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2022 (8) TMI 109 - AT - Insolvency and BankruptcyContempt of Court - willful disobedience - willful breach of settlement agreement - Whether the Respondent Nos. 1 & 2/ Contemnors committed breach of settlement agreement dated 08.03.2019 and disobeyed the order of this Tribunal dated 11.03.2019 willfully? - If so, are the Respondent Nos. 1 & 2/Contemnors liable for punishment as per Section 12 of Contempt of Court Act? - HELD THAT:- Based on the Settlement Agreement dated 08.03.2019, the respondents/contemnors invited an order from the Court dated 11.03.2019. Thus, it is clear that the respondents gave an undertaking to pay Rs. 24,27,64,004/- as per the schedule mentioned in Clause 1.1 of the settlement agreement, extracted above. At the same time, the order passed by the Court dated 11.03.2019 permitted the Applicant to file a application for contempt and to take steps to revive the prayer for CIRP. Thus, this Tribunal in anticipation of such violation, cautiously permitted the Applicant to file contempt in the event of failure to comply with the undertaking and directions issued by this Tribunal, the order became final. The Apex Court time and again discussed about the standard of proof in a contempt proceeding, concluded that the standard of proof is almost identical to the standard of proof in a criminal case since the proceedings in contempt is quasi criminal in nature. The main endeavor of respondents is that the applicant failed to establish that the violation of the order is willful, in the absence of any material to establish that the violation is willful this Tribunal cannot find the respondents guilty for contempt to punish in terms of Section of 12 of the Contempt of Court Act. No doubt, the proceedings in contempt are quasi criminal in nature and the standard of proof is almost identical to the standard of proof in criminal cases - The power of contempt is conferred on the courts and Tribunals only to uphold the dignity of courts and to see that the orders passed by the Courts and Tribunals shall not be disobeyed and to avoid substantial loss to the parties. If no such power is conferred on the courts and Tribunals, courts and tribunals will remain as a “paper tigers”, therefore, the legislature thought it fit to provide claws and jaws to prevent abuse of process of the justice system. Thus, the courts and Tribunals are conferred power of contempt to punish the party who disobeyed the order of the Court or Tribunal. The breach of undertaking amounts to contempt as defined under Section 2 (b) of Contempt of Court Act but a remedy is provided in the Clause 11.2 of Settlement Agreement to invoke arbitration clause in case of breach of undertaking. As the respondents invoked arbitration clause and filed application under Section 11 of Arbitration and Conciliation Act before the High Court of Delhi, since, such remedy is available as per the term of the settlement agreement, it is difficult to hold that the Respondent Nos. 1 & 2/ Contemnors committed wilful breach of settlement agreement. Accordingly, it is found that Respondent Nos. 1 & 2 did not commit any willful breach of Settlement Agreement dated 08.03.2019. Thus, the Respondent Nos. 1 & 2/ Contemnors are guilty for wilful disobedience of order dated 11.03.2019, while holding that the Respondent Nos. 1 & 2/ Contemnors not guilty for wilful breach of settlement agreement dated 08.11.2019. Sentence to be imposed under Section 12 of Contempt of Courts Act - HELD THAT:- The maximum sentence is simple imprisonment for a term which may extend to six months or with fine which may extend to Two Thousand rupees or with both. However, the proviso to Section 12 obligates the Court or Tribunal to consider the apology tendered by the Petitioner while considering the quantum of punishment - On the other hand, they did not comply with the direction of this Tribunal as agreed in the affidavit filed on 23.09.2019, 03.10.2019 before this Tribunal, during the pendency of this contempt case also. Application disposed off.
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