted to be used, to cover up
whatever the petitioners have done. On the contention of the learned           D
counsel for the petitioners that the disobedience, if any, was not wilful
and intentional, less said the better.
      31. In the light of the above, we are clearly of the view that the
finding of the High Court that the petitioners are guilty of contempt,
does not call for our interference under Article 136.                          E
       32. However, Mr. Santosh Kumar, learned counsel for the
petitioners, pleaded that the Court may show sympathy on the petitioners,
in view of the fact that the immovable properties which the petitioners
attempted to save, by approaching the DRT and the High Court, have
already been sold. All the attempts made by the petitioners from 2015          F
onwards, to save the mortgaged properties have been in vain.
       33. There is no dispute on facts that the mortgaged properties
have now been sold and with extraordinary efforts, the Bank has also
taken possession. The petitioners have also spent 11 days in custody
out of the total period of imprisonment of three months imposed by the         G
High Court. In such circumstances, we think that it is sufficient
punishment for the petitioners.
       34. Therefore, the SLP is disposed of upholding the finding of
the learned Single Judge and the Division Bench of the High Court that
the petitioners are guilty of contempt of court, but reducing the period
                                                                               H
386                SUPREME COURT REPORTS                        [2021] 8 S.C.R.


A     of sentence from three months to the period of imprisonment already
      suffered/undergone by the petitioners. There will be no order as to
      costs.
              35. Pending application(s) if any, shall also stand disposed of.

B

      Nidhi Jain                                                    SLP disposed of.




C




D




E




F




G




H