Asian Bearing Co. vs Vasant Engineering (P) Ltd.

S.D. Pandit, J.—The original petitioner in Company Petition No. 67 of 1985 has filed the present application to take action for contempt of

court against the respondent - Vasant Engineering (P) Ltd.

The learned advocate for the applicant is seeking an amendment to the petition. The amendment is being sought today, i.e., more than eleven

years after the filing of the original petition. The petition is being adjourned from time to time only for the purpose of granting admission and it

seems that this amendment is sought only with a view to protract further hearing. In case I find that the petition is maintainable, then I would

consider the claim for amendment; but, at this stage, 1 do not entertain this prayer of seeking amendment as, in my opinion, the same is not a bona

fide one.

The present applicant - Asian Bearing Company had filed Company Petition No. 67 of 1985 u/s 433 of the Companies Act, 1956, seeking an

order of winding up of Vasant Engineering (P) Ltd., a company incorporated under the Companies Act, 1956. After issuance of notice in the said

petition, the respondent had appeared and it seems that the parties had arrived at a settlement. As per the said settlement, a statement was made

before this court on 28 October, 1985, and there after this court disposed of the said petition by passing the following order :

ORDER

The learned advocates state that the entire claim has been settled at Rs. 65,000 finally. A cheque for Rs. 12,000 is given today, and every month

on 1st of every month Rs. 12,000 will be given, with the last instalment of Rs. 5,000. Undertaking to be filed by the respondent. In view of this

settlement, Mr. Oza withdraws this petition. The petition stands disposed of accordingly.

As per the above order, the director of the respondent company, Shri Haresh Parekh, had given an undertaking which is running as under :

I, Haresh Parekh, Director file this affidavit on behalf of the Vasant Engineering Pvt. Ltd. and do hereby solemnly affirm and state as under :

(1) I hereby give this undertaking to this Hon''ble Court that as per the Court''s order, dated 28.10.1985, the payment of Rs. 53,000 will be made

as under :

12,000 on 1.12.1985 12,000 on 1.1.1986 12,000 on 1.2.1986 12,000 on 1.3.1986 5,000 on 1.4.1986

Solemnly affirmed on this 28th day of October, 1986 at Ahmedabad.

It is the claim of the applicant that, in spite of giving the said undertaking, the respondent company has paid only Rs. 24,000 and thus there are

outstanding dues of Rs. 41,000. It is the claim of the applicant that the undertaking given by the respondent company was given with an intention

not to follow the same and the respondent deliberately and wilfully did not honour the said undertaking and thereby committed contempt of court.

The learned advocate for the applicant, Shri B. P. Gupta, urged before me that the director of the respondent company Haresh Parekh had

given an undertaking and there is failure of the said undertaking and this failure on the part of the respondent to fulfil the undertaking amounts to

contempt of court. In support of that submission of him, he cited before me the decision of the Division Bench of this court in the case of Shaw

Wallace and Company Ltd. Vs. Repute Fertilizers and Others, and he placed reliance on the following observations of the Division Bench of this

court in para 16 on page 1279 :

Let us now see whether there is any undertaking to pay any amount and whether that undertaking is to the court. The wordings of the undertaking

state that ''I, Hanubhai T. Mashru, adult, occupation : business, residing at Junagadh do hereby undertake as follows : [xxxxxx] I unconditionally

agree and undertake to abide by the consent terms arrived at in Summary Suit No. 1175 of 1988.'' The consent terms provide for payment and it

also provides that defendant No. 3 (respondent No. 2 herein) to file necessary undertaking before the court for complying with the terms and

conditions of the consent terms and the consent terms also record and bring to the notice of the parties that the plaintiff has a right to take action

under the amended provisions of Negotiable Instruments Act and also the proceedings for contempt and/or criminal offences under the appropriate

provisions of law. These provisions have also been incorporated in the decree, that the defendant No. 3 should file an undertaking to comply with

the terms and conditions and also that the plaintiff shall have the right to take contempt proceedings. Thus, there cannot be any doubt that not only

the parties intended, but the second respondent also knew very well as to why this undertaking was insisted and taken and why it was being given

and to whom was it given and for what purpose was it given. It was not intended to remain on paper only, but it was intended to have efficacy to

ensure that the consent terms are duly complied with without any further difficulty, obstruction and with due respect to the court. The original ex

parte decree was for a sum of more than Rs. 8 lakhs and there were also criminal proceedings against the defendants. By virtue of these consent

terms, consent decree and the undertaking, the plaintiff had not only substantially reduced his claim, but also undertook to withdraw the criminal

proceedings, on consideration of the second respondent giving up an undertaking before the court to comply with the consent terms and consent

decree. The undertaking of defendant No. 3 was, therefore, also the part of the decree directing him to file such undertaking and such undertaking

was in fact drafted and signed along with the consent terms on 14 May, 1989, and were filed simultaneously in the court on 21 September, 1989.

Thus, it is clear that this undertaking which is titled ''In the City Civil Court at Ahmedabad'' is given to the court and was understood clearly by

both the sides that it was an undertaking given to the court. It was not only the part of the consent terms that the undertaking was to be given to the

court, but it was also a direction in the consent decree that the defendant No. 3 shall file the undertaking before the court and the defendant No. 3

has filed such undertaking before the court.

However, if the facts of the case of Shaw Wallace, supra, are considered, then it would be quite clear that the said case is not applicable to the

facts of the present case. In that case, the petitioner had filed a Summary Suit No. 1175 of 1988 in the City Civil Court and in that suit, consent

terms were passed by the court in terms of the compromise pursis and, in support of those consent terms, the managing partner of the respondent

partnership firm had given an undertaking, to abide by the said consent terms, to the court. Thus, in that case, the consent terms were filed along

with the undertaking of the managing partner and the court had acted on the basis of the said undertaking given by the managing partner and relying

on that undertaking, a decree in terms of the consent terms was passed. In the case before me, the original petitioner is seeking an order of winding

up of the company under the Companies Act, 1956. Company Court is not a court meant for passing any money decree nor is a court to execute

money claim. The Company Court is to pass order of winding up of a company only on the grounds mentioned in section 433 of the Companies

Act, 1956. I have already quoted above the order of the court and from the said order of the court, it is quite clear that the petitioner himself has

withdrawn the petition in view of the consent terms by which the respondent had agreed to make payment of his dues to the petitioner company.

The Company Court had not at all acted upon the said consent terms and no order of the court or decree of the court is passed in pursuance of the

said consent terms. Therefore, in the circumstances, merely because an undertaking is filed in the court supporting the consent terms, it could not

be said that non-fulfilment of the said undertaking amounts to a contempt of court. It may be remembered that, in order to amount to contempt of

court, and to be punishable as such, mere breach of undertaking given or disobedience of the order passed by the court is not enough. It must be

proved that breach or disobedience was a wilful act of the contemner and the said wilful act was in breach of the undertaking given to the court.

The court must have relied on the undertaking given by the alleged contemner but, in the instant case, it is not possible to hold that the court had at

all relied on the undertaking given by the managing partner of the respondent and by relying on the said undertaking any order is passed. At the

most, it could be said that the present petitioner agreed to withdraw the petition on account of giving the said undertaking, but that does not mean

that the court has passed any order because of the said undertaking. The court has passed the order of disposal because the petitioner himself has

filed a pursis or his advocate has made a statement before the court that he wants to withdraw the petition. The case cited by the learned advocate

for the applicant is not at all applicable to the facts of the case before me.

As per the consent terms between the parties, the last instalment was to be paid as per the said undertaking on 1.4.1986. It is the case of the

petitioner that only two instalments payable on 1.12.1985 and 1.1.1986 were paid. The remaining three instalments of Rs. 12,000, Rs. 12,000 and

Rs. 5,000 payable on 1.2.1986, 1.3.1986 and 1.4.1986, respectively, are not paid. It is the claim of the petitioner that the failure to make payment

of those instalments on the dates mentioned in the undertaking amounts to contempt of court. If that is the case, then the last act of commitment of

the alleged contempt has taken place on 2.4.1986. The present petition is filed on 16.12.1987. Thus, it is filed beyond a period of one year from

the date of the alleged contempt. Therefore, on that ground also, the present application is not tenable.

Thus, I hold that the present application is not tenable in law and the same deserves to be rejected. 1, accordingly, reject the same with no order

as to costs.