Supreme Court of India
Suman Chadha vs Central Bank Of India on 9 August, 2021Author: Hon’Ble Ms. Banerjee

Bench: Hon’Ble Ms. Banerjee, V. Ramasubramanian








V. Ramasubramanian, J.

1. Upon being found guilty of committing contempt of Court, the

petitioners who are husband and wife respectively, were sentenced to

simple imprisonment for three months along with a fine of Rs.2000/­

each, by a learned Judge of the Delhi High Court. The said Order

having been confirmed by the Division Bench of the High Court in an

appeal under Section 19 of the Contempt of Courts Act, 1971 (‘Act’ for
Signature Not Verified

Digitally signed by

short), the petitioners have come up with the above Special Leave
Date: 2021.08.09
17:07:11 IST


2. We have heard Mr. Santosh Kumar, learned counsel appearing for

the petitioners and Mr. Anuj Jain, learned counsel appearing for the


3. The background facts which led to the petitioners being held guilty

of contempt of Court, are lucidly recorded in the Order dated

18.07.2017 of the learned Judge. They are as follows:

(i) The petitioners were Directors of a company by name Parul

Polymers Private Limited, which availed loan/credit facilities from the

respondent Bank. The petitioners guaranteed the repayment of the

loan and had also offered immovable properties as security.

(ii) On 24th July, 2014, the loan of the respondents was

categorized as a Non Performing Asset due to defaults in repayment.

On 18th August, 2014, a notice under Section 13(2) of SARFAESI Act

was issued for recovery of Rs. 28,82,25,942.24 plus interest. It was

followed by a possession notice under section 13(4) in respect of two


(iii) Aggrieved by the same, the petitioners filed S.A. No. 367/2014

before the Debts Recovery Tribunal­III, New Delhi (‘DRT­III’ for short),

under Section 17 of the SARFAESI Act. However, the DRT­III declined

to grant any interim relief against the physical possession of the

aforesaid properties.

(iv) The petitioners filed an appeal but could not deposit Rs. 7

crores being 25% of the amount demanded in the notice under Section

13(2). Eventually the appeal was dismissed as withdrawn on


(v) However, on 01st April, 2015, the petitioners secured a

conditional order of stay from DRT­III, New Delhi in S.A. No. 367/2014

whereby the petitioners were required to deposit a sum of Rs. 5 crores

within thirty days. The order also stipulated that Rs. 2 crores would be

deposited by 03rd April, 2015.

(vi) On 03rd April, 2015, the petitioners gave a letter to SHO,

Police Station Katju Marg, Rohini, Delhi showing their intention to

deposit the amount of Rs. 2 crores by way of four cheques. Therefore,

the Receiver was unable to take possession of the properties.

(vii) Thereafter, the petitioners challenged the conditional order

of stay passed by DRT­III on 01st April, 2015 before the High Court by

way of W.P.(C)No.3406/2015 stating that the Bank and DRT­III were

acting unfairly and unjustly in not accepting their cheques totalling to

Rs. 2 crores.

(viii) When the writ petition came for admission and interim

orders on 8th April, 2015, the petitioners admitted liability and offered,

by way of a statement under oath, to deposit Rs. 7 crores, i.e. 25% of

the notice amount in three instalments on or before 30 th June, 2015.

The Bank gave its assent and thereafter the Court ordered that the

possession of the properties of the petitioners shall not be disturbed

subject to the petitioners depositing Rs. 7 crores on or before 30 th

June, 2015, i.e. Rs. 2 crores on 30 th April, 2015, Rs. 2.5 crores each on

31st May, 2015 & 30th June, 2015.

(ix) On 29th April, 2015, the petitioners gave a letter along with

four cheques for Rs. 50 lakhs each dated 06 th May, 2015 purportedly

in compliance of the order dated 08th April, 2015.

(x) Accordingly, the possession proceedings for one property

scheduled for 30th April, 2015 were deferred by the Bank. But on 08 th

May, 2015, all the four cheques bounced.

4. Therefore, the respondent­Bank filed a petition under Sections 10

and 12 of the Contempt of Courts Act, 1971 for punishing the

petitioners for wilful and deliberate breach of their undertaking dated

08.04.2015. Though the petitioners resisted the contempt petition on

the ground that breach of an undertaking, made with a view to secure

a conditional order of stay may not tantamount to contempt, especially

when the consequences of breach of such undertaking are spelt out in

the order of the Court itself, the learned Judge was not convinced.

Therefore, by an Order dated 18.07.2017, the learned Judge of the

High Court held the petitioners guilty of contempt and sentenced them

simple imprisonment for three months with a fine of Rs.2000 each. The

Division Bench upheld the said order and the petitioners are before us.

5. Before we proceed further we should record certain developments

which have taken place after the order of single Judge dated

18.07.2017. They are as follows:­

(i) The learned Judge himself granted suspension of the sentence

of imprisonment till 26.07.2017, to enable the petitioners to move an

intra­court appeal;

(ii) The petitioners moved an intra­court appeal, which came up

before the Division Bench on 25.07.2017. The Division Bench wanted

the petitioners to comply at least with a part of their undertaking

before the sentence could be suspended. But the petitioners could not.

Therefore, the Division Bench did not grant suspension of sentence on


(iii) The petitioners filed a Special Leave Petition along with an

application for exemption from surrendering. But the said application

was dismissed by an order in Chamber dated 31.07.2017;

(iv) On 03.08.2017, the Division Bench of the High Court

dismissed the miscellaneous application seeking suspension of


(v) Challenging the said order dated 03.08.2017, the petitioners

moved a Special Leave Petition along with an application seeking

exemption from surrendering. This application was dismissed vide

order in Chamber dated 18.08.2017.

(vi) On a subsequent application seeking extension of time, this

Court granted three weeks’ time vide order dated 11.09.2017;

(vii) Eventually, the petitioners surrendered and were taken into

custody on 06.11.2017. After being in custody for 11 days, the

petitioners were released on interim bail by Order dated 16.11.2017;

(viii) The contempt appeal was thereafter dismissed by the Division

Bench of the High Court by an Order dated 27.09.2018, with a

direction to the petitioners to surrender within 10 days. However on

01.11.2018, this Court ordered notice in the present SLP and also

granted stay of the impugned order.

6. The reason why we have noted certain events post the order of the

learned single Judge is to bring on record the fact that the petitioners

have already served simple imprisonment for a period of 11 days, out

of the penalty of simple imprisonment for three months. They have also

paid the fine.

7. The main grounds of attack of the petitioners to the impugned

order, as articulated by Mr. Santosh Kumar, learned counsel for the

petitioners, are: (i) that the failure of a party to comply with an

undertaking, on the basis of which a conditional order of stay was

granted, cannot be treated as a wilful disobedience warranting the

invocation of the contempt jurisdiction; (ii) that the failure of the

petitioners to honour the undertaking cannot be taken to substantially

interfere with the due course of justice and, hence, the case would fall

under Section 13(a) of the Act; (iii) that when an order indicates the

consequences of the failure of a party to comply with a condition or

honour the undertaking, the invocation of the contempt jurisdiction

may not be appropriate; and (iv) that in any case if the defaulting

party has relied upon an interpretation of the order that the

consequences of failure are already inbuilt in the order, such an

understanding of the order is to be treated as reasonable and rational

and he cannot be held guilty of contempt.
8. In support of his first contention, the learned counsel for the

petitioners, relies upon the decisions of a few High Courts. They are: (a)

Narain Singh vs. Lala Rajendra Lal & Ors.1; (b) Indian Overseas

Bank vs. Lalit Kumar Aggarwal & Anr.2; (c) K. Saravankumar

vs. Sheela & Ors.3; and (d) National Agricultural Cor. Marketing

vs. Reliance Polycrete Ltd.4.

9. In support of his third contention, the learned counsel relies upon

the decision of this Court in Dinesh Kumar Gupta vs. United India

Insurance Company Limited5. In addition, the learned counsel also

submitted that in the light of the decision of this Court in Niaz

Mohammad vs. State of Haryana6, the disobedience should be wilful

and intentional, to tantamount to contempt.

10. In response to the aforesaid, Shri Anuj Jain, learned counsel for

the respondent submitted that the petitioners had several

opportunities to honour their commitments, but they repeatedly

adopted dilatory tactics. The learned counsel took us through various

orders passed by the High Court and the orders passed in various

1 1976 SCC Online All 425
2 2000 SCC Online Del 710
3 2008 (3) CTC 669
4 (2009) 163 DLT 441
5 (2010) 12 SCC 770
6 (1994) 6 SCC 332
proceedings before other forums including the DRT and the Chief

Metropolitan Magistrate and sought to impress upon us that the

conduct of the petitioners throughout, has been one of deceit and that

such persons do not deserve any leniency. Inviting our attention to the

decisions in (i) Bank of Baroda vs. Sadruddin Hasan Daya &

Anr7.; (ii) Rama Narang vs. Ramesh Narang & Another8 and (iii)

Rama Narang(5) vs. Ramesh Narang and Another9, the learned

counsel contended that the availability of other modes of enforcement

need not deter the Court from invoking its contempt jurisdiction and

that the deliberate failure to comply with a solemn undertaking given

to a Court has always been frowned upon by Courts.

11. We have carefully considered the rival submissions.

12. Before we analyze the rival contentions, it will be useful first to

see the actual undertaking given by the petitioners on 08.04.2015,

which led to the contempt proceedings. The undertaking given by the

first petitioner on 08.04.2015 reads as follows:­

“Statement of Mr. Suman Chadha S/o Jangi Lal Chadha R/o
H­3/50 Sector­18, Rohini, Delhi
I am the petitioner and the director of the third petitioner
in this case. I am duly authorised to make a statement on its
behalf. I have also filed an affidavit in support of the petition

7 (2004) 1 SCC 360
8 (2006) 11 SCC 114
9 (2009) 16 SCC 126
and have taken advice from my lawyer who is present with
me in Court.
I hereby state and confirm that the sum of
Rs.28,82,25,942.24 (Twenty Eight Crores Two Lakh Twenty
Five thousand Nine Hundred Forty Two and Paise Twenty
Four only) as on 18.8.2014 is due and payable to the
respondent i.e. the Central Bank of India as per notice u/s
13(2) of SARFAESI Act. I request that in view of the demand I
may be granted relief of some deferment with regard to the
repayment of the loan liability. I hereby agree on behalf of self
and other petitioners to deposit a total amount of Rs.7 (seven)
crores with respondent –Bank on or before 30.6.2015. An
amount of Rs. 2(two) crores of the said amount shall be paid
on or before 30.04.2015; the balance would be paid in equal
instalments i.e. Rs.2.5 (Two and a half) crores on or before
31.5.2015 and 30.06.2015.
I also agree and affirm that in the event of default, the
Bank is free to initiate any such proceedings and avail of
legal remedies as are available.”

13. The above undertaking given by the first petitioner was also

accompanied by an affidavit sworn to by the second petitioner. In the

said affidavit, it was stated by the second petitioner that her husband

has made a statement before the Court which she had understood

from him and that she and her husband undertake to abide by the


14. On the basis of the undertaking filed as aforesaid on 08.04.2015,

the High Court passed an order in W.P (C) No.3406 of 2015 on the

same day, namely, 08.04.2015. Paragraphs 6 to 8 of the said order of

the High Court dated 08.04.2015 read as follows:­

“6. In view of the submission of the parties, it is ordered
that the possession of the petitioners over the property in

question shall not be disturbed subject to their compliance
with the following conditions:
(1) Deposit by the petitioners on or before 30.04.2015
– the sum of Rs. 2 crores with the respondent Bank and
thereafter deposit of Rs.2.5 crores each on or before
31.05.2015 and 30.06.2015.
(2) The second petitioner shall file an affidavit/
undertaking, to comply with the above said arrangement.
(3) In the event of default, the respondent Bank shall
be at liberty to take recourse to law including the enforcement
of further action in follow up order of appointment of the
receiver by the Chief Metropolitan Magistrate (CMM). The
order to such effect passed by CMM shall be kept in abeyance
to ensure compliance in the meanwhile till 30.6.2015.
7. Petitioners’ counsel requests that after compliance of the
above order, any application for relief to the Bank including
the restructuring of the account may be considered
reasonably. The Bank shall consider such application if made
on its merits independently having regard to its applicable
policy. This will not in any way preclude the rights of the
Bank for recovering the amounts due.
8. Subject to the petitioner filing the necessary
affidavit/undertaking copy of which shall be provided to the
counsel for the respondent within a week from today, the writ
petition is disposed of.”

15. It is seen from the portion of the order of the High Court dated

08.04.2015 that it was not an order passed on the basis of an

affidavit/undertaking. It was on the basis of an offer made by the

petitioners, the first of whom was actually present in Court. The offer

so made was accepted by the Bank and hence the order was actually

based upon the consent of parties. This is made clear by what is

recorded by the Court in Paragraph 5 of its order dated 08.04.2015.

Paragraph 5 reads as follows:­

“5. During the course of hearing counsel for the petitioner
Dr. Sharma stated that the petitioners are admitting the
liability provided some time is granted in order to settle the
matter finally. It was suggested by the counsel that the
petitioners may be afforded opportunity of depositing Rs. 7
(seven) crores i.e. 25% of the notice amount in three
instalments on or before 30.06.2015. The first petitioner is
present in Court. He is a director of the third petitioner and
authorised to depose on its behalf. His statement to above
effect has been recorded under oath separately and has been
kept on record. The second petitioner is directed to file an
affidavit/undertaking within one week confirming the
statement of the first petitioner. The counsel for the
respondent submitted his assent to the disposal of the writ
petition on terms offered.”

16. It is true that this Court has held in a series of decisions that the

wilful breach of the undertaking given to the Court amounts to

contempt of Court under Section 2(b) of the Act. But the Court has

always seen (i) the nature of the undertaking made; (ii) the benefit if

any, reaped by the party giving the undertaking; and (iii) whether the

filing of the undertaking was with a view to play fraud upon the court

or to hoodwink the opposite party. The distinction between an order

passed on consent terms and an order passed solely on the basis of an

undertaking given to court and the distinction between a person

playing fraud on the court thereby obstructing the course of justice

and a person playing fraud on one of the parties, was brought out by

this Court in Babu Ram Gupta vs. Sudhir Bhasin10, in the following

10 (1980) 3 SCC 47

“…Indeed, if we were to hold that non­compliance of a
compromise decree or consent order amounts to contempt of
court, the provisions of the Code of Civil Procedure relating to
execution of decrees may not be resorted to at all. In fact, the
reason why a breach of clear undertaking given to the court
amounts to contempt of court is that the contemner by making
a false representation to the court obtains a benefit for himself
and if he fails to honour the undertaking, he plays a serious
fraud on the court itself and thereby obstructs the course of
justice and brings into disrepute the judicial institution. The
same cannot, however, be said of a consent order or a
compromise decree where the fraud, if any, is practised by
the person concerned not on the court but on one of the
parties. Thus, the offence committed by the person concerned
is qua the party not qua the court, and, therefore, the very
foundation for proceeding for contempt of court is completely
absent in such cases.”

17. But the decision in Babu Ram Gupta (supra) was clarified and

held in part to be obiter by a three member Bench of this Court in

Rama Narang vs. Ramesh Narang and Another11. In Rama

Narang (supra), this Court pointed out the distinction between two

categories of cases covered by Section 2(b) of the Act namely (i) wilful

disobedience to a process of court; and (ii) wilful breach of an

undertaking given to a court.

18. In fact, in Rama Narang (supra), this Court went to the extent of

holding that it would neither be in consonance with the statute,

judicial authority, principle or logic to draw any distinction between

11 (2006) 11 SCC 114
the wilful violation of the terms of a consent decree and wilful violation

of a decree passed on adjudication. We have our own doubts whether

the first category of cases covered by Section 2(b) can be stretched so

far. Anyway, that question does not arise in this case and hence we

leave it at that.

19. But what has happened in this case is that the subsequent

conduct of the petitioners after the order dated 08.04.2015, seems to

have tilted the balance against the petitioners. Purportedly in

compliance of the undertaking given to Court on 08.04.2015 and the

order passed thereon, the petitioners issued four cheques for Rs.50

lakhs each. These cheques were handed over to the Bank on

29.04.2015 along with a covering letter. But all the four cheques were

post­dated, bearing the date 06.05.2015, though the undertaking given

to the Court was to deposit the amount on or before 30.04.2015.

20. On 08.05.2015, all the four cheques bounced. The conduct of the

petitioners first in issuing post­dated cheques and then in allowing

them to be dishonoured, showed the petitioners in poor light. The

petitioners could have at least mend their ways thereafter. However

they did not.

21. On 14.07.2015, the learned Single Judge seems to have ordered

the issue of notice in the Contempt Petition. The notice was made

returnable by 05.11.2015 and the petitioners were directed to be

present personally in Court. But what happened on 05.11.2015, as

brought on record by the learned Judge reads as follows:­

“When the matter was taken up at first call, this Court
was informed that none of the respondents were in Station
and even summons had been received by their daughter.

However, a perusal of the file reveals that
notices/summons had been received by respondent No. 1
personally and by respondent No. 2’s husband by dasti as
well as by speed post.

Though this Court was inclined to issue warrants
against the respondents No. 1 and 2, yet as learned counsel
for respondents states that he would ensure that not only the
respondents are personally present in Court on the next date
of hearing, but the matter is amicably resolved, matter is
adjourned to 16th November, 2015.”

22. On the next date of hearing, the petitioners raised a defence that

they had issued post­dated cheques in the hope of receiving amounts

due to them from their debtors and that their debtors failed to make

payment. The petitioners also named three debtors from whom they

were expected to receive money.

23. Doubting the genuineness of the claim made by the petitioners,

the learned Judge before whom the Contempt Petition came up, passed

an order on 07.12.2015 directing an investigation by Serious Fraud

Investigation Office (‘SFIO’ for short). To the misfortune of the

petitioners, SFIO submitted a report that the alleged debtors of the

petitioners are only shell entities of Parul Polymers Private Ltd., of

which the petitioners were Directors.

24. All the above events that happened after 08.04.2015, convinced

the High Court to come to the conclusion that the petitioners had

actually played a fraud upon the Court. This is why the learned Single

Judge as well as the Division Bench of the High Court held the

petitioners guilty of contempt of court.

25. It is true that an undertaking given by a party should be seen in

the context in which it was made and (i) the benefits that accrued to

the undertaking party; and (ii) the detriment/injury suffered by the

counter party. It is also true that normally the question whether a

party is guilty of contempt is to be seen in the specific context of the

disobedience and the wilful nature of the same and not on the basis of

the conduct subsequent thereto. While it is open to the court to see

whether the subsequent conduct of the alleged contemnor would

tantamount to an aggravation of the contempt already committed, the

very determination of an act of contempt cannot simply be based upon

the subsequent conduct.

26. But the subsequent conduct of the party may throw light upon

one important aspect namely whether it was just the inability of the

party to honour the commitment or it was part of a larger design to

hoodwink the court.

27. In this case, the series of acts committed by the petitioners (i) in

issuing post­dated cheques, which were dated beyond the date within

which they had agreed to make payment; (ii) in allowing those cheques

to be dishonoured; (iii) in not appearing before the Court on the first

date of hearing with an excuse that was found to be false; (iv) in

coming up with an explanation about their own debtors committing

default; and (v) in getting exposed through the report of the SFIO,

convinced the High Court to believe that the undertaking given by the

petitioners on 08.04.2015 was not based upon good faith but intended

to hoodwink the Court. Therefore, we are unable to find fault with the

High Court holding the petitioners guilty of contempt.

28. The 1st contention of Mr. Santosh Kumar, learned counsel for the

petitioners that the failure to honour a commitment made while

securing a conditional order of stay, cannot be treated as wilful

disobedience, could have been accepted by us, but for the fact that the

petitioners issued post­dated cheques purportedly in compliance of the
undertaking, but allowed them to be dishonoured. The story cooked up

for the dishonor of the cheques having been found to be false, it is not

open to the petitioners to raise the contention that there was no wilful


29. The 2nd contention based upon the language of Section 13(a) of

the Act also does not appeal to us, in the light of what had happened

after 08.04.2015. The fact that the order dated 08.04.2015 also

indicated certain other consequences to follow, may not take away the

contempt jurisdiction of the Court. In appropriate cases where a party

had acted bonafide while giving an undertaking, but could not honour

the undertaking on account of reasons that are reasonable and

genuine, the Court could certainly withhold its stick from being

wielded. But in this case there are findings of fact to the effect that the

petitioners did not act bonafide. Therefore, the 3 rd contention is also


30. The last contention that if the order dated 08.04.2015 is capable

of being interpreted and understood in more than one way as to the

consequences flowing out of the same, the party understanding and

interpreting the said order in one particular manner must be allowed

the benefit, is perfectly correct, as a pure and simple proposition of

law. But in this case, the same cannot be permitted to be used, to

cover up whatever the petitioners have done. On the contention of the

learned counsel for the petitioners that the disobedience, if any, was

not wilful and intentional, less said the better.

31. In the light of the above, we are clearly of the view that the finding

of the High Court that the petitioners are guilty of contempt, does not

call for our interference under Article 136.

32. However, Mr. Santosh Kumar, learned counsel for the petitioners,

pleaded that the Court may show sympathy on the petitioners, in view

of the fact that the immovable properties which the petitioners

attempted to save, by approaching the DRT and the High Court, have

already been sold. All the attempts made by the petitioners from 2015

onwards, to save the mortgaged properties have been in vain.

33. There is no dispute on facts that the mortgaged properties have

now been sold and with extraordinary efforts, the Bank has also taken

possession. The petitioners have also spent 11 days in custody out of

the total period of imprisonment of three months imposed by the High

Court. In such circumstances, we think that it is sufficient

punishment for the petitioners.

34. Therefore, the SLP is disposed of upholding the finding of the

learned Single Judge and the Division Bench of the High Court that

the petitioners are guilty of contempt of court, but reducing the period

of sentence from three months to the period of imprisonment already

suffered/undergone by the petitioners. There will be no order as to


32. Pending application(s) if any, shall also stand disposed of.

(Indira Banerjee)

(V. Ramasubramanian)
August 9, 2021
New Delhi.



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