The Delhi High Court has advised the courts to maintain a balanced, sensible and thoughtful approach, without being overly reactive or excessively sensitive, while dealing with civil contempt cases.
Noting that civil contempt cases had a partly criminal nature since being found guilty could result in penalties, including imprisonment, the single-judge Bench of Justice Hari Shankar recently said that courts must act carefully when deciding if contempt had occurred in a case.
The High Court said that courts should always grant parties an opportunity to rectify their mistakes to rid themselves of contempt action. If a party continued to disobey court orders despite the opportunity, the court, assuming their actions to be intentional, can proceed with contempt actions.
Civil contempt actions also partook a quasi-criminal character inasmuch as if contempt was found to have been committed, the punishment may entail loss of liberty, it added. Therefore, the courts should be cautious while arriving at findings of commission of contempt. A sensible and reasonable verdict was key to handling contempt cases appropriately. Sensitivity has to be eschewed in such matters, it added.
It said in order to ascertain whether an act was a contempt or not, the allegations for violation should be clear and unambiguous.
The single-judge Bench said that ambiguity in the direction or the order, of which disobedience had been alleged, if found to exist, was an absolute defence to a contempt action. The possibility of the order being amenable to more than one interpretation was equally fatal to a plea of contempt, it added.
The Bench noted that every disobedience or breach of an order passed by a court, could not fall under the category of contempt. Intent was the essence of contempt. Sans intent, there could be no contempt.
The High Court made the observation, while dismissing a contempt petition filed by Canadian giant Viterra BV against a company called Sharp Corp Limited.
Viterra had accused Sharp of deliberately and willfully disobeying a sinbgle-judge order issued on June 3, 2022, in a case related to arbitration. The matter pertained to the sale of a property located in Siraspur, New Delhi, which was allegedly covered by an injunction preventing its sale or transfer to third parties.
Viterra claimed in its plea that the sale of this property in November 2022 violated the court’s order, which restrained such transactions.
Respondent (Sharp), on the other side, argued that the sale was lawful because the property was subject to a “prior right” of the State Bank of India (SBI) rather than being mortgaged or pledged. The SBI confirmed that the property was not mortgaged but acknowledged financial dealings involving the respondent company.
Submitting that no valid charge or mortgage over the property existed, the petitioner contended that that the respondents’ actions constituted a breach of the court’s injunction.
Sharp responded by asserting that the property sale was in compliance with existing financial agreements and did not violate the court’s directive.
The High Court observed that the essence of contempt of court was a disdain and disrespect for the court, and the subsequent acts by a party that reflected this attitude.
Mentioning Section 2 (b) of the Contempt of Courts Act, 1971, the single-judge Bench said “civil contempt” was defined under the Section as a “wilful disobedience to any judgement, decree, direction, order, writ or other process of court or wilful breach of an undertaking given to a court.”
Noting that disobedience of an order of a court did not become contempt unless it was done wilfully, the single-judge Bench said that the expression ‘wilful’ has to be understood in the context of the understanding of contempt of court as an attitude or an act, which belittled or undermined the need to comply with court directives.
The duty to respect orders and directives of the court, and to honour undertakings tendered before court, included a positive obligation to do so, it added.
Dismissing the contempt petition against Sharp Corp for selling the Siraspur property, the High Court ruled that no deliberate violation of the court’s order dated June 3, 2022, had occurred.
It said the sale of the property was found to be carried out to meet pre-existing financial obligations to banks, as documented by various supporting records.
The Siraspur property was under the banks’ charge. Sharp Corp acted in good faith to comply with its financial commitments. The sale proceeds were used exclusively for repaying loans, with no misappropriation by the company, the Court recorded in its order.