# RAMA NARANG v. RAMESH NARANG AND OTHERS

- **Citation:** [2021] 1 S.C.R. 389
- **Court:** Supreme Court of India
- **Decided:** 2021-01-19
- **Case number:** Civil Appeal No. 366 of 1998
- **Bench:** A. M. Khanwilkar, B. R. Gavai
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/rama-narang-v-ramesh-narang-and-others-34664
- **Pages:** 54

## Headnote

Contempt of Courts Act, 1971: s.2(b) - Contempt proceedings
- Scope of - Violation of Consent Order - Petitioner and his sons
(respondents) were the only Directors of a company - Dispute
between petitioner and respondent-sons - Purported settlement of
the dispute in terms of Consent Order recorded in orders dated 12th
December 2001 and 8th January 2002, of the Supreme Court -
Petitioner-father filed contempt petition alleging that respondentsons had violated the terms of the Consent Order - By judgment
dated 15th March, 2007, Supreme Court held respondents guilty of
contempt - Respondents filed Company Petition before the Company
Law Board (CLB), whereupon CLB passed interim order dated 10th
April 2008 - Petitioner filed instant contempt petition alleging that
the order of CLB was violative of the order of Supreme Court dated
15th March 2007 - Whether invoking the jurisdiction of CLB and
entertaining of said proceedings by CLB amounted to contempt -
Held: A person does not commit contempt of court if during pendency
of certain proceedings, he takes recourse to other judicial
proceedings open to him, even though the latter proceedings puts
the other party at a loss - On facts, respondents thought it prudent
to approach CLB by invoking its powers u/ss.397, 398 and 403 of
the Companies Act - Respondents took recourse to legal remedy
available to them under the statutory provisions in compelling
circumstances to safeguard the interest of the Company and its
stakeholders - Petitioner failed to make out a case of wilful,
deliberate and intentional disobedience of any of the directions
 [2021] 1 S.C.R. 389
389
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given by Court or acting in breach of undertaking given to Court -
Contempt Petition accordingly dismissed - Companies Act, 1956 -
ss.397, 398 and 403.
Contempt of Court: Contempt proceedings - Nature and scope
of - Held: The contempt proceedings are quasi-criminal in nature
and the standard of proof required is in the same manner as in the
other criminal cases - The alleged contemnor is entitled to protection
of all safeguards/rights which are provided in the criminal
jurisprudence, including the benefit of doubt -Punishment under
the law of contempt is called for when the lapse is deliberate and in
disregard of one's duty and in defiance of authority.
Contempt of Court: Contempt proceedings - Difference from
execution proceedings - Held: Contempt proceeding is not like an
execution proceeding under the Code of Civil Procedure - Before
punishing the contemnor for non-compliance of decision of the
Court, the Court must not only be satisfied about the disobedience
of any judgment, decree, direction, writ or other process but should
also be satisfied that such disobedience was wilful and intentional
- The civil court however, while executing a decree against the
judgment-debtor is not concerned and bothered as to whether the
disobedience to any judgment or decree was wilful and once the
decree had been passed, it is the duty of the court to execute the
decree, whatever may be the consequences thereof - Code of Civil
Procedure - Execution.
Jurisdiction: Jurisdiction of the Court to pass interim orders
pending decision on question of its' jurisdiction - Held: Even if
objection is raised to the jurisdiction of a forum, it has jurisdiction
to pass interim orders till it finally decides the issue of jurisdiction
and such orders are binding on the parties till the issue of
jurisdiction is decided - If the Court holds that it has no jurisdiction,
it is open to it to modify the orders - However, while in force, the
interim orders passed by such Court have to be obeyed and their
violation can be punished even after the question of jurisdiction is
decided against the plaintiff, provided violation is committed before
the decision of the Court on the question of jurisdiction - Judgment
/Order - Interim Order.
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Civil Contempt: Wilful disobedience or wilful breac

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RAMA NARANG
v.
RAMESH NARANG AND OTHERS
Contempt Petition (Civil) No. 92 of 2008
In
Contempt Petition (Civil) No. 148 of 2003
In
Civil Appeal No. 366 of 1998
JANUARY 19, 2021
[A. M. KHANWILKAR AND B. R. GAVAI, JJ.]
Contempt of Courts Act, 1971: s.2(b) - Contempt proceedings
- Scope of - Violation of Consent Order - Petitioner and his sons
(respondents) were the only Directors of a company - Dispute
between petitioner and respondent-sons - Purported settlement of
the dispute in terms of Consent Order recorded in orders dated 12th
December 2001 and 8th January 2002, of the Supreme Court -
Petitioner-father filed contempt petition alleging that respondentsons had violated the terms of the Consent Order - By judgment
dated 15th March, 2007, Supreme Court held respondents guilty of
contempt - Respondents filed Company Petition before the Company
Law Board (CLB), whereupon CLB passed interim order dated 10th
April 2008 - Petitioner filed instant contempt petition alleging that
the order of CLB was violative of the order of Supreme Court dated
15th March 2007 - Whether invoking the jurisdiction of CLB and
entertaining of said proceedings by CLB amounted to contempt -
Held: A person does not commit contempt of court if during pendency
of certain proceedings, he takes recourse to other judicial
proceedings open to him, even though the latter proceedings puts
the other party at a loss - On facts, respondents thought it prudent
to approach CLB by invoking its powers u/ss.397, 398 and 403 of
the Companies Act - Respondents took recourse to legal remedy
available to them under the statutory provisions in compelling
circumstances to safeguard the interest of the Company and its
stakeholders - Petitioner failed to make out a case of wilful,
deliberate and intentional disobedience of any of the directions
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given by Court or acting in breach of undertaking given to Court -
Contempt Petition accordingly dismissed - Companies Act, 1956 -
ss.397, 398 and 403.
Contempt of Court: Contempt proceedings - Nature and scope
of - Held: The contempt proceedings are quasi-criminal in nature
and the standard of proof required is in the same manner as in the
other criminal cases - The alleged contemnor is entitled to protection
of all safeguards/rights which are provided in the criminal
jurisprudence, including the benefit of doubt -Punishment under
the law of contempt is called for when the lapse is deliberate and in
disregard of one's duty and in defiance of authority.
Contempt of Court: Contempt proceedings - Difference from
execution proceedings - Held: Contempt proceeding is not like an
execution proceeding under the Code of Civil Procedure - Before
punishing the contemnor for non-compliance of decision of the
Court, the Court must not only be satisfied about the disobedience
of any judgment, decree, direction, writ or other process but should
also be satisfied that such disobedience was wilful and intentional
- The civil court however, while executing a decree against the
judgment-debtor is not concerned and bothered as to whether the
disobedience to any judgment or decree was wilful and once the
decree had been passed, it is the duty of the court to execute the
decree, whatever may be the consequences thereof - Code of Civil
Procedure - Execution.
Jurisdiction: Jurisdiction of the Court to pass interim orders
pending decision on question of its' jurisdiction - Held: Even if
objection is raised to the jurisdiction of a forum, it has jurisdiction
to pass interim orders till it finally decides the issue of jurisdiction
and such orders are binding on the parties till the issue of
jurisdiction is decided - If the Court holds that it has no jurisdiction,
it is open to it to modify the orders - However, while in force, the
interim orders passed by such Court have to be obeyed and their
violation can be punished even after the question of jurisdiction is
decided against the plaintiff, provided violation is committed before
the decision of the Court on the question of jurisdiction - Judgment
/Order - Interim Order.
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Civil Contempt: Wilful disobedience or wilful breach - Court
has to record a finding that such a disobedience was wilful &
intentional - There must be a clear cut case of obstruction of justice
by a party intentionally - Where the court is satisfied that such
disobedience is the result of some compelling circumstances, under
which it is not possible for the contemnor to comply with the same,
the Court may not punish the alleged contemnor.
Dismissing the contempt petitions, the Court
HELD:1. For bringing an action under the ambit of civil
contempt, there has to be a wilful disobedience to any judgment,
decree, direction, order, writ or other process of a court or wilful
breach of an undertaking given to the court. [Para 48][422-G;
423-A]
2.1 Such action of a person which he takes in pursuance of
his right to take legal action in a court of law, will not amount to
interfering with the course of justice, even though that may
require some action on the part of the other party in connection
with his own judicial proceedings. The principle is, that a party is
free to take action to enforce his legal right. A person does not
commit contempt of court if during the pendency of certain
proceedings, he takes recourse to other judicial proceedings open
to him, even though the latter proceedings put the other party at
a loss. [Para 68][432-D-F]
2.2 In the instant case, the respondents had legitimately
approached the Company Law Board (CLB) invoking its
jurisdiction under Sections 397, 398 and 403 of the Companies
Act. The CLB had also passed interim orders in exercise of its
powers under Section 403 of the Companies Act. Merely taking
recourse to the statutory remedy available to the respondents
would not amount to contempt. It appears, that after the order
was passed by this Court holding the respondents guilty and
thereafter finding, that the present petitioner is not co-operating
with the respondents in running the affairs of the Company, but
on the contrary making every attempt to stall the functioning of
the Company; the respondents thought it prudent to approach
the CLB by invoking its powers under Sections 397, 398 and
403 of the Companies Act. The respondents had to take recourse
to that remedy in compelling circumstances to safeguard the
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interest of the Company and its stakeholders. [Paras 66, 71][431F-G; 433-D-F]
3. The contempt proceeding is not like an execution
proceeding under the Code of Civil Procedure. Though the parties
in whose favour, an order has been passed, is entitled to the
benefits of such order, but the Court while considering the issue
as to whether the alleged contemnor should be punished for not
having complied with and carried out the directions of the Court,
has to take into consideration all facts and circumstances of a
particular case. That is why the framers of the Act while defining
civil contempt, have said that it must be wilful disobedience of
any judgment, decree, direction, order, writ or other process of
the Court. Before punishing the contemnor for non-compliance
of the decision of the Court, the Court must not only be satisfied
about the disobedience of any judgment, decree, direction, writ
or other process but should also be satisfied that such
disobedience was wilful and intentional. Though, the civil court
while executing a decree against the judgment-debtor is not
concerned and bothered as to whether the disobedience to any
judgment or decree was wilful and once the decree had been
passed, it was the duty of the court to execute the decree,
whatever may be the consequences thereof. In a contempt
proceeding before a contemnor is held guilty and punished, the
Court has to record a finding, that such disobedience was wilful
and intentional. If from the circumstances of a particular case,
though the Court is satisfied that there has been a disobedience
but such disobedience is the result of some compelling
circumstances, under which it is not possible for the contemnor
to comply with the same, the Court may not punish the alleged
contemnor. [Para 73][435-D-H]
4. The contempt proceedings are quasi-criminal in nature
and the standard of proof required is in the same manner as in
the other criminal cases. The alleged contemnor is entitled to
the protection of all safeguards/rights which are provided in the
criminal jurisprudence, including the benefit of doubt. There must
be a clear-cut case of obstruction of administration of justice by a
party intentionally, to bring the matter within the ambit of the
said provision. Punishment under the law of contempt is called
for when the lapse is deliberate and in disregard of one's duty
and in defiance of authority. [Para 75][437-C-E]
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5.1 In the instant case, the petitioner has failed to make
out a case of wilful, deliberate and intentional disobedience of
any of the directions given by this Court or acting in breach of an
undertaking given to this Court. On the contrary, the respondents
had taken recourse to the legal remedy available to them under
the statutory provisions. [Para 76][437-C-G]
5.2 Where an objection is taken to the jurisdiction to
entertain a suit and to pass any interim orders therein, the Court
should decide the question of jurisdiction in the first instance.
However, that does not mean that pending the decision on the
question of jurisdiction, the Court has no jurisdiction to pass
interim orders as may be called for in the facts and circumstances
of the case. A mere objection to jurisdiction does not instantly
disable the court from passing any interim orders. It can yet pass
appropriate orders. Though, the question of jurisdiction should
be decided at the earliest possible time, the interim orders so
passed are orders within jurisdiction, when passed and effective
till the court decides that it has no jurisdiction, to entertain the
suit. Those interim orders would undoubtedly come to an end
with the decision that the Court had no jurisdiction. If the Court
holds that it has no jurisdiction, it is open to it to modify the
orders. However, while in force, the interim orders passed by
such Court have to be obeyed and their violation can be punished
even after the question of jurisdiction is decided against the
plaintiff, provided violation is committed before the decision of
the Court on the question of jurisdiction. [Paras 76-79][438-GH; 439-A-C]
6. In the facts and circumstances of the case, the CLB
considered it appropriate, that till the petition is disposed of, as
an interim measure, in the interest of the Company as well as
more than 3000 employees/workers, there should be a mechanism
by which day to day operations are carried out without any hitch.
The said order has not been challenged by the petitioner before
any forum. Any order passed by the CLB was appellable before
the higher forums. The petitioner has not challenged the said
order. Having not challenged the same, it is not open for the
petitioner to argue, that since the petitioner has taken objection
as to maintainability of the proceedings before CLB, the said
orders are without jurisdiction and the initiation of the proceedings
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and the orders passed thereon, would amount to respondent's
committing contempt of this Court. Even if the objection is raised
to the jurisdiction of a forum, it has jurisdiction to pass interim
orders till it finally decides the issue of jurisdiction and such orders
are binding on the parties till the issue of jurisdiction is decided.
However, it should not be construed, that the proceedings under
the CLB were maintainable in law. Since the proceedings are
pending final adjudication, the parties would be at liberty to raise
all issues available to them including the issue of jurisdiction.
Also, this is not a case wherein directions as sought, should be
issued under Article 142 of the Constitution. On Insolvency and
Bankruptcy Code 2016, coming in force, the proceedings which
are pending before the CLB, now stand transferred to the
National Company Law Tribunal (NCLT). It would be appropriate
for the parties to invoke the jurisdiction of NCLT for seeking
such orders as deemed fit in the facts and circumstances in
accordance with law. [Paras 81, 84][440-D-H; 441-C, F-H]
Pratap Singh and Another v. Gurbaksh Singh [1962]
SCR 2 Suppl. 838; Mehar Rusi Dalal (Mrs.) v. T.K.
Banerjee and Others (2004) 5 SCC 119; Niaz
Mohammad and Others v. State of Haryana and Others
(1994) 6 SCC 332 : [1994] 3 Suppl. SCR 720 ; Kanwar
Singh Saini v. High Court of Delhi (2012) 4 SCC 307 :
[2011] 15 SCR 972; Debabrata Bandopadbyay and
Others v. State of West Bengal and Another AIR 1969
SC 189 : [1969] SCR 304 and Tayabbhai M.
Bagasarwalla and Another v. Hind Rubber Industries
(P) Ltd. And Others (1997) 3 SCC 443 : [1997] 2
SCR 152- relied on.
Hrishikesh Sanyal v. A.P. Bagchi ILR 1940 All 710 and
Radhey Lal v. Niranjan Nath AIR 1941 All 95 - held
approved.
Rama Narang v. Ramesh Narang and Another (2006)
11 SCC 114 : [2006] 3 SCR 1068; Rama Narang (V) v.
Ramesh Narang and Another (2009) 16 SCC 126 :
[2007] 3 SCR 1099; Vijay Laxmi and Others v. Prabhu
Devi and Others (2017) 11 SCC 169; State Bank of
India v. Ajit Jain and Others (1995) 1 Suppl. SCC 683;
Re: Vinay Chandra Mishra (The Alleged Contemnor)
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(1995) 2 SCC 584 : [1995] 2 SCR 638; Sangramsinh
P. Gaekwad and Others v. Shantadevi P. Gaekwad
(Dead) Through LRs and Others (2005) 11 SCC 314 :
[2005] 1 SCR 624; and Kale and Others v. Deputy
Director of Consolidation and Others (1976) 3 SCC
119 : [1976] 3 SCR 202 - referred to.
Case Law Reference
[2006] 3 SCR 1068
referred to
Para 8
[2007] 3 SCR 1099
referred to
Para 11
[1997] 2 SCR 152
relied on
Para 39
(2017) 11 SCC 169
referred to
Para 40
(1995) 1 Suppl. SCC 683
referred to
Para 40
[1995] 2 SCR 638
referred to
Para 43
[2005] 1 SCR 624
referred to
Para 44
[1976] 3 SCR 202
referred to
Para 44
[1962] 2 SCR Suppl. 838
relied on
Para 68
(2004) 5 SCC 119
relied on
Para 70
[1994] 3 Suppl. SCR 720
relied on
Para 73
[2011] 15 SCR 972
relied on
Para 74
[1969] SCR 304
relied on
Para 75
INHERENT JURISDICTION : Contempt Petition (Civil) No. 92
of 2008 in Contempt Petition (Civil) No. 148 of 2003 in Civil Appeal No.
366 of 1998.
Jayant K. Sud, ASG, Mukul Rohatgi, Jaideep Gupta, Kapil Sibal,
Akhil Sibal, Ms. V. Mohana, Sr. Advs, Abhinav Mukerji, Ms. Bihu Sharma,
Ms. Pratishtha Vija, Bhargava V. Desai, Ms. Aditi Diwan, S. Uday Kumar
Sagar, Ms. Bina Madhavan, Salim Inamdar, Ms. Sweena Nair, M/S.
Lawyer S Knit & Co, D.L. Chidananda, Ms. Menakshi Grover, Arvind
Kumar Sharma, Ms. Sheena Taqui, Kshitij Vaibhav, Mrs. Bina Gupta,
Ms. Suwarna Dubey, Advs. for the appearing parties.
The Judgment of the Court was delivered by
B. R. GAVAI, J.
1. The present contempt petition arises out of an unfortunate family
dispute between a father on one hand and his two sons from his first
wife on the other hand. This family dispute has given rise to number of
proceedings, some of which have even reached up to this Court.
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2. Factual matrix necessary for the adjudication of the present
case is thus:-
The petitioner in the contempt petition Rama Narang was married
to Smt. Motia. The respondent Nos.1 and 2 i.e. Ramesh Narang and
Rajesh Narang so also Rakesh Narang are sons of the petitioner and
Smt. Motia. The petitioner and Smt. Motia divorced in 1963. The petitioner
thereafter married Smt. Mona. Out of the said wedlock, two sons Rohit
and Rahul as well as a daughter Ramona were born.
3. In a previous round of litigation between these parties, the
respondent No.1- Ramesh Narang had approached this Court by filing a
Contempt Petition (C) Nos.265-67 of 1999 in Contempt Petition (C) No.
209 of 1998 in Civil Appeal Nos.366 of 1998, 603 of 1998 and 605 of
1998. The present petitioner Rama Narang was respondent No.1 in the
said proceedings. This Court passed the following order in the said
proceedings on 2nd November 2001:-
"In Conmt. Pet. (C) Nos.265-267/1999 in Conmt. Pet. (C)
No.209/1998 in Civil Appeal No.366/1998, 603/1998 & 605/
1998.
After hearing Mr. Kapil Sibal, learned senior counsel for the
petitioner and Mr. Gopal Subramaniam, learned senior
counsel for the alleged contemnor, at length, we are satisfied
that the contemnor has flouted the order of this Court dated
4th May, 1999 by not transferring 50% of the share (and
contending that he could make out the 50% share only by
calculating the shares of NIHPL held by M/s. Fashion Wears
Private Ltd., which have been forbidden by the order dated
22.01.1998). We call upon the contemnor to show cause
regarding the punishment to be imposed on him for which he
shall be present in this Court on 29th November, 2001.
I.A. No.6 in C.P. (C) No.209/1998 in C.A. No.366/1998.
Dismissed as withdrawn.
List all matters on 29th November, 2001."
4. It appears, that subsequently the matter was settled between
the parties and the parties had placed on record the Minutes of the
Consent Order. It will be apposite to reproduce the entire order passed
by this Court on 12th December 2001:-
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"The following cases are pending between the parties who
are parties in the present proceedings before us one way or
the other. We are told that all the parties have settled their
disputes in respect of all the litigations specified below.
1.
O.S. No. 3535 of 1994 before the Bombay High
Court.
2.
O.S. No. 3578 of 1994 before the Bombay High
Court.
3.
O.S. No. 1105 of 1998 before the Bombay High
Court.
4.
O.S. No. 3469 of 1996 before the Bombay High
Court.
5.
O.S. No. 1792 of 1998 before the Bombay High
Court.
6.
O.S. No. 320 of 1991 before the Bombay High Court.
7.
Company Petition No. 28 of 1992 Before the
Principal Bench, Company Law Board, New Delhi.
8.
Arbitration Suit No. 5110 of 1994 before the Bombay
High Court.
Today they filed a document styled it as "MINUTES OF
CONSENT ORDER" signed by all the parties. Learned
counsel appearing on both sides submitted that all the parties
have signed this document. Today except Mona Narang and
Ramona Narang (two ladies), all the rest of the parties are
present before us when these proceedings are dictated. As
for Mona Narang and Ramona Narang learned counsel
submitted that Mona Narang had affixed the signatures and
the power of attorney holder of Ramona Narang has signed
the above document in his presence. This is recorded.
Both sides agreed that all the suits can be disposed of in terms
of the settlement evidenced by "MINUTES OF CONSENT
ORDER" produced before us. For disposal of those cases
and/or for passing decrees in them we have to pronounce the
final formal order in terms of the settlement now produced
before us.
RAMA NARANG v. RAMESH NARANG AND OTHERS
[B.R. GAVAI, J.]
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We, therefore, withdraw all the aforesaid suits to this Court
under Article 139-A of the Constitution of India.
Prothonotory and Senior Master of the Bombay High Court
are directed to transmit the records in the above mentioned
suits by special messenger to this court so as to reach the
Registry here within ten days from today. The Bench Officer
of the Principal Bench of the Company Law Board, New Delhi
is directed to forward the records relating to Company Petition
No. 28 of 1992 to the Registry of this Court so as to reach the
Registry within ten days from today.
All the parties have undertaken before us that they will
implement the terms of the "MINUTES OF CONSENT ORDER"
on or before 1.1.2002 and that no further time will be sought
for in the matter.
Clause (f) of the compromise relates to the operation of the
bank accounts. That clause will come into force from today
onwards.
All the afore-mentioned suits and the company petition will
be posted for final formal orders on 8.1.2002 at 10.30 a.m.
along with these contempt proceedings."
5. The matter came up again before this Court on 8th January
2002. This Court passed the order thus:-
"Pursuant to the order dated 12th December, 2001 the
following suits and company petition have been transmitted
to this court and they are on the file of this court now and
registered as Transferred Cases Nos. 1 to 8 of 2002:
1.
O.S. No. 3535 of 1994 before the Bombay High
Court.
2.
O.S. No. 3578 of 1994 before the Bombay High
Court.
3.
O.S. No. 1105 of 1998 before the Bombay High
Court.
4.
O.S. No. 3469 of 1996 before the Bombay High
Court.
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5.
O.S. No. 1792 of 1998 before the Bombay High
Court.
6.
O.S. No. 320 of 1991 before the Bombay High Court.
7.
Company Petition No. 28 of 1992 Before the
Principal Bench, Company Law Board, New Delhi.
8.
Arbitration Suit No. 5110 of 1994 before the Bombay
High Court.
All the above are now being disposed of in terms of the Minutes
of Consent Order incorporated in the proceedings passed by
us on 12.12.2001.
The decree will be drawn up in terms of the Minutes of the
Consent Order.
In regard to the property (64, Sunder Nagar, New Delhi) which
is the subject matter for O.S. No. 3578/1994 of the High Court
of Bombay Rama Narang, who is present in court, gives an
undertaking that the same would be transferred with clear
and marketable title to Rajesh Narang or his nominee on or
before 31.03.2002. This undertaking is recorded.
In the light of the above developments we deem it necessary
to drop the steps against Rama Narang for contempt pursuant
to the order of this court dated 2.11.2001. We order so.
Similarly all other contempt petitions are dropped and IAs
and Transferred Cases are disposed of."
It will also be relevant to refer to the Minutes of the Consent
Order, which is a family settlement between all the members of the
family including the parties herein:-
"1. Ramesh's Suit No.3535 of 1994 [for specific performance
of family settlement] both pending in the Bombay High Court
to be decreed and implemented forthwith.
2. Ramesh's Suit No. 1105 of 1998 [Fashion Wears] opening
in the Bombay High Court to be decreed and implemented
forthwith; 19184 shared held by FWPL in NIHL are validly
transferred to Ramesh on 27th June 1992 and Ramesh having
already transferred 5194 (12%) shares in the joint names of
RAMA NARANG v. RAMESH NARANG AND OTHERS
[B.R. GAVAI, J.]
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Rama and Ramesh on 21st May 1990 directed by order of this
Hon'ble Supreme Court dated 4th May 1999. It is clarified
and agreed that the transfer of 142 additional shares by
Ramesh on 24th May 1999 to the joint names of Rama and
Ramesh is void and the said 142 shares stand restored to the
name of Ramesh. The purported transfer of shares by Rama
on 14th May 1999 in compliance with order dated 4th May
1999 is void. It is further clarified that the transfer by Rama
of 3998 shares to Ramesh pursuant to order dated 4th May
1999 is void and the said 3998 shares stand restored to the
joint names of Mohini, Rama and Mona. It is also clarified
that Ramesh, Rajesh and Rakesh shall have no objection to
the transfer of 403 shares held by FWPL in NIHL to Rama.
3. The following directions issued by this Hon'ble Supreme
Court in the above matter are re-affirmed and agreed to by
the parties as follows:-
(a)
With effect from 4th May, 1999 Rama, Ramesh and
Rajesh are the only Directors of NIHL (and its
subsidiaries). Any increase in the Board of Directors
shall be with the mutual consent of Rama and
Ramesh/Rajesh.
(b)
None of the Directors (Rama, Ramesh and Rajesh)
can be removed from directorship.
(c)
Rama and Ramesh shall continue to be in joint
management and control of NIHL and Rajesh shall
continue to be the Permanent Whole Time Director
thereof in charge of day to day operations/
management.
(d)
No decision shall be adopted concerning or
affecting the said Company (and its subsidiaries)
without the consent of Rama and Ramesh (or Rajesh)
in writing. It is further clarified and agreed that save
and except as provided herein no prevailing decisions
including appointment of Directors/Executives or any
other persons shall continue unless Rama and
Ramesh (or Rajesh) consent to the same in writing.
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(e)
All the collections coming in cash shall continue to
be remitted in the bank accounts of the Company
and all transactions will only be made in the form of
cheques and/or as may hereafter be agreed to
between Rama and Ramesh (or Rajesh).
(f)
All bank accounts of the Company shall continue to
be operated jointly by any two out of the three
Directors namely Rama, Ramesh and Rajesh and/or
as may hereafter be agreed to between Rama and
Ramesh (or Rajesh). If the amount of any transaction
exceeds Rs. 10 (ten) lacs the same shall be
undertaken through a cheque signed jointly by Rama
and Ramesh/Rajesh.
(g)
All statutory record of the Company [and its
subsidiaries] including minutes of Directors Meetings
and/or Shareholders Meetings shall be valid only if
signed jointly by Rama and Ramesh or Rajesh.
(h).
The remuneration and perquisites to which Rama,
Ramesh and Rajesh shall be entitled as Directors
with effect from 4th May 1999 shall be the maximum
permissible under the provisions of the Companies
Act, 1956 and which shall be divided/allocated
between them in equal shares as provided and/or as
may hereafter be agreed to between Rama and
Ramesh [or Rajesh]."
4. Rahul's Suit No. 3469 of 1996 and Rama's Suit No. 1792
of 1998 both pending in the Bombay High Court to be
withdrawn.
5. Ramesh's Company Petition No. 28 of 1992 pending before
the Company Law Board, New Delhi to be withdrawn.
6. Rakesh's Suit No. 320 of 1991 [who is part of the Rama
Group] to be compromised and implemented as follows:
"a. Rama shall transfer 5410 shares in NIHL to the sole
name of Rakesh.
b. Rama Group agree and undertake to restore to Rakesh
his residential accommodation on the third floor of the
RAMA NARANG v. RAMESH NARANG AND OTHERS
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bungalow at 40, Pali Hill, Bandra, Bombay and consent
to carry out all additions and alterations required by him
therein."
In consideration of the above Rakesh hereby agrees and
undertakes to ratify and confirm and implement the family settlement
and do all the acts, deeds and things required in that purpose
including;
"a. Transfer 1000 equity shares held by Rakesh in Narang
Overseas Private Limited to Rajesh.
b. Confirm his retirement as partner in the firm of United
Corporation and withdraw his claims referred to arbitration
in Arbitration Suit No. 5110 of 1994.
c. Consent to the transfer of entire undertaking of Bull
Worker Private Limited from FWPL to the Manu Group.
d. Consent to hive off land at Marol, Sahar, Bombay owned
by NIHL admeasuring about 45105.70 square meters to
the Manu Group.
e. Consent to hive off ownership and possession of the
property at 64, Sunder Nagar, New Delhi to Rajesh."
7. All the above is to be performed by the Rama Group before
01.01.2002.
8. Matter to be listed before this Hon'ble Court on
08.01.2002."
6. Perusal of the family settlement would reveal, that insofar as
Narang International Hotel Limited (hereinafter referred to as 'NIHL')
and its subsidiaries are concerned, Rama Narang, Ramesh Narang and
Rajesh Narang were to be the only Directors. Any decision by the Board
of Directors was to be taken only by the mutual consent of Rama Narang
on one hand and Ramesh and Rajesh, on the other hand. The settlement
also provided, that none of the Directors i.e. Rama Narang, Ramesh
Narang and Rajesh Narang could be removed from the Directorship.
Rama Narang and Ramesh Narang were continued to be in joint
management and control of NIHL and Rajesh Narang was continued to
be whole time Director In-Charge of day-to-day operations and
management of NIHL. It also provided, that no decision shall be taken
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concerning the said NIHL and its subsidiaries, without the consent of
Rama Narang on one hand and Ramesh/Rajesh on the other hand. It is
further provided, that all bank accounts of the Company have to be
operated jointly by any two of the three Directors as agreed between
Rama Narang and Ramesh/Rajesh. It further provided, that if amount
of any transaction was exceeding Rs. 10 lakhs, then the same could be
undertaken only through a cheque singed jointly by Rama Narang on
one hand and Ramesh or Rajesh on the other hand.
7. It appears, that though the matter was settled between the
parties in terms of Minutes of Consent Order as recorded in the orders
dated 12th December 2001 and 8th January 2002, passed by this Court,
there was no quietus to the dispute between the parties. Rama Narang
alleging, that Ramesh and Rajesh had violated the terms of the Consent
Order stipulated in Clause 3 (c), (d), (e) and (f) of the Minutes of the
Consent Order, filed a contempt petition being Contempt Petition(C)
No. 148 of 2003 in Contempt Petition (C) Nos. 265-67 of 1999 in
Contempt Petition (C) No.209 of 1998 in CA No. 366 of 1998. It was
the case of the petitioner Rama Narang, that the violations of the Consent
Order by Ramesh and Rajesh amounted to clear disobedience of the
orders dated 12th December 2001 and 8th January 2002 and thus
punishable under the Contempt of Courts Act, 1971. This Court had
initiated contempt proceedings against the respondents vide order dated
15th September 2003. This Court had also requested Justice V.A. Mohta,
retired Chief Justice of Orissa High Court to act as a Mediator for
settlement of disputes between the parties. However, despite serious
efforts made by the Learned Mediator, the settlement could not be arrived
at.
8. A preliminary objection was taken regarding the maintainability
of the abovesaid contempt petition. According to the respondents Ramesh
and Rajesh, in the absence of any undertaking given to the Court, this
Court could not exercise its jurisdiction on mere violation of the terms of
the Consent Order. The respondents had contended, that the order dated
12th December 2001, had merged in the order dated 8th January 2002
and that they had implemented the said order. A three-Judge Bench of
this Court in Rama Narang v. Ramesh Narang and Another1 rejected
these objections raised by the respondents with regard to maintainability
1 (2006) 11 SCC 114
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of the contempt petition. It will be relevant to refer to the following
observations of this Court:-
"33. In the present case, the consent terms arrived at between
the parties were incorporated in the orders passed by the
Court on 12-12-2001 [Ramesh Narang (1) v. Rama Narang,
(2009) 16 SCC 631] and 8-1-2002 [Ramesh Narang
(2) v. Rama Narang, (2009) 16 SCC 600] . The decree as
drawn up shows that order dated 8-1-2002 [Ramesh Narang
(2) v. Rama Narang, (2009) 16 SCC 600] was to be 'punctually
observed and carried into execution by all concerned'. A
violation of the terms of the consent order would amount to a
violation of the Court's orders dated 12-12-2001 [Ramesh
Narang (1) v. Rama Narang, (2009) 16 SCC 631] and 8-12002 [Ramesh Narang (2) v. Rama Narang, (2009) 16 SCC
600] and, therefore, be punishable under the first limb of
Section 2(b) of the Contempt of Courts Act, 1971. The question
whether the respondents should not be held guilty of contempt
because of any earlier confusion in the law reflected in Babu
Ram Gupta case [(1980) 3 SCC 47 : 1980 SCC (Cri) 527] is
a question which must be left for decision while disposing of
the contempt petition on merits. It may be argued as an
extenuating or mitigating factor once the respondents are held
guilty of contempt. The submission does not pertain to the
maintainability of the petition for contempt. The preliminary
objection raised by the respondents regarding the nonmaintainability of the petition for contempt is, for the reasons
stated, dismissed."
9. After the preliminary objections raised by the respondents were
rejected, the aforesaid contempt petition was heard by this Court on
merits. The main allegations against the respondents with regard to
violation of Clause 3 (c), are thus:-
(a)
that the high value contracts were executed by issuing
multiple cheques under the value of Rs. 10 lakhs, though,
the contract amount was much more. It was done so as to
overcome the requirement, that for a transaction worth more
than rupees ten lakhs, the cheques had to bear joint
signatures of Rama Narang on one hand and Ramesh or
Rajesh on the other hand;
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(b)
the vital information with regard to management of the
Company was withheld and as such the Company was
managed to the complete exclusion of Rama;
(c)
settlement with trade union was unilaterally undertaken by
the respondents and the petitioner was only asked to sign
the enhanced salary cheques, which the petitioner refused
as he was not consulted; and
(d)
it was also alleged, that the respondents had taken unilateral
decisions with regard to appointment and promotion of senior
executives and as such, had acted in clear violation of
Clause 3 (d).
10. The respondents had filed response to the said contempt
petition. It was contended on behalf of the respondents, that the petitioner
was deriving undue advantage from the alleged technical breach of the
consent terms; which too was based on interpretation of the consent
terms contrary to the mutual understanding of the parties. It was
submitted, that the petitioner was attempting to stall the functioning of
the company by trying to use the veto power. It was submitted, that it
was never the intention of the parties, that the petitioner should enjoy the
veto power over the company transactions having value of more than
Rs. 10 lakhs and create a deadlock.
11. However, the Court did not find favour with the submissions
made by the respondents and while rejecting the respondent's contention,
this Court in its judgment and order dated 15th March 2007 reported as
Rama Narang (V) v. Ramesh Narang and Another2, observed thus:-
"32. The object of entering into consent terms and jointly
filing the undertaking was to run the family business
harmoniously with the active participation of all as a family
business but the respondents had taken absolute control of
the Company NIHL to the total exclusion of the petitioner. All
the management decisions and other decisions affecting the
Company were taken by the respondent Rajesh Narang, the
whole-time Director under the guise of the day-to-day
operation/management in clear violation of Clause 3(c) of
the consent terms which clearly states that Rama Narang and
Ramesh Narang shall continue to be in joint management and
2 (2009) 16 SCC 126
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control. The parties gave undertaking to the Court regarding
the consent terms.
33. The respondents have erroneously submitted that joint
management and control of the Company means giving veto
power to the petitioner. According to the terms of undertaking
the petitioner and the respondents were under an obligation
to run the Company harmoniously with the active participation
of all as a family business but unfortunately the respondents
have taken absolute control to the total exclusion of the
petitioner. This is contrary to the terms of the undertaking
given to this Court."
12. This Court while convicting the present respondents under
Section 2(b) of the Contempt of Courts Act observed thus:-
"52. We have carefully perused the undertaking given by the
parties to the Court and orders of this Court dated 12-122001 [Ramesh Narang (1) v. Rama Narang, (2009) 16 SCC
631] and 8-1-2002 [Ramesh Narang (2) v. Rama Narang,
(2009) 16 SCC 600] based on the undertaking of the parties
given to this Court and other relevant facts and circumstances.
According to our considered view the respondents are clearly
guilty of committing contempt of court by deliberate and wilful
disobedience of the undertaking given by them to this Court.
In this view of the matter, in order to maintain sanctity of the
orders of this Court, the respondents must receive appropriate
punishment for deliberately flouting the orders of this Court.
53. Consequently, we convict the respondents under Section 2(b) of
the Contempt of Courts Act and sentence them to a simple
imprisonment for a period of two months. We further impose a fine
of Rs 2000 to be deposited by each of them within one week failing
which they shall further undergo imprisonment for one month."
13. It will also be relevant to refer to para (54) of the said judgment
and order passed by this Court in Rama Narang (V)3 (supra) dated 15th
March 2007:-
"54. We are also not oblivious of the fact that immediately sending
the respondents to jail would create total chaos in the Company
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which would also vitally affect the interests of large number
of people including the employees of the Company. Therefore,
while keeping in view the peculiar facts and circumstances
of this case, the sentence of imprisonment imposed on the
respondents is kept in abeyance. We further direct the parties
to meticulously comply with the undertakings given by them
to this Court. In case similar violation of the undertakings
given to this Court is brought to the notice of the Court, in
that event, the respondents shall be sent to jail forthwith to
serve out the sentence imposed in this case."
14. It could thus be seen, that though this Court held the respondents
guilty of contempt, taking into consideration the fact that immediately
sending the respondents to jail would create total chaos in the Company
and it would also vitally affect the interest of large number of people
including the employees of the Company, the sentence of imprisonment
imposed on the respondents was kept in abeyance. This Court further
directed the parties to meticulously comply with the undertaking given
by them to the Court. It was further observed by the Court, that in case,
similar violations of the undertaking given to this Court, was brought to
the notice of this Court, the respondents shall be sent to jail forthwith to
serve out the sentence imposed in the said case.
15. It appears, that the dispute between the parties not only
continued but got aggravated. Contending that on account of noncooperation by Rama, the functioning of the Company had come to a
standstill, Ramesh filed Company Petition No.47 of 2008 before the
Company Law Board, New Delhi (hereinafter referred to as 'CLB'). It
was contended in the said company petition, that due to non-cooperation
by Rama in signing cheques, the employees could not be paid their salaries
from November 2007 onwards. It was also contended, that bills for
payment to supplier could also not be paid, due to which, the entire
functioning of the various units of the Company had been seriously
affected. On 14th March 2008, the CLB directed the board meeting of
NIHL to be held on 24th March 2008 at 11.00 AM in the registered
office of the Company. Each of the three Directors were also directed
to circulate a list of items, that they desired to discuss in the meeting, to
the Directors by 18th March 2008. The CLB also appointed Shri C.R.
Das, Former Member of CLB as Observer, to observe the proceedings
of the said meeting. In the said proceedings, Ramesh also filed CA No.194
RAMA NARANG v. RAMESH NARANG AND OTHERS
[B.R.