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Judgment
Per: Justice Rakesh Kumar Jain:
The Appellants have challenged the order dated 09.05.2024 by which they have been held guilty of contempt and are sentenced for simple imprisonment of one month each and a fine of Rs. 1,000/- has also been imposed on each of them. They have been further ordered to go under simple imprisonment for 15 days each in case of default paying the fine.
In brief, Lanco Babandh Power Limited was pushed into CIRP on 29.08.2018 and then into liquidation on 27.11.2019.
The CD registered a project import contract for the import of goods, items and machinery for setting up a 2x600 MW Thermal Power Plant in Khadagprasad P.S, Motagan, District Dhenkanal Odisha.
The CD imported goods being items of machinery in between July, 2011 to April, 2016 against 45 number of bills of entry but the goods were not released because the CD failed to furnish required documents.
The CD provided bills of entry of 42 bills. The Deputy Commissioner, Paradip Customs Division (for short ‘DC’) issued out of charge (OOC) in respect of those goods but in respect of three bills of entry, no OOC was granted because the CD did not file bill of entry even after more than one year of import.
Since, the CD slipped into Liquidation on 27.11.2019, the DC filed a claim of Rs. 34,64,33,861/- and Appellant No. 1 / Deputy Traffic Manager of Paradip Port Authority (DTM) filed a claim of Rs. 4,36,30,691/- before the Liquidator.
Since, the goods were not released by the DC and the present Appellants, the Liquidator filed I.A No. 939 of 2020 seeking direction for the release of the same by the DC and present Appellants. The said application was allowed vide order dated 29.03.2023 with the following directions:-
“Direct the Respondents to release the goods belonging to the CD laying with them without insisting for filing the installation certificate, reconciliation statement, final payment certificate etc. or a payment of customs duty by the CD under Liquidation, within 30 days from the date of this order, besides 1st Respondent to issue no objection certificate for sale of these goods by the liquidator in accordance with the provisions of the IB Code”
During the pendency of I.A No. 939 of 2020, Jindal Steel & Power Limited (JSPL) purchased the assets including the imported goods of the CD in the e-auction dated 27.08.2021 but balance sale consideration was not paid because imported goods were still lying with the DC and the present appellants.
After the order dated 29.03.2023, the Respondent (Liquidator) sent notice dated 17.04.2023 and 23.05.2023 asking Paradip Customs Division and the Paradip Port Authority to release the said goods, but the same was of no avail.
Ultimately, contempt no. 16 of 2023 came to be filed under Section 425 of the Companies Act, 2013 read with the provisions of the Contempt of Courts of 1971.
In the petition, the present appellants were proceeded against ex-parte and a reply was filed by the DC only.
The Tribunal observed that the DC had complied with the direction though after the passing of order in IA No. 939 of 2020 but the present Appellants were found violating the order passed in I.A No. 939 of 2020 and thus they were held guilty of contempt for disobeying the direction and were sentenced.
Simultaneously, while pronouncing the order, the Tribunal further issued warrant of arrest of Appellants through the concerned superintendent of police.
Aggrieved against the aforesaid orders, the present appeal has been filed by both the appellants under Section 61 of the Code.
At the threshold of the hearing of this appeal on 11.07.2024, the Appellant submitted that non-compliance was not intentional and that it happened because of misunderstanding and misreading of the order dated 29.03.2023 because of letter of liquidator dated 17.04.2023 and he also undertook to comply with the direction passed by the Tribunal to purge the contempt and tendered unconditional apology and prayed for purging the contempt.
On this premise, this court issued the notice in the appeal on 11.07.2024 and stayed the operation of the order. The said order dated 11.07.2024 is reproduced as under:-
“This appeal is directed against the order dated 09.05.2024 by which the Appellants have been held guilty of contempt and sentenced for simple imprisonment of one month each and are further directed to pay a fine of Rs. 1,000/- each for the disobedience of the order dated 29.03.2023 passed in CP (IB) No. 296/7/HDB/2018.
2.Sr. Counsel for the Appellant has submitted that the noncompliance of the order was not intentional but because of mis-reading and mis-understanding of the order by the present Appellants because of the letter of the liquidator dated 17.04.2023.
3.He has further submitted that the Appellant shall comply with the directions of the Ld. Tribunal immediately and also tender their unconditional apology.
4.Issue notice. At this stage, Counsel appearing on behalf of the Respondent (Liquidator) accepts notice in court.
5.List again on 15th July, 2024 at 03:00 PM. In the meantime, operation of the impugned order shall remain in abeyance till then.”
Before the next date of hearing i.e. 15.07.2024, both the Appellants had filed the affidavits dated 11.07.2024 to tender apology and to demonstrate compliance with the direction contained in the order dated 29.03.2023 in order to purge the contempt.
In this regard, the following averments have been made in paras 4, 5 & 6 which are reproduced as under:-
On 15.07.2024, the affidavits filed by both the Appellants were taken on record while allowing the interim order to continue.
On 26.09.2024 Counsel for the Respondent (Liquidator) submitted that NOC, sale certificate and letter of possession have been given but she wanted to file an affidavit in this regard in which the following averments have been made:-
“13.Notably, after the present contempt ruling, the appellants finally issued a letter along with the NOC dated 24.05.2024, indicating a shift in their stance granting their no-objection and releasing the concerned goods in favor Liquidator lying at the Paradeep Port.
14.Additionally, post the NOC from the appellants, even the H1bidder has now paid the entire sale consideration amounting to Rs. 70,13,09,575 and a Certificate of Sale and letter of possession was issued on 09.08.2024, officially transferring ownership of the said goods of Corporate Debtor.
15.Following this, I also reached out to the second appellant to inform them of the payment and to request their cooperation in facilitating the immediate lifting of the Block-C assets from the port premises by the H1 bidder.
16.The process of lifting the assets (approx.. 18,000 tons) is currently in progress. Given that the NOC has now been granted and the lifting is underway, I have no objection to the setting aside of the operative part of the contempt order against the appellants, provided that they comply with future directives. However, I reserve the rights to take further action should any breaches occur moving forward”.
On 11.12.2024, after taking the affidavits dated 30.10.2024 on record, this Court passed the following order:-
“The Respondent/liquidator has filed his affidavit dated 30.10.2024 in pursuance of the order dated 26.09.2024. Paragraph no. 13 to 16 of the said affidavits are reproduced as under:
“13.Notably, after the present contempt ruling, the appellants finally issued a letter along with the NOC dated 24.05.2024, indicating a shift in their stance granting their no-objection and releasing the concerned goods in favour Liquidator lying at the Paradip Port.
14.Additionally, post the NOC from the appellants, even the H1bidder has now paid the entire sale consideration amounting to Rs. 70,13,09,575 and a Certificate of Sale and letter of possession was issued on 09.08.2024, officially transferring ownership of the said goods of Corporate Debtor.
15.Following this, I also reached out to the second appellant to inform them of the payment and to request their cooperation in facilitating the immediate lifting of the Block-C assets from the port premises by the H1 bidder.
16.The process of lifting the assets (approx.. 18,000 tons) is currently in progress. Given that the NOC has now been granted and the lifting is underway, I have no objection to the setting aside of the operative part of the contempt order against the appellants, provided that they comply with future directives. However, I reserve the rights to take further action should any breaches occur moving forward”.
The Deponent/liquidator has categorically averred in paragraph 16 of this affidavit that he reserves the right to take further action should any breach occur moving forward i.e. on the part of the contemnors.
Although Ld. Sr. Counsel appearing on behalf of the Appellant has submitted at the bar that the appellant will not cause any breach, it would be in the interest of justice if the appellant file an affidavit in this regard.
Ld. Sr. Counsel has submitted that the necessary affidavit shall be filed. Let the needful be done before the next date of hearing with advance copy to the Counsel for the Respondent/liquidator. Adjourned to 08.01.2025.”
The Appellants have filed the affidavit dated 24.12.2024 in which the following averments in para 5 & 6 have been made:-
On 27.01.2025 this Court has passed the following order:-
“Counsel for the Appellant has filed the affidavit dated 24.12.2024 which is taken on record. Counsel for Respondent has submitted that she is satisfied with the averment made in affidavit much less in paras 5 & 6 of the affidavit. We have heard Counsel for the parties. Order reserved.”
Since, the order dated 29.03.2023 has been duly complied with and Respondent has recorded his satisfaction in the aforesaid order and both Appellants being the Govt. Officials regret the lapse on their part and have tendered their unqualified apology for purging the contempt and that alleged disobedience of the order was neither intentional nor deliberate but due to misunderstanding and misreading of the record, therefore, in such circumstances, we are of the considered opinion that once the Appellants have purged the contempt by meticulously complying the order dated 29.03.2023 and have no previous history of being obstinate and head strong in so far as compliance of the judicial orders are concerned, the contempt can be purged of. Therefore, in the aforesaid peculiar facts and circumstances, we allow this appeal and set aside the order passed by the Tribunal. No costs.