M/S JAI AMBEY CONSTRUCTION CO. v. UNION OF INDIA & ORS.

1. The present petition alleges wilful disobedience of the order dated 20.12.2024 passed in the arbitral proceedings between the parties in Case Ref. No. DIAC/8230/04-24.

2. The operative directions in the order dated 20.12.2024 passed by the learned Arbitrator, read as under:-

3. It is evident from the above that (i) the respondents were directed not to ban the petitioner herein; (ii) the said order was passed for the purpose of ensuring that the petitioner’s participation in future tenders, notwithstanding the cancellation of the subject contract between the parties, remains unimpeded; (iii) the said observations were made in the context of the remarks concerning the petitioner’s capability to handle more workload, as referred to in the communication dated 05.09.2024.

4. Admittedly, no appeal against the aforesaid directions was filed by the respondents. As such, undisputedly, the aforesaid directions continue to operate.

5. The petitioner pointed out that despite the aforesaid, during the course of evaluation of a tender, issued by the same department, the following observations came to be made in respect of the bid of the petitioner: “Not recommended being adverse remarks in WLR. Interim award has been forwarded to E-in-C’s Br for CA (Def) opinion”

6. It is evident from the perusal of Annexure P-8 that the aforesaid observations came to be made in the context of the same WLR of September, 2024, which formed the basis of the aforesaid interim order passed by the learned Arbitrator.

7. It further transpires that in the aftermath thereof, in certain subsequent WLR/s dated 27.05.2025, the same adverse remarks have been repeated against the petitioner.

8. In the circumstances, it is evident that the respondents have not complied with / adhered to the directions contained in the order dated 20.12.2024 passed by the learned Arbitrator.

9. The same tantamount to disobedience of the said order dated 20.12.2024, entailing action against the respondents under the Contempt of Courts Act, 1971.

10. It is further noticed that in the counter affidavit filed on behalf of the respondents, the following averments have been made:-

11. The aforesaid contention exacerbates the wilful disobedience on part of the respondents, inasmuch as the respondents have conceded that they are not implementing the interim award / order passed by the learned Arbitrator. The same cannot be countenanced especially when the respondents have not even assailed the said order in accordance with law.

12. In DDA v. Skipper Construction Co. (P) Ltd., (1996) 4 SCC 622, the Supreme Court held that it is incumbent upon this Court to pass appropriate order/s to ensure that the contemnors do not take advantage of the wilful disobedience committed by them. The relevant extracts from the judgment are as under: “17. The principle that a contemner ought not to be permitted to enjoy and/or keep the fruits of his contempt is well settled. In Mohd. Idris v. Rustam Jehangir Babuji [(1984) 4 SCC 216: 1984 SCC (Cri) 587: (1985) 1 SCR 598] this Court held clearly that undergoing the punishment for contempt does not mean that the court is not entitled to give appropriate directions for remedying and rectifying the things done in violation of its orders. The petitioners therein had given an undertaking to the Bombay High Court. They acted in breach of it. A learned Single Judge held them guilty of contempt and imposed a sentence of one month's imprisonment. In addition thereto, the learned Single Judge made appropriate directions to remedy the breach of undertaking. It was contended before this Court that the learned Judge was not justified in giving the aforesaid directions in addition to punishing the petitioners for contempt of court. The argument was rejected holding that “the Single Judge was quite right in giving appropriate directions to close the breach (of undertaking)”.

18. The above principle has been applied even in the case of violation of orders of injunction issued by civil courts. In Clarke v. Chadburn [(1985)

1 All ER 211] Sir Robert Megarry V-C observed: “I need not cite authority for the proposition that it is of high importance that orders of the court should be obeyed. Wilful disobedience to an order of the court is punishable as a contempt of court, and I feel no doubt that such disobedience may properly be described as being illegal. If by such disobedience the persons enjoined claim that they have validly effected some charge in the rights and liabilities 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 Mad 270: (1975) 2 MLJ 54] and Sujit Pal v. Prabir Kumar Sun [AIR 1986 Cal 220: (1986) 90 CWN 342]. In Century Flour Mills Ltd. [AIR 1975 Mad 270: (1975) 2 MLJ 54] 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 the court, it was held, is not only available in such a case, but it is bound to exercise it to undo the wrong in the interest of justice. That was a case where a meeting was held contrary to an order of injunction. The Court refused to recognise that the holding of the meeting is a legal one. It put back the parties in the same position as they stood immediately prior to the service of the interim order.”