A compromise, as is well known, is an agreement between the parties with the seal of the Court super-added to it. A consent decree, therefore, is not a decree in its true sense. It would not even attract the principles of res judicata. See Baldevdas Shivlal and Anr. v. Filimistan Distributors (India) P.Ltd. & Prs.7), .
18. There exists a distinction between an undertaking given to a party to the lis and an undertaking given to a Court.
19. An undertaking given to a Court attracts the provisions of the Contempt of Courts Act, whereas an undertaking given to a party to the lis by way of an agreement of settlement or otherwise would not attract the provisions of the said Act.
Having considered the matter, this Court is of the opinion that in the instant case no proceeding under the Contempt of Courts Act should be initiated. The undertaking given before this Court is qua the party to the lis and not qua the Court and in that view of the matter, no case for initiation of proceedings under the Contempt of Courts Act having been made out. The same view has been taken by two learned Judges of this Court in Urmila Salwan and Ors. v. Kasturi Lal Bhatia, 1999 IV AD (Delhi) 805 and Indian Overseas Bank's case (Supra)
Delhi High Court
Hindustan Motors Ltd. vs Amritpal Singh Nayar And Anr. on 31 May, 2002
Equivalent citations: 100 (2002) DLT 278, 2002 (64) DRJ 394
Bench: S.B. Sinha, C.J.
1. Whether a contempt petition would be maintainable for breach of an undertaking on the part of a party to a proceeding on failure to comply with the terms of compromise arrived at by and between the parties to the lis is the question involved in this petition.
BACKGROUND FACTS :-
2. A suit was filed by the petitioner herein the Court of Senior Sub Judge, Tis Hazari Courts, Delhi being suit No. 91 of 1999. An agreement for settlement (in short, 'the said agreement') was entered into between the parties thereto wherefor an application in terms of Order XXIII, Rule 3 of the Civil Procedure Code (in short, 'CPC') was filed in terms whereof the suit was decreed stating :-
"28.5.99
Statement of Sh. Manu Nayyar, Counsel for plaintiff have compromised the matter with the Defendant in terms of agreement for settlement dated 26.5.99, the same in Ex. C.A. As accordingly requested to dispose off the suit in terms of the compromise as arrived at between the parties.
CJ/DELHI
28.5.99"
"Statement of Sh. A. Sinha, Advocate for Defendant. I admit the statement of counsel for plaintiff. The same is correct. Defendants are bound to Ex C-A. Agreement for settlement has already Ex C-A signed by the Defendant at point - A.
CJ/DELHI
28.8.99"
Order
File is taken up today an application Order 23 Rule 3 CPC.
Ld. Counsel for parties. Memo of appearance filed on behalf of the Plaintiff. I have gone through the statement of Ld. Counsel for parties and Ex C-A. In view of the statement given by the Counsel for parties and Ex C-A, the suit of Plaintiff is disposed off as compromised. Parties shall be bound by their statements. No order as to costs. File be consigned to R/R. The date of 2.7.99 is cancelled.
CJ/DELHI
28.5.99"
3. The petitioner alleged that the alleged contemner despite an undertaking made in the said agreement having failed and/or neglected to comply therewith has committed contempt of this Court.
4. The relevant clauses of the said agreement are as under :-
"2. That the PARTIES OF THE FIRST PART have undertaken to pay a part of the balance amount of Rs.32.00 viz a sum of Rs.23.90 lakhs within six months in two Installments, i.e., Rs.11.95 lakhs by each Installment and accordingly in discharge of their liabilities towards the part of the balance amount of Rs.32.00 lakhs have issued two post dated cheques each of Rs.11.95 lakhs vide Cheque Nos. 434875 & 434876 both dated 26.11.1999 and drawn on Punjab and Sind Bank, Kirti Nagar, New Delhi.
4. That the PARTIES OF THE FIRST PART have assured the PARTIES OF THE SECOND PART that under no circumstances, the aforesaid four post dated cheques would be dishonoured when those cheques would be presented on or after the dates mentioned in the respective cheques within the period of validity of those cheques."
6. That the parties hereto agree to file an application under Order XXIII, Rule 3 of the Civil Procedure Code annexing therewith this Agreement for Settlement and praying for disposal of the said suit in terms of this Agreement for Settlement. {PARTIES OF THE FIRST PART have also undertaken to withdraw the Civil Suit pending in the Court of Shri. B.S. Chumbak, Learned Civil Judge, Tis Hazari Courts, Delhi by filing an application either severally or jointly in terms of this Agreement for Settlement.} The PARTIES OF THE FIRST PART have also informed the PARTY OF THE SECOND PART that they have not filed any other suit or suits against the PARTY OF THE SECOND PART nor any other proceeding is pending against the PARTY OF THE SECOND PART at the instance of the PARTIES OF THE FIRST PART in any court of law with regard to the Lease Agreement of the said premises."
5. The said agreement thus provides that the parties had agreed to file an application under Order XXIII, Rule 3 of the CPC for disposal of the suit in terms thereof.
6. The petitioner states that despite the said undertaking, the cheques issued by the alleged contemner were dishonoured. It is accepted that prior to filing of the contempt petition, a notice was served upon the alleged contemner stating :-
"14. Whereas the aforesaid four cheques dated 26.11.99 being cheques Nos. 434875 and 434876, 434877 and 434878 were drawn by you and your husband in favor of our client for the discharge of respective liabilities to return the moneys paid by our client to you and your husband under the said Lease Agreement and you respective liabilities under the Settlement of Agreement dated 26.5.99,and whereas the said cheques have been returned by your bank as unpaid on account of insufficient funds, our client is hereby serving you and your husband with a notice under Section 138 of the Negotiable Instruments Act, 1881 calling upon you to pay to our client the said amounts of Rs.11,95,000/- and Rs.4,05,000/- by each one of you separately within a period of 15 days from the receipt of the present notice by you, failing which you and your husband shall be deemed to have committed the offence under Section 138 of the Negotiable Instruments Act, 1881 and for which our client will take appropriate criminal legal action against you and your husband in accordance with law.
15. We further state on behalf of our client that the aforesaid dishonour of cheques is also in breach of solemn undertaking given to the learned Senior Sub Judge, Tis Hazari Courts, Delhi, in Suit No. 91 of 1999 by you and your husband and amounts to contempt of the Hon'ble Court's order dated 28.5.99 You and your wife are also put on notice that unless you and your wife take immediate steps to rectify the said breach by making payment of the dishonoured cheques amount of our client, our client will also institute proceedings for contempt of Court against you and your wife in the Court of the Senior Sub Judge, Tis Hazari Courts, Delhi."
3. SUBMISSIONS :-
7. Mr. Rajiv Nayyar, the learned senior counsel appearing on behalf of the petitioner, would contend that the cheques issued by the respondents having been dishonoured, the same would amount to breach of undertaking made before this Hon'ble Court and thus the contemner is liable to be punished for gross disobedience of this Court's Order. In support of the said contention, reliance has been placed on Bajranglal Gangadhar Khemka and Anr. v. Kapurchand Ltd., A.I.R. (37) 1950 Bombay 336 and Salkia Businessmen's Association and Ors. v. Howrah Municipal Corporation and Ors.,
8. Mr Sunil Rajpal, the learned counsel appearing on behalf of the alleged contemner, on the other hand, would submit that the remedy of the petitioner would be to execute the decree. It has been pointed out that for alleged failure on the part of the alleged contemner to comply with the provisions of Negotiable Instruments Act, criminal proceedings have already been initiated under Section 138 thereof and the criminal cases are pending.
9. The learned counsel would contend that in a case of this nature, a contempt proceeding would not be maintainable.
10. In support of the aforesaid contentions, reliance has been placed on Jaywantraj Punamiya and Ors. v. H. Choksi & Co. Pvt. Ltd., ; Babu Ram Gupta v. Sudhir Bhasin and Anr.,
; R.N. Dey and Ors. v. Bhagyabati Pramanik and Ors., ; Indian Overseas Bank v. Lalit Kumar Aggarwal and Anr., 2000 VI AD (Delhi) 1198; and an unreported order of this Court passed in CCP No. 305/99 in Lalit & Co. v. Business Efficiency Service India Pvt. Ltd. and Anr. decided on 22.02.2001.
4. FINDINGS :-
11. 'Civil contempt' has been defined in terms of the provisions of the CPC as willful disobedience to any judgment decree or other process of a Court or willful breach of an undertaking given to a Court.
12. A contempt petition, as is well known, is not a substitute for execution proceedings.
13. Civil contempt involves the existence of the following conditions before a proceeding can be initiated under the said Act :-
(i) there must be a judgment or order or decree or direction or writ or other process of the Court;
(ii) an undertaking given to the judgment, etc. must be of an undertaking given to a Court;
(iii) there must be a disobedience of such judgment or breach of such undertaking;
(iv) the disobedience or the breach, as the case may be, must be willful.
In the instant case, no undertaking had been or could be given to the Court.
14. In Bajranglal Gangadhar Khemka's case (Supra), Chagla, C.J., however, observed:-
"3. Now, Mr. Desai before us has contended that no undertaking was given to the Court in respect of which committal proceedings could be taken out. He says that the undertaking referred to in the decree was merely a solemn promise given by his clients to the other side. Mr. Desai has argued that no undertaking to the Court can be given where an action is compromised and where the Court is bound under Order 23, Rule 3, to record the compromise and to pass a decree in terms of the compromise. Mr. Desai says that the Court is not interested in what terms the parties have agreed to; the parties may agree to any terms, and if they are sui Jurisdiction, the Court is bound to pass a decree in terms of the consent terms may provide for an undertaking by oe party, such an undertaking can never be construed as in undertaking to the Court. Mr. Desai's contention is that it is only when the Court is interested in passing a decree in a particular form, or is entitled to scrutinize the terms of the compromise, that the Court can insist upon an undertaking being given to it or the parties can give an undertaking to the Court. Such an eventuality, according to Mr. Desai, would only arise in cases where one of the parties was a minor or where charity was interested. Then the Court would have to sanction the terms of the compromise, and before the Court would sanction the compromise the Court may insist upon a particular undertaking or undertakings being given by party to the suit. In this case, says Mr. Desai, the parties were at liberty to agree to any terms that they thought were proper, and the Court had no voice whatever in dictating to the parties how they should settle their disputes; and therefore, according to Mr. Desai, the undertaking referred to in the consent terms was not an undertaking to the Court.
5. It is necessary to understand what the true nature of the committal proceedings is in a case like this. As pointed out by Oswald on Contempt of Court, an undertaking entered into or given to the Court by a party or his counsel or solicitor is equivalent to and has the effect of an order the Court. So far as any infringement thereof may be made the subject of an application to the Court to punish for its breach. Therefore, when an undertaking is given by a party to the Court, it becomes an order of the Court and a particular mode is prescribed for enforcing that particular order. That mode is that proceedings for contempt can be taken out for the enforcement of that order. Therefore, if we find in the case that an undertaking was given by the party to the Court resulting in that undertaking becoming an order of the Court, then it would be opend to the party aggrieved by the non-compliance with the order to come to Court and ask for committal of the party in default. Therefore, what we have to really consider is whether in fact, the plaintiffs gave an undertaking to the Court, and that we can only decide by looking at the consent decree itself.
6. It is necessary to look first at the scheme of the consent terms. We have first seven clauses which all deal with agreements between the parties. Each clause begins with the expression "Agreed". Then we come to Clause 8, which begins by saying "Ordered that the defendants do execute the said lease within a period of 2 months from the date hereof." Therefore, "Ordered" is used here in contradistinction to an agreement. Whereas the first seven clauses merely recorded an agreement between the parties, Clause 8 requires an order of the Court, which would be an executable order. And it is in this clause that the undertaking given by the defendants is incorporated. Therefore, Clause 8, on the face of it, was not dealing with any agreement between the parties at all. What the parties intended- and that intention is clear from the language used in Clause 8 itself--was that, with regard to a particular subject-matter dealt with in Clause 8, an order of the Court should be obtained. And that clasue deals with two matters; one was the execution of the lease by the defendants themselves which they were ordered to do, and the other was that they undertook to get the Paradise Cinema, Limited, to join as a confirming party to the lease. In our opinon, the second part fo Clasue 8 was as much an order of the Court as the first. The necessity for suing the expression "undertake" will become clear when one realizes that a mere lease executed by the defendants would not have been of much avail to the plaintiffs, because, as I pointed out earlier, the defendants had already transferred the income for fifteen years of the property in suit to the Paradise Cinema, Limited. Therefore, it was necessary in the interests of the plaintiffs that they should get the Paradise Cinema, Limited, to confirm the lease. It is because of the importance of the defendants getting the Paradise Cinema, Limited, to join in the lease that the parties advisedly used the expression "undertake."
(Underlining is mine for emphasis)
15. In the factual backdrop of that case, therefore, an order was passed by the Court.
16. In terms of Order XXIII, Rule Court has merely to satisfy itself that the compromise entered into by an between the parties is not unlawful. In the event, the Court satisfies itself that such a compromise had been arrived at, the same can be recorded. The Court, therefore, in a case of this nature has no jurisdiction to go beyond the compromise and direct the parties to do something, which is not contemplated under the agreement itself.
17. A compromise, as is well known, is an agreement between the parties with the seal of the Court super-added to it. A consent decree, therefore, is not a decree in its true sense. It would not even attract the principles of res judicata. See Baldevdas Shivlal and Anr. v. Filimistan Distributors (India) P.Ltd. & Prs.7), .
18. There exists a distinction between an undertaking given to a party to the lis and an undertaking given to a Court.
19. An undertaking given to a Court attracts the provisions of the Contempt of Courts Act, whereas an undertaking given to a party to the lis by way of an agreement of settlement or otherwise would not attract the provisions of the said Act.
20. In Babu Ram Gupta's case (Supra), it was held:-
"10...Apart form this, even the consent order does not incorporate expressly or clearly that any such undertaking had been given either by the appellant or by his lawyer before the Court that he would hand over possession of the property to the receiver. In the absence of any express undertaking given by the appellant or any undertaking incorporated in the order impugned, it will be difficult to hold that the appellant willfully disobeyed or committed breach of such an undertaking. What the High Court appears to have done is that it took the consent order passed which was agreed to by the parties and by which a receiver was appointed, to include an undertaking given by the contemner to carry out the directions contained in the order. With due respects, we are unable to agree with this view taken by the High Court. A few examples would show how unsustainable in law the view taken by the High Court is. Take the instance of a suit where the defendant agrees that a decree for Rs. 10,000 may be passed against him and the court accordingly passes the decree. The defendant does not pay the decree. Can it be said in these circumstances that merely because the defendant has failed to pay the decretal amount he is guilty of contempt of court? The answer must necessarily be in the negative. Take another instance where a compromise is arrived at between the parties and a particular property having been allotted to A, he has to be put in possession thereof by B. B does not give possession of this property to A. Can it be said that because the compromise decree has not been implemented by B, he commits the offence of contempt of court? Here also the answer must be in the negative and the remedy of A would be not to pray for drawing up proceedings for contempt of court against B but to approach the executing court for directing a warrant of delivery of possession under the provisions of the Code of Civil Procedure. Indeed, if we were to hold that non-compliance of a compromise decree or consent order amounts to contempt of court, the provisions of the Code of Civil Procedure relating to executing 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 not disrepute the judicial institution. The same cannot, however, be said of a consent order or a compromise decree where the fraud, if any, is practiced 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. In these circumstances, we are satisfied that unless there is an express undertaking given in writing before the court by the contemner or incorporated by the court in its order, there can be no question of willful disobedience of such an undertaking. In the instant case, we have already held that there is neither any written undertaking filed by the appellant nor was any such undertaking impliedly or expressly incorporated in the order impugned. Thus, there being no undertaking at all the questions of breach of such an undertaking does not arise."
21. In R. N. Dey's case (Supra) , the Apex Court held that the contempt is a matter between the Court and the contemnor and the aggrieved had no right that the Court should exercise its jurisdiction.
22. Having considered the matter, this Court is of the opinion that in the instant case no proceeding under the Contempt of Courts Act should be initiated. The undertaking given before this Court is qua the party to the lis and not qua the Court and in that view of the matter, no case for initiation of proceedings under the Contempt of Courts Act having been made out. The same view has been taken by two learned Judges of this Court in Urmila Salwan and Ors. v. Kasturi Lal Bhatia, 1999 IV AD (Delhi) 805 and Indian Overseas Bank's case (Supra)
23. Reliance placed by Mr. Nayyar on Salkia Businessmen's Association's case (Supra) is misplaced. Therein a writ petition has been filed. The fact of the case was that the right of the party had been taken away by reason of a compromise in a writ petition and it was held by the High Court that a subsequent writ petition would not be maintainable. The Apex Court held that the public authorities cannot be encouraged to implement their own orders an to invent methods of their own to short-circuit and give a go-bye to the obligations and liabilities incurred by them under orders of the Court and is the same is permitted to be done, the rule of law will certainly become a casualty in the process.
24. The question in this case is as to whether a case for initiation of proceedings under the Contempt of Courts Act has been made out or not and not whether this Court should exercised its jurisdiction under Article 226 of the Constitution of India or not. Both the questions stand on different footings.
25. In Lalit & Co.'s case (Supra) , another learned Single Judge of this Court observed:-
"During the pendency of the suit for possession, the parties entered into a compromise and compromise application under the provisions of Order 23 Rule 3 CPC was filed by the parties. Statements of the parties in support of application were also recorded. After recording statements of the parties, the Court passed a decree on the basis of compromise arrived at between the parties. This petition for initiating contempt against the respondent has now been filed alleging inter alia that the respondents have not complied with the terms of the decree and, therefore, they have made themselves liable to be proceeded for having committed contempt. A perusal fo the decree and statements recorded by the Courts shows that no undertaking whatsoever was given by the respondent and the Court had passed decree on the basis of the application filed by the parties under the provisions of Order 23 rule 3 CPC. In my view, in case any of the terms of the decree have not been complied with by the respondents, the petitioner can have his remedies as may be permissible in law but the present petition for contempt cannot be entertained as the contempt proceedings cannot be a substitute to execution proceedings. With these observations, the present petition for contempt is dismissed."
26. For the views I have taken, it not necessary for this Court to go into the question as to whether the agreement amounted to a contingent contract or not.
27. For the afore-going reasons, I am of the opinion that no case has been made out for initiation of proceedings under the Contempt of Courts Act.
28. The parties, however, may take recourse to the remedy available in accordance with law. In the facts and circumstances of the case, this petition is dismissed with costs, which is quantified at Rs. 5,000/-
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