ECLGS Scheme: Calcutta High Court Pulls Up Govt Company For Defying Its Directions

The Calcutta High Court has recently slammed the National Credit Guarantee Trustee Company Ltd. set up by the Union Finance Ministry for its "contumacious conduct" to defy Court's order requiring consideration of petitioner, a food and lodging business, for the benefit of an Emergency Credit Line Guarantee Scheme (ECLGS).

A single-judge bench of Justice Moushumi Bhattacharya sternly remarked,

The conduct is clear, the alleged contemnors sat by and waited for the time to pass so that the judgment and order became infructuous and the petitioners deprived of its right even to contest the appeal on merits. The power of the Court in contempt jurisdiction to pass orders is an inherent power…the Court can exercise the power to vindicate its own dignity and to shield those who are entrusted to its care...

The petitioners, through the initial writ petition sought to avail the benefit of ECLGS and the Court vide judgement dated 30^th March 2023 disposed of that petition by directing the respondent-Company to consider grant of the Scheme to the petitioners according to the RBI’s guidelines and subject to its own terms and conditions.

The respondent preferred an appeal whereby the division-bench passed an interim injunction order and directed the petitioners to not take any coercive steps in accordance with the single bench order. However, meanwhile, the respondent itself issued a notice to the petitioner under the Security Interest (Enforcement) Rules. 2002 for a public sale of the assets of the petitioners, which consisted of their flats and office spaces.

The petitioners had brought this to the notice of the Division Bench which ultimately vacated the interim protection given to respondent and observed that the respondent “ought not to have proceeded in such a manner by taking advantage of an interim order.”

Since the interim protection stood vacated, the petitioners approached the Court through instant contempt petition accusing the respondents of disobeying the single bench order.

Observations of the Court

Finding the conduct of respondents "contumacious", Justice Bhattacharya directed them to forthwith consider the eligibility of the petitioners in regard to the Scheme by 3pm on 28^th June 2023, and to communicate their decision to the petitioner by 8pm on the same day.

The Bench observed:

“The alleged contemnors in the case have sought to emasculate the directions of this Court by a subtle and not-so-subtle defiance of the orders but wilful and deliberate on all counts. This Court is satisfied that appropriate orders may be passed on the alleged contemnors to uphold the dignity of this Court."

It added, "Litigants who seek refuge in Court processes must be reassured that the Court does not simply sit by when those who defy it go free: Jennison vs. Baker, (1972) 1 All ER 997. In the words of Lord Denning (“The Due Process of Law”), the process of contempt of court is designed to secure that every person has a fair trial where the Court condemns any conduct which tends to prejudice a fair trial – “The Court will restrain it by injunction beforehand or by punishment afterwards.”

Coram: Justice Moushumi Bhattacharya

Case: Guha Roy Food Joint and Hotel Private Limited & Anr. v. Richa Singh & Ors

Citation: 2023 LiveLaw (Cal) 175

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