Supreme Court: While considering the instant contempt petition, wherein the Court deliberated over the non-compliance of its directions by the respondent (contemnor); the Division Bench of Abhay S. Oka and Augustine George Masih*, JJ., sternly remarked that the contemnor had been taking the Court for a ride from the very beginning and that the misuse of the process of Court with an intent to tarnish the image of judiciary, threatening the integrity, and the efficiency of the judicial system cannot be allowed to be overlooked and ignored in the garb of non-fulfilment of the directions. A party, misguiding the Court to pass an order which was never intended to be complied with, would constitute an act of overawing the due process of law and, thus, commit contempt of Court.
The Court that the instant case is not where mere imposition of fine would suffice; the Court therefore held the contemnor guilty for civil contempt and imposed Simple Imprisonment for three months along with fine of Rupees 20,000/- to be deposited in two weeks, and in case of default, further Simple Imprisonment for one month.
Background and Legal Trajectory:
Petitioner Association owned the decree scheduled building, consisting of 96 furnished studio apartments, at Munnar, Kerala. An agreement was entered between the Petitioner Association and Contemnor on 26-01-2014, permitting the latter to occupy and use the said Property for a period of 10 years as against payment of licence fees of Rupees12 Lakhs per month.
However, within a short period of entering into the said Agreement, the Contemnor defaulted in payment of the license fees. On persistent default, Petitioner Association was constrained to institute original suit before the Sub Court at Thodupuzha, Kerala for realization of the arrears and other reliefs. As there was an arbitration clause in the said Agreement and on consent of the parties herein, the dispute was referred to a Sole Arbitrator. The Sole Arbitrator partially allowed the Petitioner’s application. The parties moved to the in appeal under Section 37 of the A&C Act, 1996 before the District Court at Ernakulam, Kerala, whereby the proceedings before the Sole Arbitrator were stayed with reiteration of direction to Contemnor to pay arrears at the rate of Rupees 12 Lakhs per month with effect from 08-09-2016 with a further order to continue to pay INR 12 Lakhs per month towards monthly license fee.
The Contemnor challenged the afore-stated order before Kerala High Court wherein the matter was referred to mediation. The said mediation proceedings, lead to a Compromise (Settlement Agreement) dated 03-04-2017, wherein the Petitioner Association agreed to reduce the monthly license fees to Rupees 8 Lakhs per month. Arrears were also reduced from Rupees 1,65,73,439/- to Rupees 75 Lakhs. Moreover, it was specifically recorded that the settlement entered between the parties would form part of the judgment. There was a specific clause that in case of default by any of the parties to any of the terms of the agreement the other would be entitled to proceed against the other party. The terms of settlement arrived at between them were accepted by the High Court of Kerala and were incorporated in the Order dated 11-04-2017.
However, on default on the part of the Contemnor in making payment through a promissory note, as per the Settlement Agreement, Petitioner Association preferred Execution Petition. The Execution Court passed an Order dated 23-03-2021, giving an instalment facility to the Contemnor for payment of arrears, with the first being due on 01-06-2021 and the last being 01-09-2021. Furthermore, the amount of arrears being undisputed, and nothing having been paid, the Execution Court ordered delivery of the said Property. Contemnor’s challenge to the aforementioned Execution Court order was dismissed by Kerala High Court vide order dated 20-9-2021.
The Contemnor then reached the Supreme Court challenging afore-stated dismissal by the High Court. The Court in its order dated 7-11-2022 directed the Contemnor to pay arrears of use and occupation charges for period between 20-09-2021 and 31-11-2022 in six monthly instalments beginning 31-12-2022. However, the Contemnor did not make any payment to the Petitioner and continued to enjoy and occupy the said Property. The Petitioner alleged wilful disobedience on part of the Contemnor.
The Court hence sought an Affidavit from the Contemnor giving details of all his movable and immovable assets as also that of his immediate family members along with the necessary documents. This was done in light of the statement of the counsel of the Contemnor that he is not in a position to deposit any amount.
Upon perusal of the affidavit, the Court found that the Contemnor committed wilful breach of the Supreme Court’s directions dated 7-11-2022.
Court’s Assessment:
Perusing the trajectory of the case and conduct of the Contemnor, the Court found that he had deliberately and with malafide intention, not only mislead and misused the process of the courts but has also intentionally violated the order dated 7-11-2022 by not making the payment as directed therein.
The Court pointed out that the conduct of the Contemnor since the Settlement Agreement reflected his patent intent to retain the said Property and this indicates that the business proposition was not only a viable one but was yielding profits. No person with a modest business acumen would continue with a loss-causing endeavour. Contemnor had nowhere reflected the receipts from the business being undertaken in the said Property.
The Court further pointed out that when the Contemnor was heard in person and given an opportunity to comply with the order of which he had committed contempt of, he did not express any remorse nor showed any intention to comply with the order passed by the Court rather asserted that he was not in a position to make any payment. Moreover, the email sent by the Contemnor to the Petitioner seeking details of pending payment after Order dated 7-11-2022 was passed, intrinsically reflected financial capability and liquidity at hands of the Contemnor. Had the Contemnor been in dire financial difficulty, the said communication would not have come to the fore. Besides, had it been that the Contemnor was unable to comply with the Order dated 07-11-2022 he should have moved to the Court for modification or withdrawal of the order.
The Contemnor had been in possession of the said Property and had been utilising the income generated from running of the resort. Moreover, the amount which has been earned from the resort being run by the Contemnor has not been accounted for. It can therefore easily be said that there has been intentional and deliberate non-compliance on the part of the Contemnor of the order passed by the Court.
The Court pointed out that any person who misuses the process of the Court with ulterior motives cannot be said to be a person having approached the Court with clean hands. A person who tries to tarnish the process of litigation to the extent of misguiding and misleading the proceedings before the Court resulting in passing of order(s) which are to his benefit at the cost of the loss of dignity, leading to shrinkage of the faith of the common man in the judicial process cannot be permitted.
In the instant case, the opportunity having been availed, time having been sought and granted by the Court further reflects the intent on the part of the Respondent-Contemnor to discard and tarnish the judicial process by polluting it. Disobedience of the order of the Court in such circumstances would be the only result and thus, civil contempt.
Holding the Contemnor guilty for contempt, the Court gave one more opportunity to the Contemnor to purge the contempt and granted 30 days’ time to him to comply with the Order dated 07-11-2022 and submit compliance report.
[Chithra Woods Manors Welfare Association v. Shaji Augustine, CONTEMPT PETITION (CIVIL) NO. 712 OF 2023, decided on 24-4-2025]
*Judgment by Justice Augustine George Masih
Buy Arbitration and Conciliation Act, 1996 HERE
