M.G. Amirthalingam vs K.P. Arunachalam and Others

M. Anantanarayanan, C.J.—Though this matter has had a very protracted history, in the light of the actual disposal that we propose to make

of this appeal from the judgment of Kailasam, J., in C.M.A. No. 20 of 1965, it is sufficient to set forth only a few salient facts. Not merely this, but

it is also desirable that we should be very concise in our observations, as the main litigation is still pending, and there are several controversies

between the parties that have to be still resolved, upon the principles of Company Law relevant to the litigation.

We might commence with the interim injunction ordered by the Subordinate Judge''s Court of Vellore on 7th November, 1964, in an

interlocutory application in O.S. No. 132 of 1964, restraining the defendants from passing the proposed Resolutions 2 (a), 2 (b) and 2 (c) in the

Agenda for the General Meeting to be held on 11th November, 1964. Admittedly on the forenoon of 11th November, 1964, only other non-

controversial resolutions were passed, and the consideration of items 2 (a), 2 (b) and 2 (c) was adjourned to the afternoon. The interim injunction

was vacated by the Court that forenoon and the resolutions were passed in the afternoon. On 23rd November, 1964, the plaint in O.S. No. 140

of 1964 was filed for a declaration that the Managing Agents were entitled to continue as such, and that the Resolutions 2 (a), 2 (b) and 2 (c) were

invalid. It is important to note that the prayer was, as far as the present appellant is concerned, (then second defendant), to restrain him from

functioning as Managing Director in pursuance of these resolutions.

C.M.A. No. 20 of 1965 arose out of the dismissal of an application for interim injunction, and I. A. No. 486 of 1965 was also filed in that

proceeding in this Court. The High Court''s order of injunction was passed on 10th March, 1965. On 6th March, 1965, the period of six months

from the death of Mr. Govindaraja, one of the partners of the Managing Agency firm, expired and the Company Law Board declined recognition

of the Managing Agency. It was under those circumstances that the learned Judge (Kailasam, J.) before whom the matter came up in C.M.A. No.

20 of 1965, referred to the argument of Sri. V. Thyagarajan, that the resolution was ineffective because of the prohibition u/s 269 of the Act, and

confirmed the injunction against the second respondent (present appellant) from functioning as Managing Director. On 29th July, 1965, the

Company Law Board approved of the appointment of the appellant as Managing Director, u/s 269 of the Act. C.M.P. No. 9636 of 1965 taken

out for vacating the injunction under the changed circumstances, was dismissed by Kailasam, J., observing that the proper course for the

petitioners was to file a fresh petition in the trial Court for vacating the injunction.

It is very important to note that the terms of the actual injunction by Court, which has been produced before us, are absolute pendente lite, and

though the plaint itself refers to injunction in respect of the Resolutions 2 (a), 2 (b) and 2 (c) passed at the meeting on 11th November, 1964, the

injunction granted by the Court is not qualified by any such language. The only meaning therefore can he that, whether in pursuance of these

resolutions, or whether purportedly acting on the basis of subsequent events, the appellant before us, who is an Advocate of Court, was restrained

from functioning as Managing Director pendete lite. Had circumstances transpired which, according to the appellant, made a substantial difference

by providing a basis for his functioning other than the basis of the resolutions earlier referred to, the only proper remedy of the appellant, consistent

with his status as a legal practitioner and the consideration to be paid by him to the authority and dignity of Court, would have been to move the

Court which passed the injunction to modify its terms, in the light of further events. Under Order 39, Rule 4, Civil Procedure Code, such a specific

procedure exists, and there can be no doubt whatever that, if the party did not function in this manner, but acted on his own presumed

interpretation of subsequent events, however bona fide he might be, he ran, and does run, the grave risk of being committed for contempt of Court.

As Kailasam, J., observed:

The order of injunction was in absolute terms, and it is not permissible for the respondent to construe the order in a manner that would suit him.

The failure of the respondent to move the Court for cancellation of the order of injunction proves his intention to act as the Managing Director in

spite of the orders of this Court. The conduct of the respondent clearly amounts to contempt of Court....

We need not be taken as fully approbating the dictum of the learned Judge, with respect, that the failure of the present appellant to move the Court

for cancellation of the order of injunction, amounts to any proof of his intention to flout the orders of the Court. We have gone very carefully into

the facts and probabilities, and we are convinced, on the contrary, that such was not his intention.

But even if we accept his explanation that he was misled by the vigour and force of the subsequent events into believing that his right to function

as Managing Director had a new jural basis, and further the sanction by the Company Law Board which was beyond the ambit of the injunction,

his true remedy, the injunction being absolute in its terms, was to move the Court for its modification. If he chose, on his own interpretation of

events, to act as Managing Director without the knowledge or leave of the Court, he certainly was in jeopardy of being convicted for contempt.

This is the essence of the situation, and it is not really necessary to proceed into any of the other facts at any very great length. As the appellant

points out, after about one and half years from the original event, there was a fresh resolution passed by the Board, in the exercise of their power

under the new Article of Association brought into force on 23rd June, 1966. This fresh resolution again empowered the appellant to act as the

Managing Director and we find from the record that the Company Law Board definitely expressed the opinion that the original permission or

withdrawal of any objection to the functioning of the appellant as Managing Director, enured for the benefit of this resolution also. Hence, it is very

likely that the appellant thought, bona fide, that he could function as Managing Director on the new jural basis, approved as the resolution had been

by the explicit intimation of the Company Law Board. But, even so, the injunction stood unmodified and was unqualified in its terms and his duty,

particularly as an Advocate, whose very profession is the learned one of co-operating in the administration of justice and ensuring the spirit of the

rule of law, enjoined upon him the task of acquainting the Court with the facts and obtaining a modification of the injunction.

He did not do this, but acted against the injunction and was hence convicted of contempt of Court, even if the basis be technical. As was

pointed out in a very early case, Stockes v. Banbury Board of Health Equity Cases 42, and we do not think that the pith and substance of the

matter could be expressed in more adequate terms:

...the simple and only view is that an order must be obeyed and that those who wish to get rid of that order must do so by the proper course, an

appeal. So long as it exists, the order must be obeyed ,and obeyed to the letter, and any who does not obey it to the letter is guilty of committing

wilful breach of it, unless there be some misapprehension which all mankind are subject to and which may mislead him (concerned individual) upon

a plain reading of the order.

In the present case, it is not the order which misled the appellant, and that is not in dispute. It is clear and unambiguous, both in the context of

facts in which the order was passed, and in its terms. But what might have presumably misled the individual concerned was the vigour of the

subsequent events, such as the new Articles of Association, a fresh resolution of the Board and the approval of that resolution, and he might have

bona fide thought that there was a new jural basis, not within the mischief of the original injunction, on which he could function. But we must repeat

that if he felt thus, it was his duty to have brought the facts to the knowledge of the Court, and to have prayed for a modification or cancellation of

the injunction, under the terms of the rule. He ought not to have taken upon himself the grave responsibility of flouting the injunction, thinking that

the breach would only be technical.

The appellant is an young man, with about eight years experience at the Bar. After finding him guilty of contempt of Court, the learned Judge

(Kailasam, J) has imposed on him a fine of Rs. 1,000, taking the view that this is a wilful breach. We are of the view that there are extenuating

circumstances, and that there may be a large element of bona fides, in the misapprehension in the mind of the appellant about his further plain duty,

both to himself and to Court. The appellant has today filed an affidavit before us, not merely expressing regret for his conduct, but acknowledging

that the error was a grave one which amounted in fact to contempt of Court, and tendering an unconditional and unqualified apology for his

conduct, and throwing himself on the mercy of the Court. In our view, having regard to the circumstances of the standing, knowledge and

experience of the appellant, and his present apology, the interests of justice do not require that he should be mulcted in fine. He has already learned

his lesson. We accept the unqualified apology, and hold that he has thereby purged himself of the contempt which he has committed. The appeal is

allowed to this extent. No costs. The fine if paid will be refunded.

We need not express any further view. But since the learned Counsel have invited us to do so, we are doing so here, that it follows, without the

need to state it, that the appellant ought not to function a moment further as Managing Director of the firm in the light of the existing absolute

injunction. If he desires to so function on any alleged new jural basis, he has a to move the Sub-Court under the relevant rule for modification, or

cancellation of the injunction. Needless to say, any such application has to be subject to all such objections that may be raised thereto by the other

party.