CONT.CAS(C)--579/2017. Case: VED PRAKASH ABBOT Vs. KISHORE K. AVARSEKAR & ORS. High Court of Delhi (India)
| Case Number | CONT.CAS(C)--579/2017 |
| Citation | NA |
| Judgement Date | August 09, 2019 |
| Court | High Court of Delhi (India) |
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on :
% Pronounced on : 09
+ CONT.CAS (C) No.579/2017
VED PRAKASH ABBOT .....
Through: Mr. Dayan Krishnan, Senior Advocate with Mr. Ankit Agarwal, Advocate.
versus
KISHORE K. AVARSEKAR & ORS ..... Respondents
Through: Mr. Jawahar Raja, Advocate.
CORAM:
HON'BLE MS. JUSTICE JYOTI SINGH
JUDGMENT JYOTI SINGH, J.
C.M. Appl. No.3887/2019 (for delay)
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This is an application seeking condonation of delay of 9 days in filing rejoinder.
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For the reasons stated in the application, the same is and the delay of 9 days in filing the rejoinder is condoned.
C.M. stands disposed of.
C.M. Appl. No. 19227/2019 (for delay)
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This is an application seeking condonation of delay of 34 in filing reply.
CONT. CAS (C) NO.579/2017 Page 1
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For the reasons stated in the application, the same is and the delay of 34 days in filing the reply is condoned.
C.M. stands disposed of.
CONT.CAS (C) No.579/2017
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The present contempt petition has been filed by the under Sections 10 and 12 of the Contempt of Courts Act, 1961 with Article 215 of the Constitution of India, seeking a direction punish respondent No. 7 and its key officers/directors Nos. 1 to 6) for willful disobedience of the undertaking
21.04.2017 given on behalf of respondent No. 7, in respect settlement under Order 23 Rule 3 CPC as also for violation of dated 10.07.2017, whereby, in view of the settlement, a decree has been passed.
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When the matter came up on 21.8.2017 the learned counsel for the petitioner sought liberty to implead respondent which is the Authorised Representative of the respondent Company and filed a corrected memo of parties. Liberty was by this Court and in terms thereof amended memo of parties was filed wherein the Authorised Representative of the Company impleaded as respondent No. 6.
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The brief and relevant facts as averred by the petitioner on 19.10.2016, Jai Enterprises, a sole proprietorship of the filed a suit being CS No.59041/2016 before the Trial Court recovery of a sum of Rs.15,81,420/- against respondent No.
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21.04.2017, a joint application for settlement under Order 23 CPC was filed by the parties with the following terms:
(a) Defendant No. 1 will make payment of the principal sum of Rs.10,19,763/- (Rupees ten lakh nineteen thousand seven hundred and sixty three only) in full and final settlement of the plaintiffs claims in the present suit;
(b) This payment will be made in five monthly installments with the first installment being paid on
02.05.2017 and every subsequent installment being paid on the second of every month;
(c) No installment shall be less than Rs.1,50,000/8- (Rupees one lakh fifty thousand and paise nil only);
(d) On payment of the above five monthly installment of the total principal sum of Rs.10,19,763/- (Rupees ten lakh nineteen thousand seven hundred and sixty three only) the plaintiff shall forego all other claims made in the suit;
(e) On default in payment of any installment the Defendant No. 1 undertakes to pay the plaintiff interest at the rate of 12% per annum on the defaulted sum till the date of payment;
(f) On payment of all five installments plaintiff undertakes to withdraw all proceedings instituted by them against the Defendant No. 1 and its directors including criminal complaints filed, and to communicate such withdrawal to the Defendant No. 1.
(g) Defendant has no objection to the plaintiff applying and receiving refund of court fees paid in the present suit.”
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Pursuant to the said settlement, on 04.05.2017, the cheque by respondent No. 7 for Rs.1,50,000/- towards the first
CONT. CAS (C) NO.579/2017 Page 3
was dishonored on the ground „account blocked‟. On being of the dishonor, respondent No. 6 deposited Rs.1,50,000/- by on 05.05.2017 and the cheque was to be used towards the installment.
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On 14.06.2017, the cheque for Rs.1,50,000/- for the installment also bounced and a legal notice under Section Negotiable Instruments Act, 1882 („NI Act‟), was sent respondents on 08.07.2017, by the petitioner.
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On 20.06.2017, IRP (Interim Resolution Professional) appointed by the National Company Law Tribunal (NCLT) application filed by respondent No. 7 under Section 10 Insolvency and Bankruptcy Code, 2016 (IBC). On 10.07.2017, Trial Court recorded the settlement between the parties and the was disposed of by passing a compromise decree.
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On 19.02.2018, during the course of proceedings, under Section 138 of the NI Act, a demand draft of Rs.1,50,000/- was given authorized representative of respondent No. 7 to the petitioner.
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On 20.03.2018, an application was filed by the IRP, inter stating that respondent No. 7 Company could not be revived Official Liquidator be appointed.
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On 16.04.2019, summons were issued against respondent Company and respondent Nos. 1 to 5 in a complaint under Section 200 of the Cr. P.C. for offences under Section 420/406/120B/34 IPC.
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Learned senior counsel for the petitioner submits that there willful disobedience by the respondents of the undertaking
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settlement agreement dated 21.04.2017 as well as the decree passed by the Civil Court on 10.07.2017. He submits respondents did not have any intention to abide by the settlement and willfully misled the Court to accept the same decree the suit on its basis. He submits that this is evident from fact that even prior to the appointment of the IRP by the NCLT
20.06.2017, the respondents had already defaulted twice and cheques had bounced.
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The next contention of the petitioner is that the payment Rs.1,50,000/- made by respondent No. 6 on 19.02.2018 indicates the Respondents had the capacity to pay but were only disobeying the decree. It is also submitted that the plea respondents that respondent No. 7 could not have made any after appointment of the IRP on 20.06.2017 is misplaced, inasmuch, as payment of Rs.1,50,000/- was made by way of a demand draft authorized representative of respondent No. 7 on 19.02.2018, i.e., after seven months of the appointment of the IRP.
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The next contention of learned senior counsel for the is that a moratorium imposed under Section 14 of the Insolvency Bankruptcy Code, 2016, does not have any impact on the proceedings before this Court under Article 215 of the Constitution India and Contempt of Courts Act. The submission is that Secti has been interpreted by this Court in E.D. versus Axis Bank Criminal Appeal 143/2018, decided on 02.04.2019 and it has held that provisions of Section 14 IBC cannot come in the way statutory authority conferred powers under Prevention of
CONT. CAS (C) NO.579/2017 Page 5
Laundry Act (PMLA). He submits that though this judgment is PMLA, but the ratio would apply to a case where a moratorium been issued under Section 14 of IBC. He submits that Section IBC, no doubt, categorically bars the filing of executing petitions the contempt petition would still be maintainable.
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Learned senior counsel for the petitioner further submits that the claim for money filed by the petitioner sole proprietorship, operational creditor under Section 15 of the IBC is inasmuch as the present proceeding has been filed seeking to the respondents under Contempt of Courts Act and not for recovery of the money due. In contempt proceedings, the Courts are required lift the Corporate veil and punish the Directors / Officers responsible for contempt by the Company. Learned senior counsel has placed reliance upon the following judgments:
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Delhi Development Authority v. Skipper Construction Co. (P) Ltd. & Anr., (1996) 4 SCC 622 at paragraph 28;
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Aligarh Municipal Board & Ors. v. Ekka Tonga Mazdoor Union & Ors. (1970) 3 SCC 98 at paragraph 6;
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Jyoti Ltd. v. Kanwaljit Kaur Bhasin, 32 (1987) DLT 198 at paragraph 21.
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I quote hereunder the paragraphs cited and relied upon learned senior counsel for the appellant:
“1. Delhi Development Authority v. Skipper Co. (P) Ltd. & Anr., (1996) 4 SCC 622 .
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The concept of corporate entity was evolved to encourage and promote trade and commerce but not to commit
CONT. CAS (C) NO.579/2017 Page 6
or to defraud people. Where, therefore, the corporate is employed for the purpose of committing illegality defrauding others, the court would ignore the character and will look at the reality behind the corporate so as to enable it to pass appropriate orders to do between the parties concerned. The fact that Tejwant Singh and members of his family have created several corporate does not prevent this Court from treating all of them entity belonging to and controlled by Tejwant Singh and if it is found that these corporate bodies are merely behind which lurks Tejwant Singh and/or members family and that the device of incorporation was really a adopted for committing illegalities and/or to defraud peopl
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Aligarh Municipal Board & Ors. v. Ekka Mazdoor Union & Ors. (1970) 3 SCC 98 .
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In regard to the appeal by the Municipal Board, contended that the Board being a Corporation it acts natural persons and therefore, it cannot be conv contempt of court. This submission is unacceptable. The it exists today admits of no doubt that a Corporation is liable to be punished by imposition of fine and by sequestration contempt for disobeying orders of competent courts dire against them. A command to a Corporation is in command to those who are officially responsible for the conduct of its affairs. If they, after being apprised of the order to the Corporation, prevent compliance or fail to appropriate action, within their power, for the performance the duty of obeying those orders, they and the corporate are both guilty of disobedience and may be punished contempt. The appeal on behalf of the Municipal Board also fails and is dismissed.
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Jyoti Ltd. v. Kanwaljit Kaur Bhasin, 32 (1987) 198 .
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Thus, it is clear that the law of contempt is conceived the public interest. In the present case, I have no doubt, corporate veil is being blatantly used as a cloak to
CONT. CAS (C)...
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