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TMI Blog2016 (11) TMI 1461X X X X Extracts X X X X X X X X Extracts X X X X ..... s to mention before the Vacation Bench for urgent hearing of the matter. However, it is directed that till further orders, capital assets of the Company shall not be disposed of without taking permission of this Court." 2. The aforesaid Civil Appeals had challenged the judgment and order dated 06.01.2014 passed by the High Court of Gauhati in FAO No.10 of 2013, Writ Petition No.4303 of 2013 and Writ Petition No.6286 of 2013 and were disposed of by this Court vide its Judgment dated 13.11.2014(2015) 1 SCC 298). The facts leading to the filing of those appeals and connected matters are dealt with in said Judgment dated 13.11.2014. It is alleged in the present contempt petitions that in violation of the Order of 08.05.2014, which was passed during the pendency of the aforesaid Appeals, the assets owned by the Company, namely, J.K. Jute Mills Company Ltd. (hereinafter referred to as the Company) at Saifganj, Katihar, Bihar spread across 1.6 acres of land ("Katihar property", for short) were sold vide Conveyance Deed dated 02.07.2014 and consequently the persons arrayed as contemnors interfered with due administration of justice. It is prayed that the contemnors be punished for disob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the Bid documents could be obtained, inter alia, from S.K. Jha of M/S J.K. Jute Mills Co. Ltd, 70 Golf Links, New Delhi 110003. 6. When the matter was thus being considered for finalization of DRS and for sale of assets of the Company, in the proceedings of the BIFR dated 04.04.2013 it was submitted on behalf of the Company that the Net Worth of the Company having turned positive, BIFR no longer retained jurisdiction over the Company. The BIFR observed that as per Annual Balance Sheet of the Company as on 31.03.2012 the Net worth of the Company was Rs. 5.71 Crores and the accumulated losses were Rs. 36.23 crores and it would like to satisfy itself about the Balance Sheet as at 31.12.2012. The BIFR passed following directions:- "4.13. Having considered the submissions made in the hearing, materials on record, the Bench issued the following directions: (i) The Company to submit certified copy of its ABS as on 31-12-2012 along with all relevant papers and documents in support of its net worth within one week from today with copy to IDBI (OA) and all parties concerned along with documentary evidence; (ii) ASC would go ahead as per its schedule and confirmation of sale, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pices Pvt. Ltd. (Contemnor No.14 herein) through its Director Mr. Mrityunjay Kumar Singh, Contemnor No.17 herein (who is also the stooge and the employee of the Contemnor Nos.2 and 3); hence the present Petition. 7. The Contemnor Nos.4 to 8, Mr. Sashi Kant Jha, Mr. Sudhir Kumar Singh, Mr. Rakesh Kumar Singhania and Mr. Sobhanand Jha alias Mr. Ravishankar Prabhakar and Mr. Damodar Prasad Bhatter are the stooges and employees of Mr. Govind Sarda and Mr. Aditya Sarda and were/are the Directors and persons who with the Contemnor Nos.2 and 3 are in day to day management and control of the Contemnor No.1 Company being Directors and key employees of the Contemnor No.1 Company during the relevant period when the acts of contempt have been perpetrated and these Contemnor Nos.4 to 8 were/are actively involved in consciously defying the orders dated 08.05.2014 passed by this Hon'ble Court. 8. The Contemnor No.9, Mr. Prakash Kumar, IAS is the District Magistrate and Collector of Katihar, Bihar who despite the orders dated 08.05.2014 passed by this Hon'ble Court took no steps in order to restrain the sale and registration of the Katihar capital assets of the Contemnor No.1 Company. The Cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpt Petition. 10. The Contemnor No.14 is M/s. Thapar Herbs and Spices Pvt. Ltd., which is a company owned and controlled by the Contemnor No.2 and which has purchased the Katihar capital asset of the Contemnor No.1 Company in violation of the order dated 08.05.2014 passed by this Hon'ble Court. Contemnor No.15 is Mr. Krishan Kumar, Contemnor No.16 is Mr. Rakesh Kabra and Contemnor No.17 is Mr. Mritunjay Kumar Singh who are also the Directors of the Contemnor No.14 Company and are the employees/stooges of Mr. Govind Kumar Sarda (Contemnor No.2) who have acted in collusion and conspiracy with the Contemnor Nos.1 to 13 consciously and with full and complete knowledge of the facts defied/violated the orders dated 08.05.2014 passed by this Hon'ble Court. 11. That in willful disobedience to the orders dated 08.05.2014 passed by this Hon'ble Court, the Contemnor Nos.1 to 8 in collusion and conspiracy with the Contemnor Nos.9 to 13 and in willful disobedience of the orders dated 08.05.2014 sold away the Katihar capital assets of the Contemnor No.1 Company to the Contemnor No.14 Company (which is managed and controlled by Contemnor Nos.2 and 3) for a paltry sum of Rs. 3.55 crores as aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r on the sale of land and property of the Contemnor No.1 Company......................... (vi) The counsel for the petitioner also wrote another letter dated 10.06.2014 to the Contemnor No.10, with copy endorsed to the Contemnor No.9, 12, 13 and to the Registrar of Assurance, Dist. Katihar and the Chief Minister and specifically pointed out the restraint orders passed by the Allahabad High Court and by this Hon'ble Court and enclosed the copy of the said orders alongwith the letter dated 10.06.2014. .............................. (vii) Thereafter, the counsel for the Petitioner wrote a letter dated 13.06.2014 to Contemnor Nos.9, 11, 12 and to the Finance Minister, Chief Secretary and Asstt. I.G. of Registration specifically bringing to their notice the orders dated 8.05.2014 passed by this Hon'ble Court and requested that the Conveyance Deed in respect of the Katihar capital asset be not registered. .................... (viii) Despite the letters dated 10.06.2014 and 13.06.2014 of the counsel for the Petitioner bringing to the notice of the Contemnor Nos.9 to 13 of the orders dated 08.05.2014 passed by this Hon'ble Court, the Contemnor Nos.1 to 17 in willful disobedience proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial affairs of such company were directly under the supervisory control of BIFR, the power to decide whether it has since then lost the jurisdiction or not, is also in the exclusive domain of BIFR. BIFR alone is empowered to determine whether net worth has become positive as a result of which it would cease to have such jurisdiction. Any inquiry into such issue regarding net worth by anyone outside the Act including civil court, would be against the express intent of the Act and would lead to incongruous and undesired results." This Court relegated the matter to the BIFR to determine whether the Net Worth of the Company had turned positive. Since the alienation dated 02.07.2014 was effected without the express leave of the BIFR, that part of the matter was also left for BIFR to consider, as would be evident from paragraphs 37 and 38 of the judgment:- "37. In the circumstances, we allow the present appeals and set aside the order dated 06-01-2014 passed by the High Court of Gauhati in Ghanshyam Sarda v. Shiv Shankar Trading Co. It is held that Title Suit No.166 of 2013 pending on the file of the learned Civil Court at Kamroop, Gauhati is not maintainable insofar as it seeks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... necessity are established, BIFR may also consider whether the value that the property has fetched is adequate or not. If the value is adequate it may confirm the sale in favour of the transferee. However, if the value in its opinion is inadequate, it shall give offer and adequate time to the transferee to make good the deficit. In any case if the sale is held to be bad or if the transferee is not willing to make good the deficit, the entire consideration for the transaction be returned to the transferee. In such eventuality whatever the transferee has paid in excess of the consideration money towards stamp duty and registration shall be recovered from the Directors and persons responsible for effecting such sale on behalf of the Company." 11. Thus, the infirmity in the transfer or alienation of assets of the Company found by this Court was on account of absence of express leave or permission of the BIFR. Further, the transferee not being party to the proceedings before this Court, the matter was directed to be considered after giving it hearing and opportunity. The present Contempt Petitions were not dealt with and notices were directed to be issued by a separate order passed on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . C. In his reply alleged Contemnor No.6 Rakesh Kr. Singhania submitted that Katihar property was transferred well before the Order of 08.05.2014. Alleged Contemnor No.8, D.P. Bhattar another Director of the Company submitted on same lines. Alleged Contemnor No.7 Shobhanand Jha who had executed the Deed on behalf of the Company, submitted:- "That the Respondent herein has not violated the Order dated 8.5.2014 passed by this Hon'ble Court. In fact, he had resigned as Director of JK Jute Mills Ltd. On 17.02.2014 because of personal reasons and was subsequently, not in touch with the Company. He was not aware of the Order dated 08.05.2014 passed by this Hon'ble Court. The Respondent had been authorized by the Board of Directors to execute the sale deed to be entered into between the company and M/s Thapar Herbs & Spices (P) Ltd. When he was a Director of the company. The sale deed was executed on 03.04.2013 under the answering respondents signature and the sale consideration was received by the company on 04.04.2013 itself. Symbolic possession of the property was also handed over on 16.04.2013. The deed was presented for registration by the buyer on 16.04.2013 but as the stamp dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rict Sub-Registrar, Katihar submitted that he was not a party to the proceedings before this Court, that he was bound to act under the provisions of the Registration Act in connection with registration of documents. He further submitted that in view of the prevalent opinion from the office of the Advocate General, Bihar that the Registering Authorities, if not parties to the proceedings, are bound to register documents submitted for registration, he had sought opinion of the Government Pleader on 30.06.2014. The opinion was thereafter given by the Government Pleader, Katihar on 01.07.2014 that the documents could be registered, whereafter the Sale Deed was registered on 02.07.2014. Alleged Contemnor No.12, Rajendra Singh, the then Circle Officer in his reply submitted that he had caused mutation to be effected in pursuance of the registration of document and mutation by itself did not confer any title upon the transferee. Alleged Contemnor No.13, Pankaj Kumar, Secretary Registration, Excise and Prohibition Department, Government of Bihar denied having any connection with the violation of the Order of 08.05.2014. E. In their common reply, alleged Contemnor Nos.14 and 17 submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me. After putting the signature, photographs were taken. Thereafter, I returned to Delhi and informed Mr. Aditya Sarda that the papers had been signed." 14. During the pendency of these contempt petitions, IA Nos.9 and 10 of 2016 were filed by the applicants inviting attention of the Court to proceedings in Calcutta High Court, namely, Writ Petition No.5670(W) of 2016 filed by one Dinesh Sarda. It was submitted that said Dinesh Sarda was a Chartered Accountant who used to work for alleged Contemnor Nos.2 and 3. Relying on certain documents filed in said writ petition, it was submitted that alleged Contemnor Nos.2 and 3 were exercising control and management over the transferee company and that the transaction in question registered on 02.07.2014 was a device employed by them. It was further submitted that these documents indicate the involvement of the said alleged Contemnor Nos.2 and 3 and established that they were the key conspirators on whose instructions the transaction was entered into and registered on 02.07.2014. Concerned parties including alleged Contemnor Nos.2 and 3 filed their responses to I.A. Nos.9 and 10 of 2016 and denied the allegations. 15. We heard M/s Krishna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the requirements of Sections 54 and 55 of the TP Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under Section 53-A of the TP Act). According to the TP Act, an agreement of sale, whether with possession or without possession, is not a conveyance. Section 54 of the TP Act enacts that sale of immovable property can be made only by a registered instrument and an agreement of sale does not create any interest or charge on its subject-matter." 18. The document dated 04.04.2013 did not by itself create any interest nor did the title pass upon execution of such document on 04.04.2013 but it was only after the registration on 02.07.2014 that the title in Katihar property passed from the Company in favour of the transferee. The submission of the contemnors however, is that by virtue of Section 47 of the Registration Act, the document in question would operate from 04.04.2013. In our view, the principle embodied in Section 47 of the Registration Act is completely for different purposes. In so far as the issue of transfer is concerned, Section 54 of the Transfer of Property Act is the governing principle, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He tendered his resignation on 17.02.2014 as R.S. Prabhakar. Despite such resignation, he thereafter executed the document on 02.07.2014 in the name of Sobhanand Jha and signed as Sobhanand Jha. In any event of the matter as on 02.07.2014, the person was not a Director of the Company. He submitted that the Company had given him an authority way back on 06.02.2013 pursuant to which the document was executed on 04.04.2013 on which date the sale for all practical purposes stood completed and what remained was only a ministerial act which was done by him independently of the Company on 02.07.2014. It is on the basis of this submission that the Company as well as its Directors/servants namely alleged Contemnor Nos.4, 5, 6 and 8 seek to wriggle themselves out of any liability for violation of Order of 08.05.2014. If the order was passed on 08.05.2014 restraining any alienation of the capital assets of the Company, the Directors/servants of the company ought to have taken steps to inform alleged Contemnor No.7 to refrain from registering the document on 02.07.2014. Neither such steps were taken nor was the Court informed on 08.05.2014 about the document executed on 04.04.2013, in which e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d its Directors/servants. These alleged contemnors were neither parties to the proceedings pending in this Court in which Order of 08.05.2014 was passed nor is there any material to indicate that such order was ever served on them or brought to the notice of these alleged contemnors. The role played by alleged Contemnor No.17, however, stands on a different footing. The documents on record do show that he used to represent the Company and was also given authority to collect documents on behalf of the Company from the office of the BIFR. Further, on his own showing, he had gone ahead and registered the document not on the asking of the transferee. He had gone along with the Directors of the Company and on the directions of alleged Contemnor No.3. The knowledge about the passing of Order of 08.05.2014 to the Company and its Directors having been established, there is room for suspecting the involvement of alleged Contemnor No.17. But mere suspicion may not be enough and we give him benefit of doubt. Thus, none of the alleged Contemnor Nos.14 to 17 have been proved to be guilty of violation of Order of 08.05.2014. 23. As regards the involvement of alleged Contemnor Nos.2 and 3, they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of others, I cannot see why it should be said that although they are liable to penalties for contempt of court for doing what they did, nevertheless those acts were validly done. Of course, if an act is done, it is not undone merely by pointing out that it was done in breach of the law. If a meeting is held in breach of an injunction, it cannot be said that the meeting has not been held. But the legal consequences of what has been done in breach of the law may plainly be very much affected by the illegality. It seems to me on principle that those who defy a prohibition ought not to be able to claim that the fruits of their defiance are good, and not tainted by the illegality that produced them." 19. To the same effect are the decisions of the Madras and Calcutta High Courts in Century Flour Mills Ltd. v. S. Suppiah (AIR 1975 Mad270) and Sujit Pal v. Prabir Kumar Sun (AIR 1986 Cal 220). In Century Flour Mills Ltd.(supra) it was held by a Full Bench of the Madras High Court that where an act is done in violation of an order of stay or injunction, it is the duty of the court, as a policy, to set the wrong right and not allow the perpetuation of the wrongdoing. The inherent power of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idate the effect of registration of the document on 02.07.2014. 26. We thus find the Company and its Directors/servants namely alleged Contemnor Nos.1, 4, 5, 6, 7 and 8 guilty of having violated the Order of 08.05.2014. In our view, ends of justice would be met if fine is imposed on the Contemnors. We impose fine of Rs. 2,000/- on the Company. Further, fine of Rs. 2,000/- each is imposed on Contemnor Nos.4, 5, 6, 7 and 8. Fine shall be deposited with the Registry of this Court within four weeks from today. In case of failure by Contemnor Nos.4, 5, 6, 7 and 8 to deposit the amount of fine within the time stipulated, they shall undergo sentence of simple imprisonment for one month. 27. With these observations, we close Contempt Petition Nos.338 of 2014 and 375 of 2014 and the same stand disposed of. 28. In Contempt Petition Nos.24-25 of 2015 it is submitted that the contemnors have obstructed the implementation of the judgment dated 13.11.2014 passed by this Court. The acts alleged are in the nature of legal proceedings initiated by the contemnors and as such we do not find any reason to invoke our contempt jurisdiction. Said Contempt Petition Nos.24-25 of 2015 thus stand dismisse ..... 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