Parties To Court Proceedings Cannot Give Undertakings Without Intending To Honour Them: Delhi HC Rejects Apology, Holds Company In Contempt

The Delhi High Court recently while dealing with a Contempt Petition observed that parties in legal proceedings must not make undertakings lightly; rather, they are expected to genuinely commit to and conscientiously strive to fulfil the obligations they undertake.

The Single Judge Bench of Justice Jasmeet Singh, in its order, stated, "There is solemnity and seriousness attached to court proceedings. Parties to court proceedings cannot give undertakings without intending to honour them, or at least, they must make sincere and conscious efforts to comply with the same. If undertakings are given and the parties are permitted to resile from the same without any reasons, the judicial system cannot function. The Court in contempt proceedings is to ensure that the dignity and majesty of the Court are maintained and any act and conduct of a party tantamount to lowering the dignity and majesty of the Court would amount to contempt."

The Petitioner, State Trading Corporation of India, had approached the Delhi High Court seeking the commencement of contempt proceedings against officials of Akshata Mercantile Pvt. Ltd., for breaching a commitment made in connection with a Criminal Complaint under Section 138 of the Negotiable Instruments Act before the Trial Court.

The Petitioner submitted before the Delhi High Court submitted that Akshata Mercantile misled the Trial Court to delay adjudication of the complaint under Section 138 of the Negotiable Instruments Act by giving such a false undertaking. Per the statement recorded before the Trial Court,  the Respondent officials pledged that Akshata Mercantile would remit a sum ranging from Rs. 10 crores to Rs. 15 crores monthly to the State Trading Corporation. Moreover, they assured that the entire outstanding amount would be settled within a span of 6 to 8 months.

Considering the submissions, the Court acknowledged the validity of the undertaking given before the Trial Court. The High Court also rejected the Respondent's submission that the undertaking was conditional and that there was no timeline fixed. The High Court stated, "The Respondents had also undertaken to pay Rs. 10 – 15 crores every month and to liquidate the total outstanding within 6 – 8 months starting from 01.08.2014. Hence, the terms of the settlement are neither vague nor devoid of timelines."

Further, on the aspect of apology tendered by the Respondent, the High Court referred to the case of Priya Gupta v. Ministry of Health & Family Welfare, (2013) 11 SCC 404, wherein it was observed, "8.'…Bona fide' is an expression which has to be examined in the context of a given case. It cannot be understood in the abstract. The attendant circumstances, behaviour of the contemnor and the remorse or regret on his part are some of the relevant considerations which would weigh with the Court in deciding such an issue. Where, persistently, a person has attempted to over-reach the process of Court and has persisted with the illegal act done in wilful violation to the orders of the Court, it will be difficult for the Court to accept unconditional apology even if it is made at the threshold of the proceedings. It is not necessary for us to examine in any greater detail the factual matrix of the case since the disobedience, manipulation of procedure and violation of the schedule prescribed under the orders of the Court is an admitted position…."

Rejecting the apology, the High Court stated, "However, the apology has to be seen with regard to the nature of disobedience and the pre and post circumstances surrounding the apology. In the present factual matrix, and the conduct of the Respondent to not make the payment as agreed between the parties and recorded as per the order dated 04.08.2014, as well as repeatedly ask for extensions in order to delay the proceedings, I am of the view that the apology of the Respondent cannot be said to be bona fide."

The High Court accordingly held the Respondent guilty of contempt and granted 4 weeks to file a reply to show cause as to why he should not be punished for contempt for non-compliance with the undertaking given before the Trial Court. 

Cause Title: State Trading Corporation Of India Ltd v. Sheela Abhay Lodha & Ors and connected matter[Cont.Cas(C) 232/2015]

Click here to read/download the Order