Wilful Breach Of Undertaking Given To Court Is Contempt: Supreme Court

The Supreme Court observed that the wilful breach of the undertaking given to the Court can amount to Contempt under Section 2(b) of the Contempt of Courts Act.

An undertaking given by a party should be seen in the context in which it was made and (i) the benefits that accrued to the undertaking party; and (ii) the detriment/injury suffered by the counter party, the bench comprising Justices Indira Banerjee and V. Ramasubramanian observed.

The bench, however, expressed its doubt about the observation made in an earlier judgment that there is no distinction between wilful violation of the terms of a consent decree and wilful violation of a decree passed on adjudication. 

In this case, the Delhi High Court had held a husband and wife guilty of committing contempt of Court and sentenced them to simple imprisonment for three months along with a fine of Rs.2000. The proceedings were initiated by the Court in view of breach of an undertaking given by them to Court,while obtaining conditional order of stay.

Their contentions before the Apex Court in appeal were: (i) that the failure of a party to comply with an undertaking, on the basis of which a conditional order of stay was granted, cannot be treated as a wilful disobedience warranting the invocation of the contempt jurisdiction; (ii) that the failure of the petitioners to honour the undertaking cannot be taken to substantially interfere with the due course of justice and, hence, the case would fall under Section 13(a) of the Act; (iii) that when an order indicates the consequences of the failure of a party to comply with a condition or honour the undertaking, the invocation of the contempt jurisdiction may not be appropriate; and (iv) that in any case if the defaulting party has relied upon an interpretation of the order that the consequences of failure are already inbuilt in the order, such an understanding of the order is to be treated as reasonable and rational and he cannot be held guilty of contempt

"16. It is true that this Court has held in a series of decisions that the wilful breach of the undertaking given to the Court amounts to contempt of Court under Section 2(b) of the Act. But the Court has always seen (i) the nature of the undertaking made; (ii) the benefit if any, reaped by the party giving the undertaking; and (iii) whether the filing of the undertaking was with a view to play fraud upon the court or to hoodwink the opposite party."

Doubts Rama Narang Judgment

The court noted that in Babu Ram Gupta vs. Sudhir Bhasin, the court had noted the distinction between an order passed on consent terms and an order passed solely on the basis of an undertaking given to court and the distinction between a person playing fraud on the court thereby obstructing the course of justice and a person playing fraud on one of the parties. Referring to another judgment in Rama Narang vs. Ramesh Narang  the court observed:

"In Rama Narang (supra), this Court pointed out the distinction between two categories of cases covered by Section 2(b) of the Act namely (i) wilful disobedience to a process of court; and (ii) wilful breach of an undertaking given to a court...This Court went to the extent of holding that it would neither be in consonance with the statute, judicial authority, principle or logic to draw any distinction between the wilful violation of the terms of a consent decree and wilful violation of a decree passed on adjudication. We have our own doubts whether the first category of cases covered by Section 2(b) can be stretched so far. Anyway, that question does not arise in this case and hence we leave it at that.", the bench said.

An act of contempt cannot simply be based upon the subsequent conduct

The bench further observed that an undertaking given by a party should be seen in the context in which it was made and (i) the benefits that accrued to the undertaking party; and (ii) the detriment/injury suffered by the counter party.

"It is also true that normally the question whether a party is guilty of contempt is to be seen in the specific context of the disobedience and the wilful nature of the same and not on the basis of the conduct subsequent thereto. While it is open to the court to see whether the subsequent conduct of the alleged contemnor would tantamount to an aggravation of the contempt already committed, the very determination of an act of contempt cannot simply be based upon the subsequent conduct.. But the subsequent conduct of the party may throw light upon one important aspect namely whether it was just the inability of the party to honour the commitment or it was part of a larger design to hoodwink the court.", it added.

Taking note of the facts of the case, the bench observed that it is unable to find fault with the High Court holding the petitioners guilty of contempt. The court therefore upheld the finding of guilt, but ordered reduction of the period of sentence from three months to the period of imprisonment already suffered/undergone.

Case: Suman Chadha vs. Central Bank of India ; SLP(C) 28592 of 2018

Citation: LL 2021 SC 363

Coram: Justices Indira Banerjee and V. Ramasubramanian

Counsel: Adv Santosh Kumar for petitioner, Adv Anuj Jain for respondent

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