Summary
The Court held the three Reliance companies in contempt for knowingly qualifying and then wilfully breaching unconditional payment undertakings. Payment to Ericsson was independent of asset sales; the asserted inability to pay was contradicted by the companies’ own subsequent offer. Contempt against SBI’s Chairman was dismissed. The Court ordered release of the existing deposit, payment of the balance and company fines, with imprisonment of the respective Chairmen in default.
Issues
- Whether payment undertakings were conditional on sale of assets and whether non-payment was wilful.
- Whether SBI’s Chairman could be liable for contempt.
- What measures should secure compliance and punish the companies’ contempt.
Provisions considered
- Section 2(b), Contempt of Courts Act, 1971Applied the requirement of wilful disobedience or wilful breach of an undertaking, distinguishing genuine inability and reasonable misunderstanding. (¶¶ 15, 17, 18, 19, 20, 21)
- Section 12(4), Contempt of Courts Act, 1971Applied company-contempt liability to the persons responsible for the undertakings and conduct of the companies, with default imprisonment directions. (¶¶ 23, 24)
Held
- The NCLAT and Supreme Court payment directions and the companies’ original undertakings contained no linkage to asset sales. The later Chairmen’s undertakings inserted a condition contrary to the orders and to the companies’ own earlier understanding. (¶¶ 7, 8, 9, 10, 11)
- The knowingly false qualification affected administration of justice. The companies’ letter offering full payment on additional conditions contradicted their asserted inability and demonstrated wilful refusal rather than impossibility of compliance. (¶¶ 17, 18, 19, 21)
- The assertion that no advantage had been obtained from the undertakings was incorrect. The Court rejected the purported unconditional apology in light of the conduct and reply affidavit. (¶ 20)
- The financial creditors’ asset-sale transaction was independent of the Ericsson payment obligation. SBI was not bound to make that payment, so contempt against its Chairman did not lie. (¶ 22)
- The Registry was to release Rs 118 crore to Ericsson within one week. Subject to calculation error, the companies were to pay Rs 453 crore within four weeks to purge contempt, with three months’ imprisonment for the Chairmen in default. Each company also had to pay a Rs 1 crore fine to the Registry for the Supreme Court Legal Services Committee within four weeks, with one month’s imprisonment for the respective Chairman in default. (¶¶ 23, 24)
Result
Contempt petitions disposed of holding the three Reliance companies guilty and directing payment, fines and default imprisonment. Contempt petition against SBI’s Chairman dismissed.