RAMA NARANG versus RAMESH NARANG AND OTHERS CONTEMPT PETITION (CIVIL) NO. 92 OF 2008

[2021] 1 S.C.R. 389

RAMA NARANG

RAMESH NARANG AND OTHERS

Contempt Petition (Civil) No. 92 of 2008

Contempt Petition (Civil) No. 148 of 2003

Civil Appeal No. 366 of 1998

JANUARY 19, 2021

[A. M. KHANWILKAR AND B. R. GAVAI, JJ.]

Contempt of Courts Act, 1971: s.2(b) – Contempt proceedings– Scope of – Violation of Consent Order – Petitioner and his sons(respondents) were the only Directors of company – Disputebetween petitioner and respondent-sons – Purported settlement ofthe dispute in terms of Consent Order recorded in orders dated 12thDecember 2001 and 8th January 2002, of the Supreme Court –Petitioner-father filed contempt petition alleging that respondent-sons had violated the terms of the Consent Order – By judgmentdated 15[th] March, 2007, Supreme Court held respondents guilty ofcontempt – Respondents filed Company Petition before the CompanyLaw Board (CLB), whereupon CLB passed interim order dated 10thApril 2008 – Petitioner filed instant contempt petition alleging thatthe order of CLB was violative of the order of Supreme Court dated15th March 2007 – Whether invoking the jurisdiction of CLB andentertaining of said proceedings by CLB amounted to contempt –Held: person does not commit contempt of court if during pendencyof certain proceedings, he takes recourse to other judicialproceedings open to him, even though the latter proceedings putsthe other party at loss – On facts, respondents thought it prudentto approach CLB by invoking its powers u/ss.397, 398 and 403 ofthe Companies Act – Respondents took recourse to legal remedyavailable to them under the statutory provisions in compellingcircumstances to safeguard the interest of the Company and itsstakeholders – Petitioner failed to make out case of wilful,deliberate and intentional disobedience of any of the directions

Agiven by Court or acting in breach of undertaking given to Court –Contempt Petition accordingly dismissed – Companies Act, 1956 –ss.397, 398 and 403.

Contempt of Court: Contempt proceedings – Nature and scopeof – Held: The contempt proceedings are quasi-criminal in natureBand the standard of proof required is in the same manner as in theother criminal cases – The alleged contemnor is entitled to protectionof all safeguards/rights which are provided in the criminaljurisprudence, including the benefit of doubt –Punishment underthe law of contempt is called for when the lapse is deliberate and indisregard of one’s duty and in defiance of authority.C

Contempt of Court: Contempt proceedings – Difference fromexecution proceedings – Held: Contempt proceeding is not like anexecution proceeding under the Code of Civil Procedure – Beforepunishing the contemnor for non-compliance of decision of theCourt, the Court must not only be satisfied about the disobedienceDof any judgment, decree, direction, writ or other process but shouldalso be satisfied that such disobedience was wilful and intentional

– The civil court however, while executing decree against thejudgment-debtor is not concerned and bothered as to whether thedisobedience to any judgment or decree was wilful and once theEdecree had been passed, it is the duty of the court to execute thedecree, whatever may be the consequences thereof – Code of CivilProcedure – Execution.

Jurisdiction: Jurisdiction of the Court to pass interim orderspending decision on question of its’ jurisdiction – Held: Even ifFobjection is raised to the jurisdiction of forum, it has jurisdictionto pass interim orders till it finally decides the issue of jurisdictionand such orders are binding on the parties till the issue ofjurisdiction is decided – If the Court holds that it has no jurisdiction,it is open to it to modify the orders – However, while in force, theinterim orders passed by such Court have to be obeyed and theirGviolation can be punished even after the question of jurisdiction isdecided against the plaintiff, provided violation is committed beforethe decision of the Court on the question of jurisdiction – Judgment/Order – Interim Order.

Civil Contempt: Wilful disobedience or wilful breach – Courthas to record finding that such disobedience was wilful &intentional – There must be clear cut case of obstruction of justiceby party intentionally – Where the court is satisfied that suchdisobedience is the result of some compelling circumstances, underwhich it is not possible for the contemnor to comply with the same,the Court may not punish the alleged contemnor.

Dismissing the contempt petitions, the Court

HELD:1. For bringing an action under the ambit of civilcontempt, there has to be wilful disobedience to any judgment,decree, direction, order, writ or other process of court or wilfulbreach of an undertaking given to the court. [Para 48][422-G;423-A]

2.1 Such action of person which he takes in pursuance ofhis right to take legal action in court of law, will not amount tointerfering with the course of justice, even though that mayrequire some action on the part of the other party in connectionwith his own judicial proceedings. The principle is, that party isfree to take action to enforce his legal right. person does notcommit contempt of court if during the pendency of certainproceedings, he takes recourse to other judicial proceedings opento him, even though the latter proceedings put the other party ata loss. [Para 68][432-D-F]

2.2 In the instant case, the respondents had legitimatelyapproached the Company Law Board (CLB) invoking itsjurisdiction under Sections 397, 398 and 403 of the CompaniesAct. The CLB had also passed interim orders in exercise of itspowers under Section 403 of the Companies Act. Merely takingrecourse to the statutory remedy available to the respondentswould not amount to contempt. It appears, that after the orderwas passed by this Court holding the respondents guilty andthereafter finding, that the present petitioner is not co-operatingwith the respondents in running the affairs of the Company, buton the contrary making every attempt to stall the functioning ofthe Company; the respondents thought it prudent to approachthe CLB by invoking its powers under Sections 397, 398 and403 of the Companies Act. The respondents had to take recourseto that remedy in compelling circumstances to safeguard the

Ainterest of the Company and its stakeholders. [Paras 66, 71][431-F-G; 433-D-F]

3. The contempt proceeding is not like an executionproceeding under the Code of Civil Procedure. Though the partiesin whose favour, an order has been passed, is entitled to thebenefits of such order, but the Court while considering the issueBas to whether the alleged contemnor should be punished for nothaving complied with and carried out the directions of the Court,has to take into consideration all facts and circumstances of aparticular case. That is why the framers of the Act while definingcivil contempt, have said that it must be wilful disobedience ofCany judgment, decree, direction, order, writ or other process ofthe Court. Before punishing the contemnor for non-complianceof the decision of the Court, the Court must not only be satisfiedabout the disobedience of any judgment, decree, direction, writor other process but should also be satisfied that suchdisobedience was wilful and intentional. Though, the civil courtDwhile executing decree against the judgment-debtor is notconcerned and bothered as to whether the disobedience to anyjudgment or decree was wilful and once the decree had beenpassed, it was the duty of the court to execute the decree,whatever may be the consequences thereof. In contemptEproceeding before contemnor is held guilty and punished, theCourt has to record finding, that such disobedience was wilfuland intentional. If from the circumstances of particular case,though the Court is satisfied that there has been disobediencebut such disobedience is the result of some compellingcircumstances, under which it is not possible for the contemnorFto comply with the same, the Court may not punish the allegedcontemnor. [Para 73][435-D-H]

4. The contempt proceedings are quasi-criminal in natureand the standard of proof required is in the same manner as inthe other criminal cases. The alleged contemnor is entitled toGthe protection of all safeguards/rights which are provided in thecriminal jurisprudence, including the benefit of doubt. There mustbe clear-cut case of obstruction of administration of justice by aparty intentionally, to bring the matter within the ambit of thesaid provision. Punishment under the law of contempt is calledfor when the lapse is deliberate and in disregard of one’s dutyHand in defiance of authority. [Para 75][437-C-E]

5.1 In the instant case, the petitioner has failed to makeout case of wilful, deliberate and intentional disobedience ofany of the directions given by this Court or acting in breach of anundertaking given to this Court. On the contrary, the respondentshad taken recourse to the legal remedy available to them underthe statutory provisions. [Para 76][437-C-G]

5.2 Where an objection is taken to the jurisdiction toentertain suit and to pass any interim orders therein, the Courtshould decide the question of jurisdiction in the first instance.However, that does not mean that pending the decision on thequestion of jurisdiction, the Court has no jurisdiction to passinterim orders as may be called for in the facts and circumstancesof the case. mere objection to jurisdiction does not instantlydisable the court from passing any interim orders. It can yet passappropriate orders. Though, the question of jurisdiction shouldbe decided at the earliest possible time, the interim orders sopassed are orders within jurisdiction, when passed and effectivetill the court decides that it has no jurisdiction, to entertain thesuit. Those interim orders would undoubtedly come to an endwith the decision that the Court had no jurisdiction. If the Courtholds that it has no jurisdiction, it is open to it to modify theorders. However, while in force, the interim orders passed bysuch Court have to be obeyed and their violation can be punishedeven after the question of jurisdiction is decided against theplaintiff, provided violation is committed before the decision ofthe Court on the question of jurisdiction. [Paras 76-79][438-G-H; 439-A-C]6. In the facts and circumstances of the case, the CLBconsidered it appropriate, that till the petition is disposed of, asan interim measure, in the interest of the Company as well asmore than 3000 employees/workers, there should be mechanismby which day to day operations are carried out without any hitch.The said order has not been challenged by the petitioner beforeany forum. Any order passed by the CLB was appellable beforethe higher forums. The petitioner has not challenged the saidorder. Having not challenged the same, it is not open for thepetitioner to argue, that since the petitioner has taken objectionas to maintainability of the proceedings before CLB, the saidorders are without jurisdiction and the initiation of the proceedings

[2021] 1 S.C.R.

Aand the orders passed thereon, would amount to respondent’scommitting contempt of this Court. Even if the objection is raisedto the jurisdiction of forum, it has jurisdiction to pass interimorders till it finally decides the issue of jurisdiction and such ordersare binding on the parties till the issue of jurisdiction is decided.However, it should not be construed, that the proceedings underBthe CLB were maintainable in law. Since the proceedings arepending final adjudication, the parties would be at liberty to raiseall issues available to them including the issue of jurisdiction.Also, this is not case wherein directions as sought, should beissued under Article 142 of the Constitution. On Insolvency andCBankruptcy Code 2016, coming in force, the proceedings whichare pending before the CLB, now stand transferred to theNational Company Law Tribunal (NCLT). It would be appropriatefor the parties to invoke the jurisdiction of NCLT for seekingsuch orders as deemed fit in the facts and circumstances inaccordance with law. [Paras 81, 84][440-D-H; 441-C, F-H]DPratap Singh and Another v. Gurbaksh Singh [1962]SCR 2 Suppl. 838; Mehar Rusi Dalal (Mrs.) v. T.K.Banerjee and Others (2004) 5 SCC 119; NiazMohammad and Others v. State of Haryana and Others(1994) 6 SCC 332 : [1994] 3 Suppl. SCR 720 ; KanwarESingh Saini v. High Court of Delhi (2012) 4 SCC 307 :[2011] 15 SCR 972; Debabrata Bandopadbyay andOthers v. State of West Bengal and Another AIR 1969SC 189 : [1969] SCR 304 and Tayabbhai M.Bagasarwalla and Another v. Hind Rubber Industries(P) Ltd. And Others (1997) 3 SCC 443 : [1997] 2FSCR 152– relied on.

Hrishikesh Sanyal v. A.P. Bagchi ILR 1940 All 710 andRadhey Lal v. Niranjan Nath AIR 1941 All 95 – heldapproved.

Rama Narang v. Ramesh Narang and Another (2006)G11 SCC 114 : [2006] 3 SCR 1068; Rama Narang (V) v.Ramesh Narang and Another (2009) 16 SCC 126 :[2007] 3 SCR 1099; Vijay Laxmi and Others v. PrabhuDevi and Others (2017) 11 SCC 169; State Bank ofIndia v. Ajit Jain and Others (1995) 1 Suppl. SCC 683;HRe: Vinay Chandra Mishra (The Alleged Contemnor)

(1995) 2 SCC 584 : [1995] 2 SCR 638; SangramsinhP. Gaekwad and Others v. Shantadevi P. Gaekwad(Dead) Through LRs and Others (2005) 11 SCC 314 :[2005] 1 SCR 624; and Kale and Others v. DeputyDirector of Consolidation and Others (1976) 3 SCC119 : [1976] 3 SCR 202 – referred to.

INHERENT JURISDICTION : Contempt Petition (Civil) No. 92of 2008 in Contempt Petition (Civil) No. 148 of 2003 in Civil Appeal No.366 of 1998.

Jayant K. Sud, ASG, Mukul Rohatgi, Jaideep Gupta, Kapil Sibal,Akhil Sibal, Ms. V. Mohana, Sr. Advs, Abhinav Mukerji, Ms. Bihu Sharma,Ms. Pratishtha Vija, Bhargava V. Desai, Ms. Aditi Diwan, S. Uday KumarSagar, Ms. Bina Madhavan, Salim Inamdar, Ms. Sweena Nair, M/S.Lawyer S Knit & Co, D.L. Chidananda, Ms. Menakshi Grover, ArvindKumar Sharma, Ms. Sheena Taqui, Kshitij Vaibhav, Mrs. Bina Gupta,Ms. Suwarna Dubey, Advs. for the appearing parties.

The Judgment of the Court was delivered by

B. R. GAVAI, J.

1. The present contempt petition arises out of an unfortunate familydispute between father on one hand and his two sons from his firstwife on the other hand. This family dispute has given rise to number ofproceedings, some of which have even reached up to this Court.

A2. Factual matrix necessary for the adjudication of the presentcase is thus:-

The petitioner in the contempt petition Rama Narang was marriedto Smt. Motia. The respondent Nos.1 and 2 i.e. Ramesh Narang andRajesh Narang so also Rakesh Narang are sons of the petitioner andBSmt. Motia. The petitioner and Smt. Motia divorced in 1963. The petitionerthereafter married Smt. Mona. Out of the said wedlock, two sons Rohitand Rahul as well as daughter Ramona were born.

3. In previous round of litigation between these parties, therespondent No.1- Ramesh Narang had approached this Court by filing aCContempt Petition (C) Nos.265-67 of 1999 in Contempt Petition (C) No.209 of 1998 in Civil Appeal Nos.366 of 1998, 603 of 1998 and 605 of1998. The present petitioner Rama Narang was respondent No.1 in thesaid proceedings. This Court passed the following order in the saidproceedings on 2nd November 2001:-

D“In Conmt. Pet. (C) Nos.265-267/1999 in Conmt. Pet. (C)No.209/1998 in Civil Appeal No.366/1998, 603/1998 & 605/1998.

After hearing Mr. Kapil Sibal, learned senior counsel for thepetitioner and Mr. Gopal Subramaniam, learned seniorEcounsel for the alleged contemnor, at length, we are satisfiedthat the contemnor has flouted the order of this Court dated4th May, 1999 by not transferring 50% of the share (andcontending that he could make out the 50% share only bycalculating the shares of NIHPL held by M/s. Fashion WearsPrivate Ltd., which have been forbidden by the order datedF22.01.1998). We call upon the contemnor to show causeregarding the punishment to be imposed on him for which heshall be present in this Court on 29th November, 2001.

I.A. No.6 in C.P. (C) No.209/1998 in C.A. No.366/1998.Dismissed as withdrawn.

List all matters on 29th November, 2001.”

4. It appears, that subsequently the matter was settled betweenthe parties and the parties had placed on record the Minutes of theConsent Order. It will be apposite to reproduce the entire order passedby this Court on 12[th] December 2001:-H

“The following cases are pending between the parties whoare parties in the present proceedings before us one way orthe other. We are told that all the parties have settled theirdisputes in respect of all the litigations specified below.

1.O.S. No. 3535 of 1994 before the Bombay HighCourt.B

2.O.S. No. 3578 of 1994 before the Bombay HighCourt.

3.O.S. No. 1105 of 1998 before the Bombay HighCourt.

4.O.S. No. 3469 of 1996 before the Bombay HighCourt.

5.O.S. No. 1792 of 1998 before the Bombay HighCourt.

6.O.S. No. 320 of 1991 before the Bombay High Court.D

7.Company Petition No. 28 of 1992 Before thePrincipal Bench, Company Law Board, New Delhi.

8.Arbitration Suit No. 5110 of 1994 before the BombayHigh Court.

Today they filed document styled it as “MINUTES OFCONSENT ORDER” signed by all the parties. Learnedcounsel appearing on both sides submitted that all the partieshave signed this document. Today except Mona Narang andRamona Narang (two ladies), all the rest of the parties arepresent before us when these proceedings are dictated. Asfor Mona Narang and Ramona Narang learned counselsubmitted that Mona Narang had affixed the signatures andthe power of attorney holder of Ramona Narang has signedthe above document in his presence. This is recorded.

Both sides agreed that all the suits can be disposed of in termsof the settlement evidenced by “MINUTES OF CONSENTORDER” produced before us. For disposal of those casesand/or for passing decrees in them we have to pronounce thefinal formal order in terms of the settlement now producedbefore us.

AWe, therefore, withdraw all the aforesaid suits to this Courtunder Article 139-A of the Constitution of India.

Prothonotory and Senior Master of the Bombay High Courtare directed to transmit the records in the above mentionedsuits by special messenger to this court so as to reach theBRegistry here within ten days from today. The Bench Officerof the Principal Bench of the Company Law Board, New Delhiis directed to forward the records relating to Company PetitionNo. 28 of 1992 to the Registry of this Court so as to reach theRegistry within ten days from today.

CAll the parties have undertaken before us that they willimplement the terms of the “MINUTES OF CONSENT ORDER”on or before 1.1.2002 and that no further time will be soughtfor in the matter.

Clause (f) of the compromise relates to the operation of theDbank accounts. That clause will come into force from todayonwards.

All the afore-mentioned suits and the company petition willbe posted for final formal orders on 8.1.2002 at 10.30 a.m.along with these contempt proceedings.”

E5. The matter came up again before this Court on 8[th] January2002. This Court passed the order thus:-

“Pursuant to the order dated 12[th] December, 2001 thefollowing suits and company petition have been transmittedto this court and they are on the file of this court now andFregistered as Transferred Cases Nos. 1 to 8 of 2002:

1.O.S. No. 3535 of 1994 before the Bombay HighCourt.

2.O.S. No. 3578 of 1994 before the Bombay HighCourt.

3.O.S. No. 1105 of 1998 before the Bombay HighCourt.

4.O.S. No. 3469 of 1996 before the Bombay HighCourt.

5.O.S. No. 1792 of 1998 before the Bombay HighACourt.

6.O.S. No. 320 of 1991 before the Bombay High Court.

7.Company Petition No. 28 of 1992 Before thePrincipal Bench, Company Law Board, New Delhi.

8.Arbitration Suit No. 5110 of 1994 before the BombayHigh Court.

All the above are now being disposed of in terms of the Minutesof Consent Order incorporated in the proceedings passed byus on 12.12.2001.

The decree will be drawn up in terms of the Minutes of theConsent Order.

In regard to the property (64, Sunder Nagar, New Delhi) whichis the subject matter for O.S. No. 3578/1994 of the High Courtof Bombay Rama Narang, who is present in court, gives anundertaking that the same would be transferred with clearand marketable title to Rajesh Narang or his nominee on orbefore 31.03.2002. This undertaking is recorded.

In the light of the above developments we deem it necessaryto drop the steps against Rama Narang for contempt pursuantto the order of this court dated 2.11.2001. We order so.

Similarly all other contempt petitions are dropped and IAsand Transferred Cases are disposed of.”

It will also be relevant to refer to the Minutes of the ConsentOrder, which is family settlement between all the members of thefamily including the parties herein:-

“1. Ramesh’s Suit No.3535 of 1994 [for specific performanceof family settlement] both pending in the Bombay High Courtto be decreed and implemented forthwith.

2. Ramesh’s Suit No. 1105 of 1998 [Fashion Wears] openingin the Bombay High Court to be decreed and implementedforthwith; 19184 shared held by FWPL in NIHL are validlytransferred to Ramesh on 27th June 1992 and Ramesh havingalready transferred 5194 (12%) shares in the joint names of

Rama and Ramesh on 21[st] May 1990 directed by order of thisHon’ble Supreme Court dated 4[th] May 1999. It is clarifiedand agreed that the transfer of 142 additional shares byRamesh on 24[th] May 1999 to the joint names of Rama andRamesh is void and the said 142 shares stand restored to thename of Ramesh. The purported transfer of shares by Ramaon 14[th] May 1999 in compliance with order dated 4[th] May1999 is void. It is further clarified that the transfer by Ramaof 3998 shares to Ramesh pursuant to order dated 4[th] May1999 is void and the said 3998 shares stand restored to thejoint names of Mohini, Rama and Mona. It is also clarifiedthat Ramesh, Rajesh and Rakesh shall have no objection tothe transfer of 403 shares held by FWPL in NIHL to Rama.

3. The following directions issued by this Hon’ble SupremeCourt in the above matter are re-affirmed and agreed to bythe parties as follows:-

(a)With effect from 4[th] May, 1999 Rama, Ramesh andRajesh are the only Directors of NIHL (and itssubsidiaries). Any increase in the Board of Directorsshall be with the mutual consent of Rama andRamesh/Rajesh.

(b)None of the Directors (Rama, Ramesh and Rajesh)can be removed from directorship.

(c)Rama and Ramesh shall continue to be in jointmanagement and control of NIHL and Rajesh shallcontinue to be the Permanent Whole Time Directorthereof in charge of day to day operations/management.

(d)No decision shall be adopted concerning oraffecting the said Company (and its subsidiaries)without the consent of Rama and Ramesh (or Rajesh)in writing. It is further clarified and agreed that saveand except as provided herein no prevailing decisionsincluding appointment of Directors/Executives or anyother persons shall continue unless Rama andRamesh (or Rajesh) consent to the same in writing.

(e)All the collections coming in cash shall continue tobe remitted in the bank accounts of the Companyand all transactions will only be made in the form ofcheques and/or as may hereafter be agreed tobetween Rama and Ramesh (or Rajesh).

(f)All bank accounts of the Company shall continue tobe operated jointly by any two out of the threeDirectors namely Rama, Ramesh and Rajesh and/oras may hereafter be agreed to between Rama andRamesh (or Rajesh). If the amount of any transactionexceeds Rs. 10 (ten) lacs the same shall beundertaken through cheque signed jointly by Ramaand Ramesh/Rajesh.

(g)All statutory record of the Company [and itssubsidiaries] including minutes of Directors Meetingsand/or Shareholders Meetings shall be valid only ifDsigned jointly by Rama and Ramesh or Rajesh.

(h).The remuneration and perquisites to which Rama,Ramesh and Rajesh shall be entitled as Directorswith effect from 4th May 1999 shall be the maximumpermissible under the provisions of the CompaniesAct, 1956 and which shall be divided/allocatedbetween them in equal shares as provided and/or asmay hereafter be agreed to between Rama andRamesh [or Rajesh].”

4. Rahul’s Suit No. 3469 of 1996 and Rama’s Suit No. 1792of 1998 both pending in the Bombay High Court to bewithdrawn.

5. Ramesh’s Company Petition No. 28 of 1992 pending beforethe Company Law Board, New Delhi to be withdrawn.

6. Rakesh’s Suit No. 320 of 1991 [who is part of the RamaGGroup] to be compromised and implemented as follows:

“a. Rama shall transfer 5410 shares in NIHL to the solename of Rakesh.

b. Rama Group agree and undertake to restore to Rakeshhis residential accommodation on the third floor of the

Abungalow at 40, Pali Hill, Bandra, Bombay and consentto carry out all additions and alterations required by himtherein.”

In consideration of the above Rakesh hereby agrees andundertakes to ratify and confirm and implement the family settlementBand do all the acts, deeds and things required in that purposeincluding;

“a. Transfer 1000 equity shares held by Rakesh in NarangOverseas Private Limited to Rajesh.b. Confirm his retirement as partner in the firm of UnitedCCorporation and withdraw his claims referred to arbitrationin Arbitration Suit No. 5110 of 1994.

c. Consent to the transfer of entire undertaking of BullWorker Private Limited from FWPL to the Manu Group.

Dd. Consent to hive off land at Marol, Sahar, Bombay ownedby NIHL admeasuring about 45105.70 square meters tothe Manu Group.

e. Consent to hive off ownership and possession of theproperty at 64, Sunder Nagar, New Delhi to Rajesh.”E7. All the above is to be performed by the Rama Group before01.01.2002.

8. Matter to be listed before this Hon’ble Court on08.01.2002.”

6. Perusal of the family settlement would reveal, that insofar asFNarang International Hotel Limited (hereinafter referred to as ‘NIHL’)and its subsidiaries are concerned, Rama Narang, Ramesh Narang andRajesh Narang were to be the only Directors. Any decision by the Boardof Directors was to be taken only by the mutual consent of Rama Narangon one hand and Ramesh and Rajesh, on the other hand. The settlementGalso provided, that none of the Directors i.e. Rama Narang, RameshNarang and Rajesh Narang could be removed from the Directorship.Rama Narang and Ramesh Narang were continued to be in jointmanagement and control of NIHL and Rajesh Narang was continued tobe whole time Director In-Charge of day-to-day operations andmanagement of NIHL. It also provided, that no decision shall be takenH

concerning the said NIHL and its subsidiaries, without the consent ofRama Narang on one hand and Ramesh/Rajesh on the other hand. It isfurther provided, that all bank accounts of the Company have to beoperated jointly by any two of the three Directors as agreed betweenRama Narang and Ramesh/Rajesh. It further provided, that if amountof any transaction was exceeding Rs. 10 lakhs, then the same could beundertaken only through cheque singed jointly by Rama Narang onone hand and Ramesh or Rajesh on the other hand.

7. It appears, that though the matter was settled between theparties in terms of Minutes of Consent Order as recorded in the ordersdated 12[th] December 2001 and 8[th] January 2002, passed by this Court,there was no quietus to the dispute between the parties. Rama Narangalleging, that Ramesh and Rajesh had violated the terms of the ConsentOrder stipulated in Clause 3 (c), (d), (e) and (f) of the Minutes of theConsent Order, filed contempt petition being Contempt Petition(C)No. 148 of 2003 in Contempt Petition (C) Nos. 265-67 of 1999 inContempt Petition (C) No.209 of 1998 in CA No. 366 of 1998. It wasthe case of the petitioner Rama Narang, that the violations of the ConsentOrder by Ramesh and Rajesh amounted to clear disobedience of theorders dated 12[th] December 2001 and 8[th] January 2002 and thuspunishable under the Contempt of Courts Act, 1971. This Court hadinitiated contempt proceedings against the respondents vide order dated15[th] September 2003. This Court had also requested Justice V.A. Mohta,retired Chief Justice of Orissa High Court to act as Mediator forsettlement of disputes between the parties. However, despite seriousefforts made by the Learned Mediator, the settlement could not be arrivedat.8. preliminary objection was taken regarding the maintainabilityof the abovesaid contempt petition. According to the respondents Rameshand Rajesh, in the absence of any undertaking given to the Court, thisCourt could not exercise its jurisdiction on mere violation of the terms ofthe Consent Order. The respondents had contended, that the order dated12[th] December 2001, had merged in the order dated 8[th] January 2002and that they had implemented the said order. three-Judge Bench ofthis Court in Rama Narang v. Ramesh Narang and Another[1] rejectedthese objections raised by the respondents with regard to maintainability

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Aof the contempt petition. It will be relevant to refer to the followingobservations of this Court:-

“33. In the present case, the consent terms arrived at betweenthe parties were incorporated in the orders passed by theCourt on 12-12-2001 [Ramesh Narang (1) v. Rama Narang,B(2009) 16 SCC 631] and 8-1-2002 [Ramesh Narang(2) v. Rama Narang, (2009) 16 SCC 600] . The decree asdrawn up shows that order dated 8-1-2002 [Ramesh Narang(2) v. Rama Narang, (2009) 16 SCC 600] was to be ‘punctuallyobserved and carried into execution by all concerned’. Aviolation of the terms of the consent order would amount to aCviolation of the Court’s orders dated 12-12-2001 [RameshNarang (1) v. Rama Narang, (2009) 16 SCC 631] and 8-1-2002 [Ramesh Narang (2) v. Rama Narang, (2009) 16 SCC600] and, therefore, be punishable under the first limb ofSection 2(b) of the Contempt of Courts Act, 1971. The questionDwhether the respondents should not be held guilty of contemptbecause of any earlier confusion in the law reflected in BabuRam Gupta case [(1980) 3 SCC 47 : 1980 SCC (Cri) 527] isa question which must be left for decision while disposing ofthe contempt petition on merits. It may be argued as anextenuating or mitigating factor once the respondents are heldEguilty of contempt. The submission does not pertain to themaintainability of the petition for contempt. The preliminaryobjection raised by the respondents regarding the non-maintainability of the petition for contempt is, for the reasonsstated, dismissed.”F9. After the preliminary objections raised by the respondents wererejected, the aforesaid contempt petition was heard by this Court onmerits. The main allegations against the respondents with regard toviolation of Clause 3 (c), are thus:-

(a)that the high value contracts were executed by issuingGmultiple cheques under the value of Rs. 10 lakhs, though,the contract amount was much more. It was done so as toovercome the requirement, that for transaction worth morethan rupees ten lakhs, the cheques had to bear jointsignatures of Rama Narang on one hand and Ramesh orHRajesh on the other hand;

(b)the vital information with regard to management of theCompany was withheld and as such the Company wasmanaged to the complete exclusion of Rama;

(c)settlement with trade union was unilaterally undertaken bythe respondents and the petitioner was only asked to signthe enhanced salary cheques, which the petitioner refusedBas he was not consulted; and

(d)it was also alleged, that the respondents had taken unilateraldecisions with regard to appointment and promotion of seniorexecutives and as such, had acted in clear violation ofClause 3 (d).

10. The respondents had filed response to the said contemptpetition. It was contended on behalf of the respondents, that the petitionerwas deriving undue advantage from the alleged technical breach of theconsent terms; which too was based on interpretation of the consentterms contrary to the mutual understanding of the parties. It wassubmitted, that the petitioner was attempting to stall the functioning ofthe company by trying to use the veto power. It was submitted, that itwas never the intention of the parties, that the petitioner should enjoy theveto power over the company transactions having value of more thanRs. 10 lakhs and create deadlock.

11. However, the Court did not find favour with the submissionsmade by the respondents and while rejecting the respondent’s contention,this Court in its judgment and order dated 15[th] March 2007 reported asRama Narang (V) v. Ramesh Narang and Another[2], observed thus:-

“32. The object of entering into consent terms and jointlyfiling the undertaking was to run the family businessharmoniously with the active participation of all as familybusiness but the respondents had taken absolute control ofthe Company NIHL to the total exclusion of the petitioner. Allthe management decisions and other decisions affecting theCompany were taken by the respondent Rajesh Narang, thewhole-time Director under the guise of the day-to-dayoperation/management in clear violation of Clause 3(c) ofthe consent terms which clearly states that Rama Narang andRamesh Narang shall continue to be in joint management and

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Acontrol. The parties gave undertaking to the Court regardingthe consent terms.

33. The respondents have erroneously submitted that jointmanagement and control of the Company means giving vetopower to the petitioner. According to the terms of undertakingBthe petitioner and the respondents were under an obligationto run the Company harmoniously with the active participationof all as family business but unfortunately the respondentshave taken absolute control to the total exclusion of thepetitioner. This is contrary to the terms of the undertakinggiven to this Court.”C

12. This Court while convicting the present respondents underSection 2(b) of the Contempt of Courts Act observed thus:-

“52. We have carefully perused the undertaking given by theparties to the Court and orders of this Court dated 12-12-D2001 [Ramesh Narang (1) v. Rama Narang, (2009) 16 SCC631] and 8-1-2002 [Ramesh Narang (2) v. Rama Narang,(2009) 16 SCC 600] based on the undertaking of the partiesgiven to this Court and other relevant facts and circumstances.According to our considered view the respondents are clearlyguilty of committing contempt of court by deliberate and wilfulEdisobedience of the undertaking given by them to this Court.In this view of the matter, in order to maintain sanctity of theorders of this Court, the respondents must receive appropriatepunishment for deliberately flouting the orders of this Court.

53. Consequently, we convict the respondents under Section 2(b) ofFthe Contempt of Courts Act and sentence them to simpleimprisonment for period of two months. We further impose fineof Rs 2000 to be deposited by each of them within one week failingwhich they shall further undergo imprisonment for one month.”

13. It will also be relevant to refer to para (54) of the said judgmentGand order passed by this Court in Rama Narang (V)[3] (supra) dated 15[th]March 2007:-

“54. We are also not oblivious of the fact that immediately sendingthe respondents to jail would create total chaos in the Company

H3 (2009) 16 SCC 126

which would also vitally affect the interests of large numberof people including the employees of the Company. Therefore,while keeping in view the peculiar facts and circumstancesof this case, the sentence of imprisonment imposed on therespondents is kept in abeyance. We further direct the partiesto meticulously comply with the undertakings given by themto this Court. In case similar violation of the undertakingsgiven to this Court is brought to the notice of the Court, inthat event, the respondents shall be sent to jail forthwith toserve out the sentence imposed in this case.”14. It could thus be seen, that though this Court held the respondentsguilty of contempt, taking into consideration the fact that immediatelysending the respondents to jail would create total chaos in the Companyand it would also vitally affect the interest of large number of peopleincluding the employees of the Company, the sentence of imprisonmentimposed on the respondents was kept in abeyance. This Court furtherdirected the parties to meticulously comply with the undertaking givenby them to the Court. It was further observed by the Court, that in case,similar violations of the undertaking given to this Court, was brought tothe notice of this Court, the respondents shall be sent to jail forthwith toserve out the sentence imposed in the said case.

15. It appears, that the dispute between the parties not onlycontinued but got aggravated. Contending that on account of non-cooperation by Rama, the functioning of the Company had come to astandstill, Ramesh filed Company Petition No.47 of 2008 before theCompany Law Board, New Delhi (hereinafter referred to as ‘CLB’). Itwas contended in the said company petition, that due to non-cooperationby Rama in signing cheques, the employees could not be paid their salariesfrom November 2007 onwards. It was also contended, that bills forpayment to supplier could also not be paid, due to which, the entirefunctioning of the various units of the Company had been seriouslyaffected. On 14[th ]March 2008, the CLB directed the board meeting ofNIHL to be held on 24[th] March 2008 at 11.00 AM in the registeredoffice of the Company. Each of the three Directors were also directedto circulate list of items, that they desired to discuss in the meeting, tothe Directors by 18[th] March 2008. The CLB also appointed Shri C.R.Das, Former Member of CLB as Observer, to observe the proceedingsof the said meeting. In the said proceedings, Ramesh also filed CA No.194

Aof 2008 on 20[th] March 2008, pointing out therein, that due to non-paymentof salaries/wages for the months of December 2007 and January 2008,about two hundred workers at Delhi Flight Catering Unit of the Companyhad stopped the work and started protest and agitation.

16. When the matter was listed before CLB on 7[th] April 2008, theBCLB found, that though the Board met on two consecutive dates totallyfor fifteen hours, not single decision had been taken, in view of eachone holding of his own views/opinion. From the Report of the Observer,the CLB found, that all the three Directors had adopted rigid standresulting in complete deadlock. The CLB found, that in the proceedingsunder Section 397/398 of the Companies Act, 1956, it was the interest ofCthe Company, which was paramount. The CLB noticed, that due todifferences among the Directors, many operational issues like paymentof salaries/wages, payment to supplier etc. were pending, leading toagitation by employees and irregularities in supply. The CLB found itappropriate, that till the petition was disposed of, as an interim measure,Din the interests of the Company and more than 3000 employees/workers,there should be mechanism by which the day-to-day operations of theCompany were carried on without any hitch. The CLB thus passed thefollowing order on 10[th] April 2008:-“8. Accordingly, as I indicated during the hearing, I appointEShri Justice Arvind V. Savant, Former Chief Justice of KeralaHigh Court, who has given his consent, as the Facilitator(Mobile No. ……..). As the Facilitator, he would try to bringabout consensus among the directors on matters which areurgent and essential to ensure that the business of the Companyis carried on smoothly and in case consensus is not possible,Ftaking into consideration the views of the three Directors, hewill take final decision which will be binding on theDirectors and the Company. I make it abundantly clear thathis role will be limited only to operational matters, like, issuesrelating to workers/employees of all categories, issues relatingGto suppliers/supply contracts, urgent repairs to equipmentsetc. These are only illustrative. It will be within his competenceto decide considering the spirit of this order that the businessof the company should be carried on smoothly till the petitionis disposed of, which are urgent/essential operational issues.”

17. Alleging, that the order passed by CLB dated 10[th] April 2008,was violative of the order of this Court dated 15[th] March 2007 and nothingbut an attempt to legalize their conduct of contempt, the petitionerapproached this Court by the present contempt petition.

18. It appears, from the Record of Proceedings, that on 15[th]December 2008, this Court had heard the counsel for the parties andreserved the order. The contempt petition was listed before this Courton 10[th] February 2009 and on the said date, this Court passed the followingorder:-

“We have perused the order dated 27.01.2009.

On 15[th ]December, 2008, this Court heard learned counselfor the parties at length and reserved the order.

Before this Court could pronounce the order, IA No.1 of 2008was filed by respondent No.1 in which prayer was made torecall the order dated 15[th] December, 2008. In the said IAwhat has been incorporated in para No.2 is reproducedhereunder:

“Instructions had duly been taken that the Hon’ble Court berequested to kindly hear the Contempt Petition on merits.

On 15.12.2008, Mr. Nariman, learned Senior Counsel, whohas been appearing in the matter could not be present forpersonal reasons. In order not to inconvenience the otherside and this Hon’ble Court, another learned Senior Counselhad been briefed to argue the case. On that day, your Lordshipswere pleased to observe that in case Mr. Nariman wasavailable on another day, your Lordships might consideradjourning the matter for day or two and the availability ofMr. Nariman was sought. However, regrettably, on anerroneous impression, statement was made withoutconsulting Mr. Nariman that he would not be available tillJanuary, 2009.”

In the interest of justice, we deem it appropriate to recall theorder dated 15[th ]December, 2008. We order accordingly.

List this matter on Friday, the 20[th] February, 2009 beforeanother Bench.”

A19. The matter thereafter came up before this Court on 9[th ]April2009. Perusal of the order dated 9[th] April 2009, would reveal, that thisCourt, on query found, that for the last one decade, the Company hasnot filed its returns under the Income Tax Act. It also found, that theBooks of Accounts had not been prepared and/or audited. It was alsofound, that the requisite financial statements had not been filed beforeBthe Registrar of Companies. The Court noticed, that none of the authoritieshad taken any action under the Companies Act or under the Income TaxAct, 1961. The Court therefore, called for the status of the matter pendingbefore the Income Tax Authorities. The Court, in order to protect theinterest of the Revenue as well as the workmen, as the first step, directedCM/s K.P.M.G. Chartered Accountants to prepare financial accounts afterverifying the Books. The Court directed both the parties to sign theaccounts, without prejudice to their rights and contentions. The CharteredAccountant was also directed to consult both the sides. The matter wasdirected to be kept on 13[th] July 2009.D20. On 13[th] July 2009, again this Court passed detailed order.The perusal thereof shows, that the Court directed the Registrar ofCompanies and Chief Commissioner of Income Tax to be impleaded inthe proceedings. The Court also observed, that it would also like to knowfrom the Chief Commissioner of Income Tax, as to what action hasbeen taken against the Company with regard to dues under the IncomeETax Act. The Court also wanted to know as to why assessment has notbeen done for all the years, particularly, when the Return/Accounts havenot been filed by the Company. The matter was directed to be listed bythis Court thereafter on 21[st] July 2009. On 21[st ]July 2009, the Courtconsidered the Status Report submitted before it, by the Chief

FCommissioner of Income Tax. Apology was tendered to the Court bythe Registrar of Companies for not taking action under the CompaniesAct. The Court recorded, that both these officers have assured to takeaction in accordance with law. The Court also noticed, that apart fromnon-compliance of the statutory provisions, the Books of Accounts had

not been audited by the Auditors of Company. The Court therefore, inGorder to set the house in order and particularly, keeping in mind theinterest of 3000 workmen as well as exchequer, while invoking powersunder Article 142 of the Constitution, appointed an independent Director,who was to look into the financial management of the Company andsubmit his report to this Court from time to time, on the state of theHCompany’s Accounts and due compliance of the statutory provisions of

the Companies Act and Income Tax Act. He was also requested tosuggest steps for good corporate governance, including financialmanagement in future. The Court therefore, requested Shri Homi Ranina,a Tax Expert to accept the assignment and submit the Status Report tothis Court, so that appropriate directions could be issued. From the perusalof the order, it appears, that this Court was more concerned with puttingthe house in order before taking the contempt petition for hearing.

21. This Court, however, clarified in its order dated 21[st] July 2009,that the same will not come in the way of functioning of Shri ArvindSavant, Former Chief Justice of Kerala High Court as Facilitator appointedby the CLB.

22. The contempt petition thereafter came up before this Courton 29[th] July 2009. By an order passed on the said date, this Courtrequested Shri Ranina to take charge as independent Director and furtherclarified that the same would be confinedonly in the context of complianceof the provisions of the Companies Act as well as the Income Tax Act.By the said order, this Court directed M/s BSR & Company, CharteredAccountants to prepare and audit the accounts of the Company andobserved, that its function will not overlap with the functioning of theFacilitator, who was free to proceed in accordance with law. The Courtfurther found, that the regular meetings in accordance with the provisionsof the Companies Act have not been held and therefore, charted out thefunctions to be undertaken by Shri Ranina who was appointed as anindependent Director vide order dated 21[st] July 2009. The directions innutshell are thus:-

(i)Shri Ranina will convene an informal meeting of all theconcerned parties including M/s BSR & Company and atthe said meeting, Shri Ranina was to act only as an advisorand not as an independent Director of the Company;

(ii)After going through the relevant papers, Shri Ranina wasto convene one more meeting in which he was to suggestmode of his induction into the Company as an independentDirector. It was further clarified that, Shri Ranina was notto be subjected to prosecution which the Court had directedin its earlier order dated 21[st] July 2009 with regard to theaction to be taken by the Registrar of Companies againstthe Directors for violation of the provisions of CompaniesAct;

A(iii)The BSR & Company was to update and audit the Accountsof the Company. If the BSR & Company found anyimpediment, they were to report to Shri Ranina, who in turn,was to try to resolve the problem himself in the first instanceand if not, to submit report to this Court;

B(iv)The BSR & Company would also submit the reports on thestatus of the accounts from time to time to Shri Ranina. Incase, Shri Ranina found any impediment or difficulty incarrying out the orders passed by the Court, he would submitStatus Report to this Court through Shri Parag Tripathi.

C23. The matter thereafter came up before this Court on 14[th]December 2009. This Court noted, that the Accounts of the Companystood duly audited upto 31[st] March 2006, whereas accounts of thesubsidiary Companies stood audited upto 31[st] March 2009. The Courtfurther noted, that as on that date, there was no compliance of theprovisions of Section 212 of the Companies Act. The Court extendedDthe time for filing of accounts before Registrar of Companies upto 31[st]January 2010. The Court therefore directed, that the proceedings shallremain pending till further orders.

24. By the same order, the Court appointed Shri Habib Rehman,Expert in Hotel Management, to advise Shri Ranina from time to time. ItEfurther directed, that in the event of any dispute between the Directors,the decision taken by Shri H.P. Ranina in consultation with Shri HabibRehman, shall be final and binding on Board of Directors. The matterwas thereafter listed before this Court on 16[th] April 2010. In the saidorder, the Court noted, that pursuant to its order dated 8[th] February 2010,Fthe Registrar of Companies had submitted report on 26[th] March 2010.It was found, that the Register of Directors maintained by the Companywas not in conformity with the Court orders/Resolutions, passed by theBoard or Company during the period right from 1990. The court thereforeauthorised Shri H.P. Ranina to update the said Register of Directors andbring it in conformity with the Court Orders and Resolutions passed byGthe Board. The said order was passed by the Court without prejudice tothe rights and contentions of the parties appearing before the Court.

25. Thereafter, the matter came up for hearing before the Courton 3[rd] May 2010. By order on said date, the Court appointed Shri SyedHabibur Rehman as an independent Director to manage the affairs ofH

the Hotel and the flight kitchens on day-to-day basis. M/s J.G. Verma &Co. was directed to be appointed as Tax Auditors of the Company inplace of M/s BSR & Company. It was clarified that Shri Habibur Rehmanwas appointed as an independent Director and shall not be prosecutedfor any violation of the statutory provision. Thereafter, the matter waslisted before this Court on 6[th] August 2010. By order on said date, theCourt noticed the earlier proceedings and observed, that although numberof steps were taken; even as on that day, the signing of the Accountsremained pending because of the family disputes between the fatherand the sons. The Court noticed, that at the end of the day, the positionremained that some of the provisions of the Companies Act were notcomplied with and the Accounts remained unsigned. The Court thereforedirected the Additional Chief Metropolitan Magistrate, 37[th] Court,Mumbai, to expedite the hearing and finally dispose of the cases pendingbefore him. The Court by the said order dispensed with the services ofShri H.P. Ranina and Shri Syed Habibur Rehman.26. In the parallel proceedings before the CLB, Rama Naranghad filed Company Application No.57 of 2011 in Company Petition No.47 of 2008, praying for the discharge of the Facilitator Retired JusticeArvind V. Savant, on the ground of collusion with the petitioner and therespondent before the CLB. The Court found no substance in theallegation made by Shri Rama Narang and therefore, dismissed the saidCA by imposing exemplary cost of Rs. 1,00,000/. It will be relevant torefer to paragraph (7) of the order dated 22nd February 2011, as under:-

“7.I therefore dismiss CA 57/2011 while awarding anexemplary cost of Rs. one lakh against R-2. The cost soawarded shall be deposited by R-2 in the High Court LegalAid Committee, New Delhi within week from today. TheFacilitator shall now proceed to fix date for holding meetingof the Board of Directors for ensuring statutory compliancesand also for acting in furtherance of directions contained inthe Order dated 10.04.2008,12.10.2010 and 22.11.2010 andsend status report as directed by me in the Order dated6.1.2011.”

27. It further appears from the record, that Rajesh-respondentNo.2 herein, who was whole-time Director, filed Company ApplicationNo.223 of 2011 before the CLB in pending Company Petition No. 47 of2008. It was contended on behalf of the applicant in the application, that

Adue to non-cooperative attitude of the respondent i.e. the petitioner herein,the entire functioning of the Company had come to standstill. It wasfurther averred, that Rama was making every attempt to put hindrancein the day to day functioning of the company. As such certain necessarydirections were sought in the interest of the Company so also its workers.On 28[th] April 2011, the CLB after considering the rival contentions, passedBthe following order:-

“On an overall consideration of the factual scenario whilerejecting the objection raised by learned senior counsel forR-2 as to the locus of the applicant and considering thecomplete, repeated, persistent and deliberate non-cooperationCby R-2 in the smooth functioning of R-1 company and also toregulate the conduct of the company’s affairs I deem it fit togrant the relief as prayed for in CA No. 223/2011 and orderthat pending the hearing and final disposal of C.P. No.47/08and in addition to the directions already made in C.P. No.47/D08, in the event of dispute/ disagreement inter se between theDirectors in the Board Meeting on any items on the agenda,a decision shall be taken by the Facilitator which shall befinal and binding on the Board of Directors and the company.With the paramount object of smooth running of R-1 theFacilitator is further empowered to sign cheques/minutes andEstatutory records in case of disagreement between or refusalby any of the Directors or inability of the Board to take adecision. Before signing any cheque/ minutes/statutory recordsthe Facilitator shall record reasons for not agreeing with thedissenting Director/s or agreeing with the assenting Director/Fs.”

28. It appears from the record, that in the emergent situation i.e.not making payment of electricity bills and the resultant possibility ofelectricity supply of the Hotel being disconnected, Company ApplicationNo.610 of 2011 was mentioned before the CLB. It was brought to theGnotice of the CLB, that the Facilitator was not able to function and operatesmoothly and therefore, vide order dated 29[th] November 2011, the CLB,as temporary measure, appointed Shri H.S. Acharya as SpecialOfficer-cum-Advisor, in addition to the Facilitator already appointed.The CLB further directed, that since the present Facilitator has stayedhis hands from exercising additional powers given vide order dated 28[th]H

April 2011, the said powers could be exercised by Shri Acharya untilfurther orders.

29. Thereafter, by an order dated 30[th] April 2015, the CLB passedthe following order:-

“16. Therefore, for the reasons stated above, I hereby appointMr. H.P. Ranina as Facilitator cum Advisor by removing Mr.H.S. Acharya as Administrator cum Advisor. Mr. Ranina hasto act as Facilitator cum Advisor with the powers that wereconferred upon on Mr. Acharya by CLB when he was madeas Facilitator cum Advisor. It is made clear that Mr. Raninawill not go beyond the powers conferred upon when Mr.Acharya was appointed by CLB through orders dated29.11.2011, R1 Company shall not close down flight cateringunits without prior permission from Company Law Board.”

It could thus be seen, that by the said order, CLB appointed ShriH.P. Ranina as Facilitator-cum-Advisor in place of Shri H.S. Acharyawith all the powers that Shri Acharya had as Facilitator-cum-Advisor.

30. It appears from the record of this Court, that the contemptpetition was listed before various Benches of this Court on various dates.On 15[th] March 2016, this court found, that the business of the Companyhad come to standstill and therefore, it was of the tentative view, thatit was fit case where the Company may be wound up. The Departmentof Corporate Affairs therefore was directed to make an enquiry/investigation into the affairs of the Company and submit its report to theCourt within period of four weeks. On 19[th] April 2016, this Courtgranted further eight weeks’ time to enable the Department of CorporateAffairs to make necessary enquiry and submit report in terms of theorder dated 15[th] March 2016. This Court also observed, that it would beopen to the parties to settle the matter and make mention of the Termsof Settlement before this Court. On 19[th] July 2016, this Court directedthe report of the Registrar of Companies, Maharashtra, Ministry ofCorporate Affairs, to be made available to the counsel for both the sides.It further observed, that if so required, on the next date, the Court willproceed to appoint an independent Board/Committee to run the affairsof the Company until appropriate solution to the present impasse betweenthe Directors is arrived at. On 16[th] August 2016, the Court directed thecontempt petition to be listed for final disposal in the month of November

A2016. It further ordered, that without prejudice to the rights of therespective parties, the present arrangement for running the affairs ofthe Company will continue until further orders. On 29[th] November 2016,the matter was directed to be adjourned sine die.

31. From the documents placed on record, it appears, that in theBmeantime, the meeting of the Board of Directors of NIHL was held on30[th] April 2019. From the Minutes of the Meeting, it would appear, thatone of the subjects that came up for discussion before the Board ofDirectors, was with regard to sale of the Companies’ property at 40 PaliHill, Bandra West, Mumbai (hereinafter referred to as the ‘Bandraproperty’) so as to tide over the financial crisis. From the perusal of theCMinutes of the Meeting, it could be seen, that it is stated therein, that theBandra property was only non-business asset of the Company. It is furtherstated in the Minutes of the Meeting, that if funds were not available, itwould result in closure of the Company’s Flight Catering Business, whichwould result in over 3000 persons losing their livelihood as well as createDserious financial and legal challenges. It was suggested in the saidMeeting, that on the sale of the Bandra property, an amount of Rs. 351crore could be received from Maverick Realty & Developers LLP. Inthe said Meeting, the petitioner was also asked by the respondent No.1as well as the Facilitator, as to whether the petitioner had any othersuggestions to offer so as to tide over the financial crisis. However, theEpetitioner refused to offer any suggestion, as such under the directionsof the Facilitator, the following resolutions came to be passed:-“RESOLVED THAT pursuant to applicable provisions of theCompanies Act, 2013 as amended from time to time (includingany statutory modification or re-enactment thereof) and anyFother applicable rules, regulations, laws, circulars, theCompany do sell its right, title and interest in the property/non business asset comprising of land admeasuring 2,530(Two Thousand Five Hundred and Thirty) square meters orthereabouts along with Bungalow situated at 40 Pali Hill,GBandra West, Mumbai CTS No. 1345/46/47/48, to MaverickRealty & Developers LLP for consideration ofRs.351,00,00,000/- (Rupees Three Hundred and Fifty OneCrores Only) exclusive of stamp duty, registration chargesand applicable taxes based on vacant and peaceful possessionof the said property being made available to the said buyer,

and on such other terms and conditions as may be agreed tobetween Maverick Realty & Developers LLP and Mr. RameshNarang, Joint Managing Director of the Company.

RESOLVED FURTHER THAT Mr. Ramesh Narang, JointManaging Director of the Company, be and is herebyauthorized to execute, sign, register, modify, required definitiveagreements, documents, papers, deeds, letters, writing, formsetc. and to do all such acts, deeds, matters and things as maybe required to give effect to the above Resolution.”

32. As per the said Resolutions, the petitioner as well as therespondent No.1 were required to vacate the said property. However,since the petitioner along with his other family members did not vacatethe premises, IA No.87565 of 2019 came to be filed seeking directionsto the petitioner along with his family members to vacate the said property.The said IA also came to be listed before various Benches of this Court.However, the matter came to be adjourned from time to time. IA as wellas the contempt petition was listed before us on 4[th] December 2020. Onthe said date, we informed the learned counsel for the parties, that wewould hear the main contempt petition as well as the IA for directionssimultaneously. Accordingly, we have heard the learned counsel for theparties on the main contempt petition as well as the IA for directions atlength on 10[th] December 2020 and 11[th] December 2020.

33. Shri Jaideep Gupta, the learned Senior Counsel opened thearguments on behalf of the contempt petitioner. The learned SeniorCounsel submitted, that the perusal of the orders passed by this Courtdated 12[th ]December 2001 and 8[th] January 2002, would reveal, that therespondents were required to run the affairs of NIHL jointly along withthe petitioner. However, they were running the affairs of the Companytotally to the exclusion of the present petitioner. It was further submitted,that this Court in the judgment reported in Rama Narang[4] (supra) hadclearly held, that the contempt petition at the behest of present petitioneragainst the present respondents was very much tenable. He furthersubmitted, that not only this, but the judgment of this Court reported inRama Narang (V)[5] (supra) would clearly show, that this Court inunequivocal terms has held, that the present respondents had acted inbreach of the undertaking given to this Court. It is submitted, that though

4 (2006) 11 SCC 114

5 (2009) 16 SCC 126

Athe respondents were required to run the affairs of NIHL jointly with thepresent petitioner, it was clearly found, that they had acted in breach ofthe orders of the Court and were running the business totally to theexclusion of the petitioner. The learned Senior Counsel submitted, thatthe acts which are alleged to be contemptuous in nature, in the presentproceedings, are identical with the acts which are found to beBcontemptuous in the judgment of this Court dated 15[th] March 2007. Hesubmitted, that in spite of having been held guilty, similar acts have beencontinued by the respondents even after 15[th] March 2007. He submitted,that in view of the findings of this Court in its judgment dated 15[th] March2007, for the reasons recorded therein, the present respondents areCrequired to be held guilty for committing contempt of this Court and bepunished in accordance with law.

34. With regard to the application for directions filed by therespondent No.1 herein, Shri Jaideep Gupta submitted, that such anapplication was not tenable in the contempt proceedings initiated by theDpetitioner. He submitted, that as matter of fact, the CLB has nojurisdiction to pass an order of nature as passed by it. It is submitted,that when there was settlement between the parties which has seal ofapproval by this Court, the respondents could not have initiated theproceedings before the CLB. He submitted, that in any case, the petitionerhad taken objection with regard to maintainability of the proceedingsEbefore the CLB and the CLB, without deciding the issue regardingtenability, had passed the interim orders. It is therefore submitted, thatthe reliance placed by the respondents on the orders passed by CLB isof no assistance to their case.

35. Shri Kapil Sibal, the learned Senior Counsel made hisFsubmissions in reply to the contempt petition and in support of theapplication for directions. He submitted, that originally Narang’s familyconsisted of three brothers, namely Manu, Rama and Rohit. He submitted,that the Terms of Settlement between various members of the familywas recorded by an order passed by the Bombay High Court on 3[rd] JulyG1997. He submitted, that the proceedings arising out of the settlementhad reached up to this Court. This Court vide order dated 4[th] May 1999,had called for report from Justice Lodha, Judge of the Bombay HighCourt (as His Lordship then was) with regard to, Rama-petitioner hereincommitting contempt of Justice Dhanuka’s order. He submitted, thatafter perusal of the report, this Court vide order dated 2[nd] NovemberH

2001, held the present petitioner guilty for contempt. However, in viewof the subsequent settlement between the parties, the order holding thepresent petitioner guilty was recalled.

36. Shri Sibal submitted, that the family settlement between theparties is in two parts. He submitted, that the first part is with regard tovarious suits filed by Ramesh Narang which were withdrawn andtransferred to this Court and decreed by this Court. He submitted, thatthe second part of the settlement was with regard to the management ofthe Company. The learned Senior Counsel submitted, that the conductof the present petitioner was throughout of non-cooperation in thefunctioning of the Company. The petitioner, at every stage, was attemptingto put hindrance so that the functioning of the Company comes to astandstill. He submitted, that after the orders were passed by this Courton 12[th] December 2001 and 8[th] January 2002, though the petitioner wasrequired to co-operate, the petitioner refused to do so and in order to runthe affairs of the Company, the respondents were required to do certainthings in the interest of the Company. He submitted, that had therespondents not done what they had done, the entire business of theCompany would have come to standstill thereby, depriving the livelihoodof 3000 persons and further resulting into closure of the Company, apartfrom incurring various financial and statutory liabilities.37. Shri Sibal submitted, that though there was settlement withregard to the affairs of the Company, the affairs were required to beregulated by the statutory provisions and in spite of the settlement,statutory powers cannot be abridged. He further submitted, that everyDirector has fiduciary responsibility to act for welfare of the Company.The learned Senior Counsel therefore submitted, that since the presentpetitioner failed to act for welfare of the Company, the respondents hadno other option but to approach the CLB, seeking certain directions forsmooth functioning of the Company. He submitted, that having alreadybeen found guilty for contempt by the judgment of this Court in RamaNarang (V) (supra), the respondents bona fide approached thecompetent statutory body to seek directions for the smooth functioningof the Company, so as to ensure the welfare of the Company and its3000 employees. He submitted, that the order appointing the Facilitatornot only continued from 10[th] April 2008, but this Court on several occasionshas made it clear, that it was not interfering with the order of CLBappointing Facilitator. On the contrary, by order dated 16[th] August 2016,

Athis Court has clarified, that the present arrangement for running theaffairs of the Company would continue until further orders withoutprejudice to the rights of the respective parties. He submitted, that if thepetitioner was aggrieved by the order passed by the CLB, the remedyavailable to him was to challenge the same before the competent authority.Having failed to avail of that opportunity, it is not open to the petitioner toBnow contend that the said orders cannot be given effect to. The learnedSenior Counsel submitted, that the respondents have not taken singledecision from 2008 onwards without the consent of the Facilitator.

38. Shri Sibal further submitted, that no Director of the Companyhas propriety rights over the property owned by the Company. The learnedCSenior Counsel further submitted, that the perusal of the Minutes of theMeeting of the Board of Directors held on 31[st] December 2001, whichwas held in order to give effect to the Consent terms filed before thisCourt and the order of this Court dated 12[th] December 2001, so also theexplanatory statement to the notice for Extraordinary General MeetingDconvened on 1[st] January 2002, would clearly show, that the residentialaccommodation provided to Rama Narang and Ramesh Narang atCompany’s Bandra property, was in their capacity as Director of theCompany. The learned Senior Counsel reiterated, that no Director canclaim ownership over the Company’s property.

E39. Shri Sibal further submitted, that since after 2008, therespondents have been acting as per the orders passed by the CLB,which were passed by competent statutory authority in exercise of thestatutory provisions, by no stretch of imagination, they could be heldguilty for having committed contempt of this Court. The learned SeniorCounsel submitted, that even interim orders passed by the jurisdictionalFauthorities are binding on the parties as long as they hold the field. Thelearned Senior Counsel relies on the judgment of this Court in the caseof Tayabbhai M. Bagasarwalla and Another v. Hind RubberIndustries (P) Ltd. And Others[6], in support of the said proposition.

40. Shri Sibal submitted, that insofar as application of theGrespondents is concerned, in order to save the Company from imminentdanger of closure, thereby affecting the livelihood of 3000 workers andalso from statutory and financial repercussions, it was necessary thatthis Court exercises powers under Article 142 and directs the contemptpetitioner to comply with the decision of the Facilitator. He relied on theH6 (1997) 3 SCC 443

judgments of this Court in Vijay Laxmi and Others v. Prabhu Deviand Others[7] and State Bank of India v. Ajit Jain and Others[8]insupport of this proposition.

41. Shri Akhil Sibal, the learned Senior Counsel supplemented thearguments on behalf of the respondents in the contempt petition/applicantsin the application for directions. He submitted, that insofar as theallegations made by the petitioner with regard to the respondentsunilaterally entering into labour contracts, grant of increments to theexecutives, contract of purchase of equipments etc. are concerned, therespondents, in order to keep the Company running, were required totake several decisions between September 2007 and March 2008, inaccordance with the Company Manual. He submitted, that at one pointof time, the labourers went on strike and the contempt petitioner was notwilling to cooperate in running the affairs of the Company, as such certainemergent decisions were taken during the said period. However, all thosedecisions have been ratified by the Facilitator and therefore, no case ismade out to hold the respondents guilty of contempt.

42. Shri Mukul Rohatgi, the learned Senior Counsel made hissubmissions in rejoinder. He submitted, that the matter pending beforethis Court was only contempt petition and the IA for directions filed bythe respondents was nothing but an abuse of process of law. He submitted,that there was no order passed by any competent court directing thecontempt petitioner to vacate the premises. Neither had any authorityapproved the Resolutions of the Board of Directors with regard tovacating the premises at Pali Hill. He submitted, that the Facilitator hasnot been appointed by this Court. Though, this Court had earlier appointedShri H.P. Ranina and Shri Syed Habibur Rehman, this Court itself videorder dated 6[th] August 2010, dispensed with their services. He thereforesubmitted, that after 6[th] August 2010, no Facilitator could have exercisedthe powers. He submitted, that the appointment of so-called Facilitatoris not only without jurisdiction but is in breach of the orders passed bythis Court dated 12[th] December 2001 and 8[th] January 2002. He thereforesubmitted, that the application for directions needs to be dismissedsummarily.

43. Shri Rohatgi reiterated, that since the activities which werefound to be contemptuous by the judgment of this Court in Rama Narang

7 (2017) 11 SCC 169

8 1995 Supp (1) SCC 683

A(V)[9](supra), have been continued even after the judgment was deliveredby this Court, the respondents are required to be held guilty of havingcommitted contempt of this Court and punished in accordance with law.He relied on the judgment of this Court in Re: Vinay Chandra Mishra(The Alleged Contemnor)[10].

B44. Shri Rohatgi further submitted, that the family settlementseven in company matters are required to be dealt with differently. Herelied on the judgment of this Court in the cases of Sangramsinh P.Gaekwad and Others v. Shantadevi P. Gaekwad (Dead) ThroughLRs and Others[11] and Kale and Others v. Deputy Director ofConsolidation and Others[12].C

45. As indicated in the opening paragraphs itself, though initiallyonly an interlocutory application filed by the respondent No.1 herein fordirection to the petitioner to comply with the Facilitator’s decision waslisted, we intimated the parties that we would hear the contempt petitionas well as the interlocutory application together. As such, we have heardDthe learned Senior counsel for the parties at length on both the ContemptPetition as well as the interlocutory application (IA No. 87565 of 2019)filed by the respondent No.1.

46. We are of the considered view, that it is appropriate to firstdecide the contempt petition itself, inasmuch as the outcome of theEcontempt petition will have bearing on the interlocutory applicationfiled by the respondent No.1.

47. It would be apposite to refer to Section 2(b) of the Contemptof Courts Act, 1971 which reads thus:-

“F2. Definitions. - …..

(b) “civil contempt” means wilful disobedience to anyjudgment, decree, direction, order, writ or other process of acourt or wilful breach of an undertaking given to court.”

48. It is thus clear that for bringing an action under the ambit ofGcivil contempt, there has to be wilful disobedience to any judgment,

decree, direction, order, writ or other process of court or wilful breach

9 (2009) 16 SCC 12610 (1995) 2 SCC 58411 (2005) 11 SCC 314H12 (1976) 3 SCC 119

of an undertaking given to the court. No doubt, that Shri Rohatgi is justifiedin relying on the judgment of this Court in the case of Rama Narang(V) (supra) decided on 15[th] March 2007. In the said judgment, this Courtheld, that according to the terms of undertaking, the petitioner and therespondents were under an obligation to run the company harmoniouslywith the active participation of all as family business but unfortunately,the respondents had taken over absolute control to the total exclusion ofthe petitioner. This Court held, that this was contrary to the terms of theundertaking given to this Court. Shri Rohatgi asserts, that the acts withregard to which the present contempt petition has been filed, are identicalto the acts of the respondents, for which, they were held guilty ofcontempt. According to him, fortiori, the present respondents shouldalso be held guilty for the acts with regard to which, the present contemptpetition has been filed.

49. We will have to consider the correctness of the said submission.For that, it will be necessary to refer to the events that have taken placesubsequent to the date of the judgment of this Court in Rama Narang(V)[13] (supra) i.e. 15[th] March 2007.

50. It is the case of the respondents, that the petitioner wasattempting to use the consent terms as veto to stall the functioning ofthe Company. It is their case, that the petitioner was making every attemptpossible to thwart the functioning of the Company. It is also the case ofthe respondents, that the said acts were done with the mala fide intention.It is their case, that the son of the petitioner from his second wife namelyRohit Narang is working as the Managing Director of Sky GourmetCatering Pvt. Ltd., which Company is direct competitor with the FlightCatering business of NIHL. It is their case, that since the petitionerrefused to offer any cooperation for proper functioning of the Company,the respondent No.1 was compelled to approach the CLB by CompanyPetition No. 47 of 2008. The said petition was filed on 10[th] March 2008.The petitioner in the said petition had averred, that after the order waspassed by this Court on 15[th] March 2007, all genuine efforts were madeby the respondents herein, to ensure that the present petitioner shouldnot have any further grievance regarding exclusion from the managementand control of the Company. It was averred, that however the attitudeof non-cooperation and putting hindrances in the functioning of theCompany by the petitioner continued even thereafter. It was averred,

Athat petitioner Rama was unreasonably withholding his consent even inroutine decisions crucial to the operations of the Company. It was averred,that the situation had led to complete management deadlock. It wasfurther averred, that the Company was in precarious state with unpaidsalaries, employee unrest both at the level of senior executives and skilledworkers. It was averred, that petitioner Rama was misusing the consentBdecree dated 12.12.2001, as tool of oppression, which had resulted inmismanagement and which in turn, was detrimental to the interest of theCompany and its shareholders.51. The said petition filed by the respondent No.1 Ramesh hereinwas heard by the Chairman of the CLB on 7[th] April 2008. The orderCwas passed in the said proceedings by the Learned Chairman on 10[th]April 2008. It is pertinent to note, that petitioner Rama had raised anobjection with regard to maintainability of the said proceedings. Paragraph(8) of the order which has already been reproduced herein reveals, thatthe Chairman, CLB had appointed Shri Justice Arvind V. Savant, FormerDChief Justice of Kerala High Court as Facilitator. The Facilitator wasto try to bring about consensus among the Directors on matters, whichwere urgent and essential to ensure that the business of the Company iscarried on smoothly. The said order also provided, that in case there wasno consensus after taking into consideration the views of the threeDirectors, the Facilitator will take final decision, which would be bindingEon the Directors and the Company. The order made it clear, that the roleof the Facilitator was limited only to operational matters like issues relatingto workers/employees of all categories, issues relating to suppliers/supplycontracts, urgent repairs of equipments etc. The order also made it clear,that the spirit of the order was, that the business of the Company should

Fbe carried out smoothly till the petition was disposed of. After the orderwas passed by the CLB, the petitioner approached this Court by way ofpresent contempt petition alleging, that the very filing of the proceedingsbefore the CLB and entertaining the same by CLB was contemptuousin nature. It also appears from the record, that the petitioner had alsofiled an application for stay of the order passed by the CLB being IAGNo. 1 of 2008 in the present proceedings.

52. When the matter was listed before this Court on 21[st] July2009, this Court, keeping in mind the interest of 3000 workmen as wellas the exchequer, was of the view, that under Article 142 of theConstitution, this Court should appoint an independent Director, who willH

look into the financial management of the Company and submit his reportto this Court from time to time, on the state of the Company’s accountsand due compliance of the statutory provisions of the Companies Actand Income Tax Act. He was also requested to suggest steps for goodcorporate governance including financial management in future. TheCourt therefore appointed Shri Homi Ranina, who is Tax Expert, as anindependent Director of the Company. However, by the said order, thisCourt noted, that Shri Arvind Savant, Former Chief Justice of the KeralaHigh Court had been appointed as Facilitator by the CLB. The Courttherefore clarified, that the said order will not come in the way of thefunctioning of the Facilitator. The Court clarified, that it had requestedShri Ranina to take charge as an independent Director only in the contextof compliance of the provisions of the Companies Act as well as IncomeTax Act and that function will not overlap with the functioning of theFacilitator, who was free to proceed in accordance with law. There aretwo takeaways from the order of this Court. First, the Court recognisedthe continual contrarious attitude of the parties impacting the efficientmanagement of the Company and the interests of large number ofstakeholders and the need to defuse the stalemate situation by appointinga Facilitator. Thus, this Court not only did not disapprove the order of theCLB in appointing Facilitator but on more than one occasions observed,that the orders passed by it would not come in the way of functioning ofthe Facilitator. As matter of fact, the petitioner cannot be heard tochallenge the order of the competent judicial forum regarding appointmentof Facilitator by way of an I.A. in contempt petition.53. The matter again came up before this Court on 29[th] July 2009.In the said order, the Court directed M/s BSR & Company, CharteredAccountants to take necessary measures to update and audit the accountsof the Company. The Court noted, that it had appointed Shri Homi Raninaas an independent Director vide order dated 21[st] July 2009. Since variousstatutory provisions had not been complied with for the last several years,the Court vide the said order also charted out the functions to beundertaken by Shri Ranina. Again, in the said order, the Court noted, thatthe CLB has appointed Shri Arvind Savant, Former Chief Justice ofKerala High Court as Facilitator. The Court observed, that the orderpassed by it on that date, was only confined to compliance of the statutoryprovisions of the Companies Act and the provisions of the Income TaxAct. The Court also clarified, that the work assigned to Shri Ranina aswell as M/s BSR & Company would not overlap with the work of the

AFacilitator. It further observed, that in fact the directions issued by thisCourt would help the Facilitator.

54. Vide another order dated 14[th] December 2009, the Courtappointed Shri Habib Rehman, as Consultant to guide and advise ShriRanina from time to time, on such terms and conditions as Shri RaninaBdeemed fit. It also provided, that in the event of dispute/disagreementbetween the Directors, the decision taken by Shri Ranina, Advisor inconsultation with Shri Habib Rehman shall be final and binding on theBoard of Directors. The Court noted the statements made on behalf ofthe counsel for the petitioner Rama, that he will sign notes of accounts,director’s reports and other statutory documents as may be required byCShri Ranina for compliance with the statutory provisions. It furtherclarified, that if Rama failed to do so, Shri Ranina was authorised to doso. Vide subsequent order dated 16[th] April 2010, the Court clarified, thatRama will comply with the directions given by the Court vide orderdated 14[th] December 2009. It also clarified, that the said order datedD14[th] December 2009, was to be implemented by Rama without prejudiceto his rights and contentions in the pending litigation.

55. It further appears from the record, that Company ApplicationNo. 223 of 2011 was filed by respondent No.2-Rajesh before the CLBin Company Petition No. 47 of 2008. Vide order dated 28[th] April 2011,Ethe CLB rejected the objection raised by the counsel for Rama as to thelocus of the applicant Rajesh (respondent No.2 herein). The CLB afterconsidering the complete, repeated, persistent and deliberate non-cooperation by Rama in the smooth functioning of the Company, in orderto regulate the conduct of the Company’s affairs, deemed it fit to grantthe relief as prayed for in Company Application No. 223 of 2011 andFdirected, that in addition to the directions already made in CompanyPetition No. 47 of 2008, in the event of dispute/disagreement inter-sebetween the Directors in the Board meeting on any items on the agenda,a decision shall be taken by the Facilitator, which shall be final and bindingon the Board of Directors and the Company. With paramount object ofGsmooth running of the Company, the Facilitator was further empoweredto sign cheques/minutes and statutory records in case of disagreementbetween or refusal by any of the Directors or inability of the Board totake decision. It further directed, that before signing any cheque/minutes/statutory records, the Facilitator shall record reasons for notagreeing with the dissenting Directors or agreeing with the assentingHDirectors.

56. Vide order dated 6[th ]August 2010, this Court found, that despiteits various efforts, the position remained unchanged. It will be relevantto refer to the following observations made by the Court:-

“Although number of steps were taken, even today the signingof Accounts remains pending because of the family disputesbetween the father and the sons. At the end of the day, theposition remains that some of the provisions of the CompaniesAct remains non-complied and the Accounts remainedunsigned and, therefore, we have no option but to direct theAdditional Chief Metropolitan Magistrate, 37[th] Court,Mumbai, to expedite the hearing and finally dispose of thecases pending before him.”

Vide the said order, the Court dispensed with the services of ShriRanina and Shri Syed Habibur Rehman. The CLB, vide order dated 29[th]November 2011, appointed Shri Acharya as Special Officer-cum-Advisor.Vide another order dated 30[th] April 2015, Shri Acharya was replacedwith Shri Ranina as the Facilitator-cum-Advisor.

57. It will be pertinent to note, that in the meantime, CompanyApplication No. 57 of 2011 was filed by petitioner Rama in CompanyPetition No. 47 of 2008, praying for discharge of the Facilitator ShriJustice Arvind Savant. The CLB found, that petitioner Rama was makingattempt after attempt to somehow stop the Facilitator from functioning.It was observed, that petitioner Rama had made wild, scurrilous andbaseless allegations against the Facilitator. Therefore, vide order dated22[nd] February 2011, the application was rejected with exemplary cost ofRs. 1 lakh.

58. When the contempt petition was listed before this Court on16[th] August 2016, this Court directed the contempt petition to be kept forfinal disposal on Tuesday in the month of November 2016. This Courtfurther clarified, that without prejudice to the rights of the respectiveparties, the present arrangement for running the affairs of the Companywill continue until further orders. It appears, that thereafter the matterwas listed before this Court on 29[th] November 2016, when this Courtdirected the matter to be adjourned sine die. Thereafter, the matter hascome up before this Bench to which reference has already been madein the earlier paragraphs.

59. For considering the rival submissions, it will be relevant torefer to Sections 397, 398 and 403 of the Companies Act, 1956:-

“397. APPLICATION TO TRIBUNAL FOR RELIEF INCASES OF OPPRESSION

(1) Any members of company who complain that the affairsof the company are being conducted in manner prejudicialto public interest or in manner oppressive to any member ormembers (including any one or more of themselves) may applyto the Tribunal for an order under this section, provided suchmembers have right so to apply in virtue of section 399.

(2) If, on any application under sub-section (1), the Tribunalis of opinion-

(a) that the company’s affairs are being conducted in amanner prejudicial to public interest or in manneroppressive to any member or members ; and

(b) that to wind up the company would unfairly prejudicesuch member or members, but that otherwise the factswould justify the making of winding up order on theground that it was just and equitable that the companyshould be wound up ; the Tribunal may, with view tobringing to an end the matters complained of, make suchorder as it thinks fit.

398. APPLICATION TO TRIBUNAL FOR RELIEF INCASES OF MISMANAGEMENT

(1) Any members of company who complain –

(a) that the affairs of the company are being conducted ina manner prejudicial to public interest or in mannerprejudicial to the interests of the company ; or

(b) that material change (not being change broughtabout by, or in the interests of, any creditors includingdebenture holders, or any class of shareholders, of thecompany) has taken place in the management or controlof the company, whether by an alteration in its Board ofdirectors 2 [***] or manager 3 [***] or in the ownershipof the company’s shares, or if it has no share capital, in its

membership, or in any other manner whatsoever, and thatby reason of such change, it is likely that the affairs of thecompany will be conducted in manner prejudicial topublic interest or in manner prejudicial to the interestsof the company; may apply to the Tribunal for an orderunder this section, provided such members have right soto apply in virtue of section 399.

(2) If, on any application under sub-section (1), the Tribunalis of opinion that the affairs of the company are beingconducted as aforesaid or that by reason of any materialchange as aforesaid in the management or control of thecompany, it is likely that the affairs of the company will beconducted as aforesaid, the Tribunal may, with view tobringing to an end or preventing the matters complained ofor apprehended, make such order as it thinks fit.

403. INTERIM ORDER BY TRIBUNAL Pending the making

by it of final order under section 397 or 398, as the casemay be, the Tribunal may, on the application of any party tothe proceeding, make any interim order which it thinks fit forregulating the conduct of the company’s affairs, upon suchterms and conditions as appear to it to be just and equitable.”

60. Perusal of Section 397 would reveal, that member of aCompany is entitled to apply to the CLB complaining that the affairs ofthe Company were being conducted in manner prejudicial to the publicinterest or in manner oppressive to any member or members includinganyone or more of themselves, for an order under the said section. Theonly rider is that such Member should have right to do so by virtue ofSection 399. Under sub-section (2) of Section 397, if the CLB was ofthe opinion, that the Company’s affairs are being conducted in mannerprejudicial to the public interest or in manner oppressive to any memberor members and that to wind up the Company would unfairly prejudicesuch member or members, but that otherwise the facts would justify themaking of winding up order on the ground, that it was just and equitablethat the Company should be wound up; it was entitled to make suchorder as it thinks fit, with view to bringing to an end such mattercomplained of.

It could thus be seen, that any member of Company is entitledto make an application to the CLB complaining that the affairs of the

ACompany are being conducted in manner prejudicial to public interestor in manner prejudicial to the interest of the Company and the CLB isempowered to make such order as it thinks fit, with view to bring to anend the matter complained of.

61. similar provision contained in Section 398, enables theBmembers of Company to complain, that the affairs of the Companyare being conducted in manner prejudicial to public interest or in amanner prejudicial to interest of the Company. It also enables memberto complain with regard to material change which has taken place in themanagement and control of the Company and by reason of such change,it is likely that the affairs of the Company will be conducted in mannerCprejudicial to the public interest or to the interest of the Company. Again,the only rider is, that such member must have right to apply by virtueof Section 399. Perusal of sub-section (2) of Section 398 would furtherreveal, that if such an application was made under sub-section (1) ofSection 398 and if the CLB was of the opinion, that the affairs of theDCompany are being conducted as aforesaid, the Tribunal may, with aview to bringing to an end or preventing the matter complained of orapprehended, is entitled to make such orders as it thinks fit.

62. Perusal of Section 403 would reveal, that the CLB is alsoentitled to make any interim order pending making by it of finalEorderunder Section 397 or 398, on an application of any party to theproceedings, which order it thinks fit for regulating the conduct of theCompany’s affairs. Such an order has to be made on such terms andconditions as appears to CLB to be just and equitable.

63. The respondents had legitimately invoked the jurisdiction ofFCLB invoking the aforesaid powers under Sections 397, 398 and 403 ofthe Companies Act, to which they were entitled to in law and were notrestrained to do so by any competent Court/forum.

64. The CLB vide order dated 10[th] April 2008, in Company PetitionNo. 47 of 2008 found, that it was necessary to appoint Facilitator inGthe interest of the Company. Immediately after the said order was passed,the petitioner has filed the present contempt petition. Along with the saidcontempt petition, the petitioner has also filed IA No. 1 of 2008 seekingstay of the said order. subsequent application, being IA No. 2 of 2008was also filed by petitioner Rama seeking stay of the proceedings beforeCLB and the communications/directions passed by the Facilitator.H

However, perusal of the record would reveal, that no orders were passedon the said IAs. On the contrary, perusal of the record would reveal,that this Court vide order dated 21[st] July 2009, though had appointedShri Homi Ranina, Tax Expert, as an independent Director, for ensuringdue compliance of the statutory provisions, it noted, that Shri ArvindSavant, Former Chief Justice of the Kerala High Court, had beenappointed as Facilitator by the CLB. The Court clarified, that the saidorder will not come in the way of the functioning of the Facilitator. Videanother order dated 29[th] July 2009, this Court while issuing variousdirections, before concluding the order again noted, that the CLB hadappointed Shri Arvind Savant, Former Chief Justice of the Kerala HighCourt as Facilitator and clarified, that the order passed by it appointingShri Ranina as an independent Director and directing M/s BSR &Company, Chartered Accountants, to take necessary measures and toupdate and audit the accounts, was confined to compliance of the statutoryprovisions of the Companies Act as well as the Income Tax Act. TheCourt clearly observed, that the work assigned to Shri Ranina and M/sBSR & Company will not overlap with the work of the Facilitator. Itfurther observed, that in fact the above directions will help the Facilitator.65. Vide another order dated 28[th] April 2011, the CLB issuedcertain directions thereby giving additional powers to the Facilitatorincluding signing of cheques/minutes and statutory records, in case ofdisagreement between the parties. This Court vide order dated 16thAugust 2016, observed thus:-

“Without prejudice to the rights of the respective parties, thepresent arrangement for running the affairs of the Companywill continue until further orders.”

66. It could thus be seen, that the respondents had legitimatelyapproached the CLB invoking its jurisdiction under Sections 397, 398and 403 of the Companies Act. The learned CLB had also passed interimorders in exercise of its powers under Section 403 of the CompaniesAct. The petitioner had approached this Court immediately after theorder dated 10[th] April 2008, was passed by the CLB by way of presentcontempt petition. Along with the contempt petition, IA No. 1 of 2008was also filed for stay of the order passed by CLB. Subsequently, anotherIA No. 2 of 2008 was also filed seeking stay of the proceedings beforeCLB and the communications/directions passed by the Facilitator.However, no orders have been passed by this Court on the said IAs.

A67. It is the main contention of the petitioner, that invoking thejurisdiction of the CLB and entertaining the said proceedings by theCLB, itself amounts to contempt.

68. It will be relevant to refer to the observations of this Court inthe case of Pratap Singh and Another v. Gurbaksh Singh[14]. ThisBCourt after referring to various judgments of the High Courts, observedthus:-

“The principle behind all these cases is that such action ofthe person which he takes in pursuance of his right to takelegal action in Court of law or in just making demand onCthe other to make amends for his acts will not amount tointerfering with the course of justice, even though that mayrequire some action on the part of the other party inconnection with his own judicial proceeding, as party isfree to take action to enforce his legal rights.”

DIt could thus be seen, that this Court has held, that such action ofa person which he takes in pursuance of his right to take legal action ina court of law, will not amount to interfering with the course of justice,even though that may require some action on the part of the other partyin connection with his own judicial proceedings. The principle is, that aparty is free to take action to enforce his legal right. This Court hasEapproved the view taken by Allahabad High Court in Hrishikesh Sanyalv. A.P. Bagchi[15]and Radhey Lal v. Niranjan Nath[16], that persondoes not commit contempt of court if during the pendency of certainproceedings, he takes recourse to other judicial proceedings open tohim, even though the latter proceedings put the other party at loss.F

69. In the present case, undisputedly, the respondents were entitledto invoke the jurisdiction of the CLB under Sections 397, 398 and 403 ofthe Companies Act. The CLB has passed the order on 10[th] April 2008appointing Facilitator and further passed order dated 28[th] April 2011,enhancing the powers of the Facilitator. Perusal of the orders passed byGthis Court dated 21[st] July 2009 and 29[th] July 2009, would reveal, thatthough this Court had appointed independent Director, it is clarified, thatthe independent Director’s functioning would not come in the way of

14 1962 SCR Supp. (2) 83815 ILR 1940 All 710H16 AIR 1941 All 95

the functioning of the Facilitator. On the contrary, by order dated 29[th]July 2009, this Court observed, that the appointment of Shri Ranina asindependent Director would facilitate the functioning of the Facilitator,appointed by the CLB.

70. It will also be relevant to refer to dictum of this Court inMehar Rusi Dalal (Mrs.) v. T.K. Banerjee and Others[17]:-

“2. In our view, every party has right to move court oflaw for adjudication of his rights. Mere filing of proceedingsin court of law and applying to court of law that thepayment may not be made would not amount to breach ofundertaking. We, therefore, see no reason to punish forcontempt. The contempt notice will stand discharged. Therewill be no order as to costs.”

71. As such, merely taking recourse to the statutory remedyavailable to the respondents, in our view, would not amount to contempt.With regard to the reliance placed by the learned Senior counsel for thepetitioner on the judgment of this Court in Rama Naranag (V)[18] (supra),we are of the view, that it would not be of assistance to the case of thepetitioner, inasmuch as, at that stage, there were no orders passed bythe CLB. It appears, that after the order was passed by this Court holdingthe respondents guilty and thereafter finding, that the present petitioneris not co-operating with the respondents in running the affairs of theCompany, but on the contrary making every attempt to stall the functioningof the Company; the respondents thought it prudent to approach theCLB by invoking its powers under Sections 397, 398 and 403 of theCompanies Act. The respondents had to take recourse to that remedy incompelling circumstances to safeguard the interest of the Company andits stakeholders. It was not in strict sense remedy for seeking personalrelief, much less to defeat the terms of settlement recorded in disputebetween private parties who incidentally are Directors of the sameCompany.

72. Perusal of the company petition filed by the respondents beforethe CLB and the order dated 10[th] April 2008, passed by CLB wouldreveal, that specific reference has been made to the order passed bythis Court holding the respondents guilty for committing contempt (vide

17 (2004) 5 SCC 11918 (2009) 16 SCC 126

ARama Narang (V)[19]). We are therefore of the view, that the saidjudgment would be of no assistance to the case of the present petitioner.

73. Apart from that, for bringing an action for civil contempt, thepetitioner has to satisfy the court that there has been wilful disobedienceof any judgment, decree, direction, order, writ or other process of theBCourt. It will be relevant to refer to paragraph (9) of the judgment of thisCourt in Niaz Mohammad and Others v. State of Haryana andOthers[20]:-

“9. Section 2(b) of the Contempt of Courts Act, 1971(hereinafter referred to as ‘the Act’) defines “civil contempt”Cto mean “wilful disobedience to any judgment, decree,direction, order, writ or other process of court …”. Wherethe contempt consists in failure to comply with or carry outan order of court made in favour of party, it is civilcontempt. The person or persons in whose favour such orderor direction has been made can move the court for initiatingDproceeding for contempt against the alleged contemner, witha view to enforce the right flowing from the order or directionin question. But such proceeding is not like an executionproceeding under Code of Civil Procedure. The party in whosefavour an order has been passed, is entitled to the benefit ofEsuch order. The court while considering the issue as to whetherthe alleged contemner should be punished for not havingcomplied with and carried out the direction of the court, hasto take into consideration all facts and circumstances of aparticular case. That is why the framers of the Act whiledefining civil contempt, have said that it must be wilfulFdisobedience to any judgment, decree, direction, order, writor other process of court. Before contemner is punishedfor non-compliance of the direction of court, the court mustnot only be satisfied about the disobedience of any judgment,decree, direction or writ but should also be satisfied that suchGdisobedience was wilful and intentional. The civil court whileexecuting decree against the judgment-debtor is notconcerned and bothered whether the disobedience to anyjudgment, or decree, was wilful. Once decree has been

19 (2009) 16 SCC 126H20 (1994) 6 SCC 332

passed it is the duty of the court to execute the decree whatevermay be consequence thereof. But while examining thegrievance of the person who has invoked the jurisdiction ofthe court to initiate the proceeding for contempt fordisobedience of its order, before any such contemner is heldguilty and punished, the court has to record finding thatsuch disobedience was wilful and intentional. If from thecircumstances of particular case, brought to the notice ofthe court, the court is satisfied that although there has been adisobedience but such disobedience is the result of somecompelling circumstances under which it was not possible forthe contemner to comply with the order, the court may notpunish the alleged contemner.”It can thus be seen, that this Court has held, that the contemptproceeding is not like an execution proceeding under the Code of CivilProcedure. It has been held, that though the parties in whose favour, anorder has been passed, is entitled to the benefits of such order, but theCourt while considering the issue as to whether the alleged contemnorshould be punished for not having complied with and carried out thedirections of the Court, has to take into consideration all facts andcircumstances of particular case. It has been held, that is why theframers of the Act while defining civil contempt, have said that it mustbe wilful disobedience of any judgment, decree, direction, order, writ orother process of the Court. It has been held, that before punishing thecontemnor for non-compliance of the decision of the Court, the Courtmust not only be satisfied about the disobedience of any judgment, decree,direction, writ or other process but should also be satisfied that suchdisobedience was wilful and intentional. Though, the civil court whileexecuting decree against the judgment-debtor is not concerned andbothered as to whether the disobedience to any judgment or decree waswilful and once the decree had been passed, it was the duty of the courtto execute the decree, whatever may be the consequences thereof. In acontempt proceeding before contemnor is held guilty and punished, theCourt has to record finding, that such disobedience was wilful andintentional. It has been held, that if from the circumstances of particularcase, though the Court is satisfied that there has been disobediencebut such disobedience is the result of some compelling circumstances,under which it is not possible for the contemnor to comply with thesame, the Court may not punish the alleged contemnor.

ABC

A74. It will also be apposite to refer to the following observationsof this Court in Kanwar Singh Saini v. High Court of Delhi[21], taking asimilar view:-

“30. In an appropriate case where exceptional circumstancesexist, the court may also resort to the provisions applicable inBcase of civil contempt, in case of violation/breach ofundertaking/judgment/order or decree. However, beforepassing any final order on such application, the court mustsatisfy itself that there is violation of such judgment, decree,direction or order and such disobedience is wilful andintentional. Though in case of execution of decree, theCexecuting court may not be bothered whether the disobedienceof the decree is wilful or not and the court is bound to executea decree whatever may be the consequence thereof. In acontempt proceeding, the alleged contemnor may satisfy thecourt that disobedience has been under some compellingDcircumstances, and in that situation, no punishment can beawarded to him.[See Niaz Mohammad v. State ofHaryana [(1994) 6 SCC 332], Bank of Baroda v. SadruddinHasan Daya [(2004) 1 SCC 360: AIR 2004 SC 942] and RamaNarang v. Ramesh Narang [(2006) 11 SCC 114 : AIR 2006SC 1883].] Thus, for violation of judgment or decreeEprovisions of the criminal contempt are not attracted.”

75. It will also be appropriate to refer to the further observationsmade by this Court in para (38) of the said judgment:-

“38. The contempt proceedings being quasi-criminal in nature,Fthe standard of proof required is in the same manner as inother criminal cases. The alleged contemnor is entitled to theprotection of all safeguards/rights which are provided in thecriminal jurisprudence, including the benefit of doubt. Theremust be clear-cut case of obstruction of administration ofjustice by party intentionally to bring the matter within theGambit of the said provision. The case should not rest only onsurmises and conjectures. In Debabrata Bandhopadhyaya v. State of W.B. [AIR 1969 SC 189 : 1969 Cri LJ 401] , thisCourt observed as under: (AIR p. 193, para 9)“9. question whether there is contempt of court or not isa serious one. The court is both the accuser as well as thejudge of the accusation. It behoves the court to act withas great circumspection as possible making all allowancesfor errors of judgment and difficulties arising frominveterate practices in courts and tribunals. It is only whena clear case of contumacious conduct not explainableotherwise, arises that the contemnor must be punished. …Punishment under the law of contempt is called for whenthe lapse is deliberate and in disregard of one’s duty andin defiance of authority. To take action in an unclear caseis to make the law of contempt do duty for other measuresand is not to be encouraged.”(emphasis added)”

This Court has observed, that the contempt proceedings are quasi-criminal in nature and the standard of proof required is in the samemanner as in the other criminal cases. The alleged contemnor is entitledto the protection of all safeguards/rights which are provided in the criminaljurisprudence, including the benefit of doubt. There must be clear-cutcase of obstruction of administration of justice by party intentionally, tobring the matter within the ambit of the said provision. The Court hasalso referred to the observations made by this Court in the case ofDebabrata Bandopadbyay and Others v. State of West Bengal andAnother[22], wherein it was observed, that punishment under the law ofcontempt is called for when the lapse is deliberate and in disregard ofone’s duty and in defiance of authority.

76. In the present case, we are of the considered view, that thepetitioner has failed to make out case of wilful, deliberate and intentionaldisobedience of any of the directions given by this Court or acting inbreach of an undertaking given to this Court. On the contrary, we findthat the respondents had taken recourse to the legal remedy available tothem under the statutory provisions. No doubt, Mr. Rohatgi has argued,that the proceedings before the CLB are itself without jurisdiction.

77. In this regard, it will be appropriate to refer to followingobservations of this Court in the case of Tayabbhai M. Bagasarwalla(supra). After scanning the entire law, the Court observed thus:-

A“28. The correct principle, therefore, is the one recognisedand reiterated in Section 9-A — to wit, where an objection tojurisdiction of civil court is raised to entertain suit and topass any interim orders therein, the Court should decide thequestion of jurisdiction in the first instance but that does notmean that pending the decision on the question of jurisdiction,Bthe Court has no jurisdiction to pass interim orders as maybe called for in the facts and circumstances of the case. Amere objection to jurisdiction does not instantly disable thecourt from passing any interim orders. It can yet passappropriate orders. At the same time, it should also decideCthe question of jurisdiction at the earliest possible time. Theinterim orders so passed are orders within jurisdiction whenpassed and effective till the court decides that it has nojurisdiction to entertain the suit. These interim ordersundoubtedly come to an end with the decision that this Courthad no jurisdiction. It is open to the court to modify theseDorders while holding that it has no jurisdiction to try the suit.Indeed, in certain situations, it would be its duty to modifysuch orders or make appropriate directions. For example, takea case, where party has been dispossessed from the suitproperty by appointing receiver or otherwise; in such aEcase, the Court should, while holding that it has nojurisdiction to entertain the suit, put back the party in theposition he was on the date of suit. But this power or obligationhas nothing to do with the proposition that while in force,these orders have to be obeyed and their violation can bepunished even after the question of jurisdiction is decidedFagainst the plaintiff provided the violation is committed beforethe decision of the Court on the question of jurisdiction.”

78. This Court has held, that the correct principle therefore isthat, where an objection is taken to the jurisdiction to entertain suit andto pass any interim orders therein, the Court should decide the questionGof jurisdiction in the first instance. However, that does not mean thatpending the decision on the question of jurisdiction, the Court has nojurisdiction to pass interim orders as may be called for in the facts andcircumstances of the case. It has been held, that mere objection tojurisdiction does not instantly disable the court from passing any interimHorders. It has been held, that it can yet pass appropriate orders. Though,

this Court has observed, that the question of jurisdiction should be decidedat the earliest possible time, the interim orders so passed are orderswithin jurisdiction, when passed and effective till the court decides that ithas no jurisdiction, to entertain the suit. It has been held, that those interimorders would undoubtedly come to an end with the decision that theCourt had no jurisdiction. This Court has held, that if the Court holds thatit has no jurisdiction, it is open to it to modify the orders. However, it hasbeen held, that while in force, the interim orders passed by such Courthave to be obeyed and their violation can be punished even after thequestion of jurisdiction is decided against the plaintiff, provided violationis committed before the decision of the Court on the question ofjurisdiction.

79. Apart from that, it is to be noted that in the present case, thepetitioner has raised an objection with regard to tenability of theproceedings before the CLB. It will be relevant to refer to the observationsmade by CLB in its order dated 10[th] April 2008:-

“Shri Gopal Jain once again raised the issue that withoutdeciding on the maintainability of the petition, no interim ordershould be passed. In proceeding under Sections 397/398 ofthe Act, it is now well settled that only if the maintainability ischallenged either in terms of Section 399 or the jurisdictionof this Board, challenges on other grounds have to beconsidered along with the merits of the case. In the presentcase, it is an admitted fact that the petitioner qualifies underSection 399 of the Act and this Board has the jurisdiction todeal with the petition under Sections 397/398 of the Act.Further, in proceeding under Sections 397/398, it is theinterest of the company which is paramount. It is quite evidentfrom the various annexure enclosed with the petition that dueto differences among the directors, many operational issues,like, payment of salary/wages, payment to suppliers etc. arepending resulting in agitation by the employees andirregularities in supplies etc. Therefore, I consider itappropriate that till the petition is disposed of, as an interimmeasure, in the interests of the company, over 3000 employees/workers, there should be mechanism by which the day today operations are carried on without any hitch.” [emphasissupplied]

A80. It could thus be seen, that though the counsel for the presentpetitioner had raised an issue that without deciding on the maintainabilityof the petition, the interim order could not be passed, the CLB observed,that under Sections 397 and 398 of the Companies Act, it is well settled,that only if the maintainability is challenged either in terms of Section399 or jurisdiction of the CLB, challenges on other grounds have to beBconsidered along with the merits of the case. It further observed, that inthe present case, it was admitted fact, that the petitioner qualified underSection 399 of the said Act and that the CLB has jurisdiction to deal withthe petition under Sections 397 and 398 of the Act. It further observed,that in the proceedings under Sections 397/398, it is the interest of theCCompany which is paramount. It observed, that it was quite evidentfrom the various annexures enclosed with the petition, that due todifferences among the Directors, many operational issues concerningthe management of the Company like payment of salary/wages, paymentto suppliers etc. were pending, resulting in agitation by the employeesand irregularity in supplies. The CLB therefore considered it appropriate,Dthat till the petition is disposed of, as an interim measure, in the interestof the Company as well as more than 3000 employees/workers, thereshould be mechanism by which day to day operations are carried outwithout any hitch.E81. It is not in dispute, that the aforesaid order has not beenchallenged by the petitioner before any forum. The observations referredhereinabove are indisputably adverse to the case of the petitioner. Anyorder passed by the CLB was appellable before the higher forums.Undisputedly, the petitioner has not challenged the said order. Havingnot challenged the same, in our view, it is not open for the petitioner toFargue, that since the petitioner has taken objection as to maintainabilityof the proceedings before CLB, the said orders are without jurisdictionand the initiation of the proceedings and the orders passed thereon, wouldamount to respondent’s committing contempt of this Court. In our view,the argument needs to be rejected, in view of the judgment of this CourtGin the case of Tayabbhai M. Bagasarwalla (supra). This Court inunequivocal terms has held, that even if the objection is raised to thejurisdiction of forum, it has jurisdiction to pass interim orders till itfinally decides the issue of jurisdiction and such orders are binding onthe parties till the issue of jurisdiction is decided. As could be seen fromthe order of the CLB dated 10th April 2008, though the CLB by referringH

to Sections 397, 398 and 399 of the Companies Act, prima facie, hasobserved, that only if maintainability is challenged either in terms ofSection 399 of the Companies Act or on the ground of jurisdiction of theBoard, the same will have to be considered first and challenges on othergrounds, had to be considered along with the merits of the case. TheCLB has further observed, that it was an admitted fact, that the petitionerqualifies under Section 399 of the Act and the Court has the jurisdictionto deal with the petition under Section 397 or/and 398 of the Act. Havingchosen not to challenge the aforesaid observations of the CLB, in ourview, the argument advanced deserves no merit and needs to be rejected.However, it should not be construed, that we have held that theproceedings under the CLB were maintainable in law. Since theproceedings are pending final adjudication, the parties would be at libertyto raise all issues available to them including the issue of jurisdiction.

82. In the result, we are of the considered view, that the presentcontempt petition is without any merit and deserves to be dismissed, andis accordingly dismissed.

83. That leaves us with Interlocutory Application No. 87565 of2019 filed by the respondent No.1. The respondent No.1, by the saidapplication is seeking direction to the petitioner to abide by the decisionof the Facilitator dated 30.04.2019.

84. Having held, that the present contempt petition deserves nomerit and is liable to be dismissed, we find that such an application neednot be entertained. Indeed, the respondents may be well-advised to takerecourse to the remedies available to them in law. We do not wish toexpress any opinion one way or the other in that regard. Though, ShriKapil Sibal has strenuously argued, that this Court should invoke powersunder Article 142 of the Constitution and issue directions to the contemptpetitioner, we find, that this is not case wherein directions as sought,should be issued under Article 142 of the Constitution. On Insolvencyand Bankruptcy Code 2016, coming in force, the proceedings which arepending before the CLB, now stand transferred to the National CompanyLaw Tribunal (NCLT). It would be appropriate for the parties to invokethe jurisdiction of NCLT for seeking such orders as deemed fit in thefacts and circumstances in accordance with law.

A85. Without going into the merits and demerits of the saidapplication, we dispose of the same relegating the parties to the statutoryremedy available to them in law.

86. All pending IAs, if any, stand disposed of in aforesaid terms.

Devika Gujral

Contempt petitions dismissed.