Delhi High Court: A petition was filed by the petitioner under Sections 10 and 12 of the Contempt of Courts Act, 1971 seeking initiation of contempt proceedings against the respondents for the alleged wilful disobedience and disregard of the consent decree dated 01-06-2009 passed by this Court. Dharmesh Sharma, J., held that the petition was ex facie barred by limitation under Section 20 of the Contempt of Courts Act, 1971, as the cause of action arose when the respondent failed to pay the balance amount by 31-12-2012.
The case arises from a commercial dispute between the petitioner and Polar Industries Limited (PIL). The petitioner had filed a recovery suit for Rs. 1,38,79,026 against PIL, and in order to amicably resolve the dispute, both parties entered into a compromise agreement on 13-01-2009. The Court, after reviewing the agreement, decreed the suit in its terms on 01-06-2009. The agreement outlined various obligations for PIL and its chairman and managing director, Respondent 1. While most clauses of the agreement were complied with, the petitioner alleged non-compliance with Clause (vi) which required the transfer of 15.72% shares in Vinsa Electricals Private Limited (Vinsa), owned by Respondent 2 to the petitioner by 03-06-2010. Despite the release of these shares from Eight Capital in 2010, the transfer did not occur.
Due to the alleged breach, the petitioner filed an execution petition against PIL and the respondent seeking the enforcement of the consent decree. The petitioner claimed that an amount of Rs. 26.41 crore was due. As an interim measure, the Court restrained the respondents from pledging or selling 15.72% of Vinsa’s equity shares and the Polar brand. However, in a twist, the petitioner discovered in 2020 that Respondent 2 had executed a Deed of Pledge on 25-04-2012, transferring 51% of Vinsa’s shares to the proposed Respondent 5 under a Business Exposure Agreement dated 24-04-2012. This transfer occurred despite the court’s restraining orders. Subsequently, on 27-01-2020, 50,224 shares of Respondent 2 in Vinsa were transferred to respondent 5 reducing her shareholding below the 15.72% threshold mandated by the Court. An affidavit filed by Respondent 2 in April 2022 confirmed that all her shares were now held by respondent 5, Virat Leasing Ltd. Aggrieved by the alleged deliberate and willful disobedience of the Court’s orders, the petitioner filed the present contempt petition.
On the aspect whether the petition is barred by limitation, the Court noted that the primary allegation concerns non-compliance with Clause (vi) of the compromise agreement dated 13-01-2009, which was made a part of the consent decree dated 01.06.2009. The clause stipulated that the transfer of 15.72% shares of Vinsa Electricals Private Limited was to be completed by 30-06-2010, and in case of failure, the respondent was required to pay the balance amount by 31-12-2012. Since the alleged non-compliance occurred upon the respondent’s failure to pay the balance by 31-12-2012, the petitioner had one year from that date, i.e., until 31-12-2013, to file the contempt petition. However, the petition was filed in 2020, making it ex facie time barred.
The petitioner argued that the cause of action arose on 27-01-2020, when the respondent transferred the shares to a third party, thereby violating court orders. However, the Court rejected this argument, noting that the petition had already been filed on 08-01-2020, before the alleged act of transfer. Additionally, the Court observed that the petitioner was attempting to expand the scope of the petition by citing subsequent events, which were not mentioned in the original plea. The petitioner’s reliance on the concept of a “continuing wrong” was also dismissed. The Court emphasized that a continuing wrong requires the injury to accrue from day to day. In this case, the non-payment constituted a completed breach as of 31-12-2012, and the continued non-compliance did not amount to a fresh cause of action. Accordingly, the Court ruled that the petition was time-barred and could not be entertained.
The Court remarked that “there is no gainsaying that the power to punish for contempt under the Contempt of Courts Act is not only discretionary but is also to be used sparingly by this Court. A trend which has been noticed by this Court is that parties invariably try to invoke the provisions of the Contempt of Courts Act, 1971, in order to get orders implemented while there is already a machinery provided under the Code of Civil Procedure, 1908, for the purpose of getting orders, decrees or directions executed.”
Thus, the Court held the present contempt proceedings are not maintainable for being barred by limitation.
[Sunil Gupta v. Anil Aggarwal, 2025 SCC OnLine Del 1659, decided on 18-03-2025]
Advocates who appeared in this case:
Mr. Gaurav Mitra, Mr. Dushyant Kumar and Mr. Ishan Roy Chowdhary, Advocates for petitioner
Mr. Raghavendra Mohan Bajaj, Ms. Garima Bajaj, Mr. Kumar Karan and Mr. Sagun Agarwal, Advs. for R-1. Ms. Srishty Kaul, Adv. for R-2. Mr. Rajshekhar Rao, Sr. Adv. with Mr. Kunal Vajani, Mr. Kunal Mimani, Mr. Shubhang Tandon, Ms. Shraddha Chirania and Mr. Mridul Yovesh Suri, Advs. for R-3 and R-4
