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Judgment
Ashok Bhushan, J.
This Contempt proceeding has been instituted to punish the Contemnors for breach and wilful disobedience of the final judgment dated 20.08.2019 passed by this Tribunal in Company Appeal (AT) No. 44 of 2018. The Applicants had filed Company Appeal (AT) No. 44 of 2018 against the judgment dated 06.11.2017 passed by the National Company Law Tribunal ("Tribunal" for short), Mumbai Bench, Mumbai by which the Tribunal has dismissed the Company Petition No. 109/2013 filed by the Applicants with cost. The Applicants had filed a petition under Sections 397, 398, 399, 402, 403, 406, 235, 237 and 247 read with Section 111 of the Companies Act, 1956 against the alleged acts of oppression, mismanagement, fraud, manipulation etc. before the Company Law Board, Mumbai Bench, Mumbai. The Company Appeal (AT) No. 44 of 2018 was disposed off by this Tribunal vide judgment dated 20.08.2019, the following order was passed:-
"33. For above reasons and observations, the impugned order dated 6.11.2017 is upheld with the following directions:-
i) 1st Respondent will pay the appellants their balance of unsecured loan with interest at agreed rate which Respondents have discontinued providing since 1.4.1999 within one month of this order.
ii) The Respondent No.1 company will get the price of each share determined by registered valuer who will act as per Section 247 of the Companies Act, 2013. Respondent No.1 Company will ensure compliance within one month of the date of this Judgment.
iii) After getting report of Registered Valuer, Board of Directors of 1st Respondent will offer shares of 1st and 2nd appellant to the existing shareholders adopting procedure akin to Section 62 of the Companies Act, 2013 within one month of the offer given by the company. In case none of the existing shareholders purchase the shares of 1st and 2nd appellant, in that event 1st respondent will purchase the shares of 1st and 2nd appellant within one month thereafter.
iv) There shall be no order as to costs."
The Applicants' case is that after the order dated 20.08.2019, the Applicants filed a Review Petition No. 23 of 2019 before this Tribunal which was rejected. Applicants also filed Appeal being Civil Appeal No. 1220-1221 of 2020 before the Hon'ble Supreme Court which too was dismissed vide order dated 14.02.2020. The Applicants gave a legal notice dated 25.02.2020 to the Contemnors, demanding payment of a total amount of Rs. 20,349,111/- towards the balance of unsecured loan with compound rate of interest at 15% per annum from 01.04.1999 to 29.02.2020. The Contemnors had filed an Application for execution of the judgment and order dated 20.08.2019 before the NCLT, Bench at Cuttak seeking for following directions:-
"a) Direct the Respondent No.1 & 2 to accept the balance of unsecured loan with interest at agreed rate since 01.04.199 amounting to Rs. 9,21,598/- (Rupees Nine Lakhs Twenty One Thousand Five Hundred and Ninety Eight Only) and Rs. 28,88,503/- (Rupees Twenty Eight Lakhs Eighty Eight Thousand and Five Hundred and Three Only); and
b) Direct Respondent No.1 and 2 to transfer their shares in favour of Petitioner No.1 in lieu of the consideration amount as per the valuation report annexed; or
c) Direct Respondent No.4 (ROC) to transfer the shares of Respondent No.1 and 2 in the name of Petitioner No.1; and
d) Direct Respondent No.1 and 2 to pay the cost amount of Rs. 1,00,000/- (Rupees One Lac Only) each to the
Petitioners."
Legal notice was replied. In the execution petition, the Contemnors stated that two cheques, Cheque No. 017386 in the name of Applicant No.1 drawn on Allahabad Bank amount to Rs. 9,21,598/- and Cheque No. 017369 drawn on Allahabad Bank in the name of Applicant No.2 amounting to Rs. 28,88,503/- was sent by speed post which was not received by the Applicants.
Hence, the execution application has been filed. The Applicants filed the present Contempt Application on 19.08.2020.
This Tribunal heard the Contempt Case on several occasions. On 19.10.2020, following order was passed by this Tribunal:-
"19.10.2020: At request of Ms. Sweta Bharti, the Learned Counsel for the Petitioners/ Appellant for filing a proposal in respect of the balance unsecured loan with interest @ 10% compounded annually which the Respondents have to pay from 1.4.1999 the matter is adjourned to 6th November, 2020. The Learned Counsel for the Appellant is directed to serve a copy of the said proposal to the Learned Counsel for the Respondent one week well in advance before the next date of hearing.
The Registry is directed to List the matter on 6th November, 2020 as Part Heard."
The above order indicates that the time was granted for filing proposal in respect of the balance unsecured loan with interest @ 10% compounded annually from 01.04.1999.
Again matter was adjourned by order dated 08.01.2021 for filing a proposal in respect of the balance unsecured loan with interest @ 10% compounded annually which the Respondents have to pay from 01.04.1999. The order sheet of this Court dated 01.03.2021 indicates that the Learned Counsel for the Appellant has filed proposal on 22.02.2021 for payment of balance of unsecured loan along with compound interest @ 15% per annum from 01.04.1999 to 28.02.2021. On 02.06.2021, following order was passed by this Tribunal:-
"02.06.2021: It is stated that the Applicants/ Original Appellants have not complied with the directions given by this Tribunal in order dated 19th October, 2020 read with order dated 8th January, 2021. The Applicants to comply with the same before the next date.
Learned Counsel for the Respondents submits that he may be permitted to file Interlocutory Application making an offer to deposit the amount as per the calculation of the Respondents and permission may be given for the same. Respondents may file the Interlocutory Application as stated.
List the Contempt Case on 14th July, 2021."
The Contempt Application was heard thereafter. We have heard Learned Counsel for the Applicants as well as Learned Counsel for the Respondents.
Ms. Sweta Bharti, Counsel appearing for the Applicants contends that the Applicants have not submitted the proposal as directed by this Tribunal in respect of balance unsecured loan with interest @ 10% compounded annually which Respondents had to pay from 01.04.1999 rather they insist that they should be paid the amount @ 15%. It is submitted that the judgment of this Tribunal dated 20.08.2019 has become final between the parties according to which judgment the Respondents were obliged to make payment of unsecured loan with interest @ 15% compounded. Hence, the Applicants are entitled for payment of unsecured loan with interest @ 15% compounded annually. The Respondents having failed to pay such amount have committed contempt of this Tribunal's order dated 20.08.2019 and are liable to be punished.
Learned Counsel appearing for the Respondents submits that the Respondents have not committed any contempt of this Tribunal's order rather in pursuance of the order dated 20.08.2019, they have calculated the amount and sent two cheques of Rs. 9,21,598/- and Rs. 28,88,503/- as on 30.09.2019 which cheque were not received by the Applicants. Hence, the Respondents left with no remedy, has filed an Application for execution of the judgment and order dated 20.08.2019 before the Adjudicating Authority where the matter is pending. It is submitted that the cheques were sent to the Respondents in the month of September, 2019 which they refused to accept. Learned Counsel for the Respondents submits that for unsecured loan interest @ 15% was to be payable till 30.09.1998 and thereafter it was to be paid @ 10% per annum upto 31.03.1999. However, under the orders of this Tribunal dated 20.08.2019, the rate of interest have been calculated @ 10% and was not limited to 31.03.1999. It is submitted that the resolution dated 25.09.1998 was passed in the Seventh Annual General Meeting of the shareholders of Gyan Ganga Educational Institute Pvt. Ltd., Raipur, which Resolution is binding on all. The Respondents have calculated the amount of unsecured loan to be paid to the Applicants @ 15% till 30.09.1998 and from 01.09.1998 @ 10% which is substantial compliance of the judgment of this Tribunal dated 20.08.2019. It is further submitted that due to the above, this Tribunal in its orders, as noted above, directed the Applicants to submit a proposal for payment @ 10% w.e.f. 01.04.1999. The Applicants have not submitted the above proposal which itself indicates that the Applicants are not ready to comply with the orders passed by this Tribunal.
We have considered the submissions of the Learned Counsel for the parties and have perused the record.
The judgment dated 20.08.2019 passed in Company Appeal (AT) No. 44 of 2018 has become final between the parties whereunder direction (i) the 1st Respondent was to pay the Appellants their balance of unsecured loan with interest at agreed rate which Respondents have discontinued providing since 01.04.1999 within one month of this order. There is no dispute between the parties that as per the Agreement dated 07.09.1991 on the unsecured loan of the Applicants, the Respondent No.1 was to make payment @ 15% annually compounded. The Applicants themselves have brought on record the proceedings of general body meeting dated 25.09.1998 as Annexure-B which has been referred to and relied in Paragraph 6 of the Application. Paragraph 6 of the Application states as follows:-
"6. Thereafter, the Contemnors started to pay the interest on the unsecured loans of the Petitioner at the compound rate of 15% in per annum up to 30.09.1998, as the same is evident from the minutes of Seventh Annual General Meeting of the Shareholders of Contemnor No.1 held on 25.09.1998 which was also part of the records of the Appeal filed before this Hon'ble Tribunal. The copy of the minutes of the Annual General Meeting dated 25.09.1998 of Contemnor No.1 annexed herewith and marked as Annexure- B"
Now we revert to the proceedings of the Annual General Meeting dated 25.09.1998 which indicates that it was resolved that from 01.10.1998 the interest will be paid to the shareholders on their unsecured loans only at 10% per annum compound rate of interest upto 31.03.1999. The Resolution passed on 25.09.1998 is to the following effect:-
"(7) Shri R.P. Singh moved a resolution that as the company had run into loss during 1997-98 and the inflationary trend during the current year and souring high, the company would be operating on a very tight budget and it would not be able to contain the financial burden of paying interest on unsecured loans at the compound rate of 15% per annum. Shri Sachin Shandilya and some other members also supported this resolution and by a majority at votes by show hands the following resolution was adopted.
"Resolved and as it resolved that from 1-10-98 the interest will be paid to the shareholders on their unsecured loans, only at 10% per annum compound rate of interest upto 31-3-99, and thereafter no interest will be payable on unsecured loan and those members who wish to withdraw their unsecured loans in part or in full may apply after 1-4-99 with three months notice so that the loan could."
Learned Counsel for the Applicants submits that this Tribunal's judgment dated 20.08.2019 did not direct payment of interest @ 15% rather the expression used by this Tribunal was 'with interest at agreed rate'. It is submitted that the Resolution dated 25.09.1998 having never been challenged by the Applicants, the Resolution of the general body with regard to the rate of interest have to be given effect and the agreed rate which is to be paid to the Applicants is @10% from 01.04.1999. The order passed by this Tribunal dated 19.10.2020, as extracted above, indicates that this Tribunal in its order noted the filing of the proposal of the balance unsecured loan with 10% interest compounded annually w.e.f. 01.04.1999. Although the proposal with interest @ 10% as was prayed to be submitted by the Appellants was never submitted rather Applicants have submitted the proposal with interest @ 15% per annum from 01.04.1999 but in the facts of the present case, we are satisfied that there is no wilful disobedience on the part of the Respondents so as to punish the Respondents for contempt. The Respondents even before filing of the Contempt Application has issued two cheques in favour of the Applicant Nos. 1 & 2 as noted above calculating the interest @ 10% compounded annually from 01.04.1999.
The fact that Respondents themselves have filed application for execution of the judgment dated 20.08.2019 is sufficient to indicate that the Respondents intended to comply the Judgment. We however cannot lose sight of the fact that the judgment dated 20.08.2019 having become final between the parties, the Respondents are liable to pay the amount. We further noticed that in the order passed by this Tribunal dated 20.08.2019, there is no direction to make payment of interest @ 15% since 01.04.1999. Learned Counsel for the Appellant submits that direction to pay 15% interest is decipherable from the observations made in paragraph 32. It is submitted by the Respondents that the amount included by the Applicants is unsecured loan on which the Respondents were paying interest @ 15% and TDS was also being deducted.
The above observation notices the case of the Respondents that they were paying interest @ 15%. There is no dispute that the earlier interest @15% was being paid till 30.09.1998 and the above observations only indicate that the payments were earlier made @ 15% but that the above observations cannot read to mean that even from 01.04.1999 the Respondents agreed to make the payment @ 15%. The expression 'at agreed rate' as contained in paragraph 33 of the judgment of this Tribunal dated 20.08.2019 is capable of interpretation as put by the Respondents. When general body Resolution dated 25.09.1998 have expressly decided to pay interest @ 10% from 01.04.1999 and the general body Resolution is not denied or challenged by the Applicants, their insistence that the unsecured loan was to be paid @ 15% annually even after 01.04.1999 cannot be accepted. It is well settled that it is not permissible to the Court to examine the correctness of the earlier decision which has become final between the parties. However, when an order was reasonably capable of more than one interpretation a proceeding for contempt would not be maintainable. The Hon'ble Supreme Court in "Tamilnad Mercantile Bank Shareholders Welfare Association (1) vs. Tamilnad Mercantile Bank Limited- (2008) 15 SCC 529" paragraphs 8 and 9 laid down the following:-
"8. Having heard learned counsel for the parties, we are of the opinion that the expression "duly registered" cannot be said to be free from any ambiguity. It is apparent that the parties to the suit construed the said expression differently. The learned Single Judge while passing the consent order did not specifically spell out that the said expression would mean that the power of attorneys must be registered with the Registrar of Assurances.
It is now well settled that when an order is ambiguous and was reasonably capable of more that one interpretation, a proceeding for contempt would not be maintainable."
We are thus satisfied that no case has been made out to punish the Respondents for contempt. The Respondents having themselves initiated proceedings for execution of the judgment dated 20.08.2019 and have expressed their willingness to deposit the entire amount with interest @ 15% till 30.09.1998 and thereafter @ 10% per annum annually compounded till the date payment is made, we permit the Respondents to deposit the amount as above before the Executing Court within one month from today. The said amount shall be remitted by the Executing Court to the Applicants. The Executing Court shall also verify whether the amount so deposited is as per above and in the event any shortfall is found in the amount, the Respondents shall be directed to deposit the said amount also which may be remitted to the Applicants. The execution proceedings may be concluded by the Executing Court at an early date preferably within three months of the date when copy of this order is produced. The Contempt Application is disposed off, accordingly.