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HIGH COURT OF DELHI
Date of Decision: 24th October, 2019.
RAVI SHARMA ..... Decree Holder
Through: Mr. Rakesh Mittal, Adv.
JUDGMENT
Through: Mr. Anuj Bhandari, Adv. for JDs.
Mr. Parag P. Tripathi, Sr. Adv. with Mr. Abhimanyu Bhandari, Ms. Roohina Dua, Mr. Cheitanya Madan, Mr. Arav Pandit & Ms. Mishika Bajpai, Advs. for the applicant.
AND
SATYENDRA JAIN ..... Decree Holder
Through: Mr. Rakesh Mittal, Adv.
Through: Mr. Anuj Bhandari, Adv. for JDs.
Mr. Parag P. Tripathi, Sr. Adv. with Mr. Abhimanyu Bhandari, Ms. Roohina Dua, Mr. Cheitanya Madan, Mr. Arav Pandit & Ms. Mishika Bajpai, Advs. for the applicant.
2019:DHC:5568
No.26/2018 (both of Omaxe Ltd. under Section 151 CPC)
1. The applicant Omaxe Ltd. has filed these applications to withdraw the undertaking dated 2nd May, 2019.
2. The counsel for the decree-holders and the counsel for the judgmentdebtors appear on advance notice.
3. I have enquired from the counsel for the decree-holders, whether any reply is required to be filed to the applications.
4. The counsel for the decree-holders states that no reply is required and the applications be heard today itself.
5. Though the counsel for the judgment-debtors states that an opportunity to file reply be granted but it prima facie appears that the applications are not concerned with the judgment-debtors and thus the senior counsel for the applicant Omaxe Ltd., counsel for the decree-holders and the counsel for the judgment debtors have been heard.
6. Both execution petitions seek execution of money decreesin CS(OS) No.48/2011 and CS(OS) No.47/2011 respectively in favour of respective decree-holders and jointly and severally against the judgment-debtors.
7. Though Execution Petition No.26/2018 was not listed today before this Bench and was informed to be listed before Justice V.K. Rao but on first call it was informed that the said Bench had directed the Execution Petition No.26/2018 also to be listed before this Bench and the matter was passed over. The file of Execution Petition No.26/2018 has since been received.
8. On 8th May, 2019, EAs No.213/2019 & 214/2019 in the two Execution Petitions respectively, filed by judgment debtor No.2 Janak Goyal came up before this Court. The judgment debtor No.2, in the said applications stated (a) that the decree holders are in possession of title deeds of land, deposited with the decree holders by way of collateral security for loan taken from decree holders; (b) that vide orders in the Execution Petitions, the judgment debtors had been directed to maintain status-quo qua their properties; (c) the judgment debtors, during pendency of the Execution Petitions, had approached Omaxe Ltd., to enter into an arrangement for developing a project on the land mortgaged with the developers, and Omaxe Ltd.had shown willingness and therefore agreed to immediately pay an amount of Rs. 1 crore to the decree holder Satyendra Jain, and to further pay amounts of Rs. 9,28,79,923/- by post dated cheque (PDC)dated 1st November, 2019, an amount of Rs 10,51,00,925/- to the decree holder Ravi Sharma by PDC dated 1st November, 2019, and to further pay a sum of Rs. 50 lacs to each of the decree holders through PDC dated 1st November, 2019; (d) that the decree holders may be directed to, on receiving Rs. 1 crore and PDCs for the other amounts for and on behalf of the judgment debtors, get all the pending matters adjourned for a period of 6 months; (e) the decree holders be also directed to release the property of Ghanshayam from mortgage and return the original title deeds to the judgment debtor, so that the judgment debtor can apply for necessary permissions for development of the subject land; (f) in case any of the PDCs given by Omaxe Ltd. for and on behalf of the judgment debtors gets bounced, the original title deed should be given back to the decree holders, and the decree holders should have right to revive all the pending cases and initiate any proceedings against the judgment debtors and Omaxe Ltd; (g) the judgment debtor through Omaxe Ltd undertakes to pay the entire decretal amount through PDCs aforesaid and to honor the cheques; (h) affidavit of undertaking of authorized signatory of Omaxe Ltd was enclosed, and (i) the judgment debtor and Omaxe Ltd. undertake to return the original title deeds to the decree holder in case of any of the cheques given by Omaxe Ltd. to the decree holder gets bounced, and in such an eventuality, all payments made by Omaxe Ltd. to the decree holder may be forfeited and the decree holders may continue the legal proceedings.
9. The following order was passed in the two Execution Petitions on the aforesaid identical applications: “1. By way of this application, Judgement Debtor No.2 seeks to place on record the undertaking of Mr. Kumar Dhruv [Authorized Signatory of M/s Omaxe Limited and Mr. Janak Goyal s/o late Sh. Bhagwan Goyal, [Judgement Debtor No. 2] described as document No. 4 in the accompanying the application. The board resolution in favour of the executants authorising them to give the undertakings is handed over in the Court and the same is taken on record. The said undertakings are accepted by the Decree-holder and taken on record. The Judgment Debtor No. 2 as well as Mr. Kumar Dhruv shall be bound by the said undertakings.
2. In terms of the undertaking, the Judgement Debtor No. 2 has handed over the post dated cheques. The said cheques are tendered and accepted by the learned counsel for the Decree Holder.The Judgment Debtor assures that the cheques handed over to the Decree Holder will be honoured on presentation. In view of the aforesaid tender cheques, learned counsel for the Decree Holder has handed over the original title documents in respect of the properties mentioned in para 1 in EX.P. 142/2013 and para 2 in EX.P. 26/2018. Learned counsel for the Decree Holder further assures that for a period of six months, any application filed by the Judgment Debtor seeking adjournments/suspension of the stay order, shall not be opposed by the Decree Holder. Learned counsel for the decree holder prays that the matter be now listed sometime in the month of November 2019 by which time the fate of the cheques handover to him today would become clear.
3. The learned counsel for the Decree Holder, further states that he has no objection in case the Court were to suspend the directions given in it's order dated 21st April 2014, whereby the Judgement Debtors No. 1 to 3 were directed to maintain status quo in respect of the title and possession of properties belonging to them as mentioned in Annexure-A to the execution petition. It is ordered accordingly.
4. List on 7th November 2019 for directions.The next date of hearing i.e. 17th July 2019 stands cancelled.”
10. The undertaking referred to in the aforesaid order, in Execution Petition No.142/2013 is as under: “UNDERTAKING I, Kumar Dhruv S/o Shri Vijay Kumar Gupta authorized signatory (duly authorized by board resolution) of M/s Omaxe Limited, a company, incorporated under the Indian Companies Act 1956, having its registered office at Shop no.,19-B, First Floor, Omaxe Celebration Mall, Sohna Road, Gurgaon-122001 (Haryana), (a real estate developer) do hereby solemnly affirm and declare as under:
1. That, I am Authorized Signatory of M/s Omaxe Limited and I have been duly authorized by board of directors to give this undertaking in the court for and on behalf of M/s Omaxe Limited and I am competent to sign this undertaking on behalf of the Company.
2. That M/s. Omaxe Limited has entered into an arrangement with M/s Omway Buildestate Pvt. Ltd. and another for developing a project on the land mortgaged with Sh. Ravi Sharma and Mr. Satyender Jain (Decree Holders).
3. That M/s Omaxe Limited has issued 1 current dated and other Post Dated Cheque(s) (PDC) in the name of Mr. Ravi Sharma and Mr. Satyender Jain for and on behalf of M/s Omway Buildestate Pvt. Ltd., and Anr., as mentioned in Para 11(i) to Para (iv) in the application dated 2-5-2019 in EXECUTION PETITION NO.142 OF 2013 AND 26 OF 2018.
4. That, I on behalf of M/s Omaxe Limited hereby clearly agree and understand the contents of application dated 2-5-2019 filed in the Execution Petition no.142 OF 2013 and 26 of 2018 and undertake the clearance / payment of issued vide current and Post Dated Cheque(s) (PDC) to Mr. Ravi Sharma and Mr. Satyender Jain by M/s Omaxe Limited.
5. That I, on behalf of Omaxe Ltd., undertake to return the original title deeds of the properties mentioned in Para-1 and 2 to the respective Decree Holders in case any of the cheque given by Omaxe Limited gets bounced for any reason whatsoever. It is also undertaken by M/s Omaxe Limited that in such eventuality, any / all payments made for and on behalf of judgment debtors by Omaxe Limited to the Decree Holders may be forfeited by the Decree Holders and Decree Holders may continue / initiate appropriate legal proceedings against the judgment debtors as well as M/s Omaxe Limited. Sd/- DEPONENT VERIFICATION Verified at New Delhi on 02/05/19 that the contents of the above affidavit are true and correct best of my knowledge and on the basis of records maintained by the Company, that no part of it is false and that nothing material has been concealed therefrom Sd/- DEPONENT”
11. These applications have been filed by Omaxe Ltd. pleading that (i) since the judgment-debtor no.1 Omway Buildestate Pvt. Ltd. was not in a position to fulfil the said decree, it had approached the applicant Omaxe Ltd. with a proposal for development by the applicant Omaxe Ltd. of land situated at Main Alwar-Delhi Road, Belaka, Alwar, Rajasthan owned by the judgment-debtor, in lieu of the applicant Omaxe Ltd. filling“into the shoes of the Judgment-Debtor and discharging the said Decree on behalf of the Judgment-Debtor”; (ii) the land which was proposed to be developed by the applicant Omaxe Ltd. was mortgaged by the judgment-debtors with the decree-holders and the judgment-debtors had informed the applicant Omaxe Ltd. that as per orders in these execution proceedings, the land could not be dealt with; (iii) in order to release the said lands from the decree-holders, the judgment-debtors were under obligation to discharge the “decrees” subject matter of the two execution petitions and which the judgment-debtors were unable to fulfil; (iv) the judgment-debtors assured the applicant Omaxe Ltd. that the lands were otherwise free from all encumbrances and not subject matter of any litigation and capable of being developed by the applicant Omaxe Ltd.; (v) the Memorandum of Understanding (MOU) dated 7th February, 2019 was executed between the judgment-debtors Omway Buildestate Pvt. Ltd. And Ghanshayam on the one part and the applicant Omaxe Ltd. on the other part; (vi) under the said MOU, the applicant Omaxe Ltd. had agreed to pay forthwith a sum of Rs.[1] crore to the decreeholder inExecution Petition No.26/2018 and to pay other amountsas mentioned in the applications, through PDCs expiring six months from the date of MOU, for and on behalf of the judgment-debtors; (vii) the aforesaid total amount of Rs.22,11,38,569/- had been given by the applicant Omaxe Ltd. to the judgment-debtors as refundable security, to be recovered by the applicant Omaxe Ltd. from the Escrow account mentioned in the MOU;
(viii) the applicant Omaxe Ltd. had agreed to pay the decreed amounts to the decree-holders against the promises of the judgment-debtors contained in the MOU; (ix) the applicant Omaxe Ltd. also filed the undertaking aforesaid before this Court; (x) despite the applicant Omaxe Ltd. fulfilling all its obligation under the MOU, the judgment-debtors have failed to fulfil their obligations under the MOU and are in breach of the MOU and which has resulted in loss to the applicant Omaxe Ltd.; (xi) the applicant Omaxe Ltd. has discovered that the judgment-debtors had misrepresented to the applicant Omaxe Ltd.; (xii) the applicant Omaxe Ltd. has already initiated legal proceedings against the judgment-debtors to recover the loss caused by the judgment-debtors to the applicant Omaxe Ltd.; (xiii) the applicant Omaxe Ltd. has also intimated the decree-holders to abstain from encashing the cheques; and, (xiv) these applications are being filed by way of intimation to this Court.
12. The senior counsel for the applicant has contended that though the applicant Omaxe Ltd. in the applications has set out the various facts leading to the applicant Omaxe Ltd. choosing to withdraw from the MOU with the judgment-debtors, whereunder the applicant Omaxe Ltd. was to develop the land mortgaged by the judgment-debtors with the applicant Omaxe Ltd.,but the same may not be relevant for the present purposes.
13. The contention of the senior counsel for the applicant is that the undertaking furnished by the applicant Omaxe Ltd. before this Court itself provided for the consequences of the cheques given by the applicant Omaxe Ltd. under the undertaking furnished to this Court bouncing for any reason whatsoever, the applicant Omaxe Ltd. cannot be proceeded against for breach of undertaking and the applicant Omaxe Ltd. today has brought to this Court the title deeds of the land aforesaid which on 8th May, 2019 were handed over by the counsel for the decree-holder to the applicant Omaxe Ltd. and is also ready to face other consequences as contained in the undertaking viz. of forfeiture of the amount of Rs.[1] crore already paid. It is further contended that the applicant Omaxe Ltd. is willing to deliver possession of the land to whosoever the Court may direct.
14. Per contra, the counsel for the decree holders has argued (i) that the applicant Omaxe Ltd. was not a party to the suit or to the execution and had on its own come forward to satisfy the money decree against the judgment debtors and which proposal of the applicant Omaxe Ltd. was accepted by the decree holders and the applicant Omaxe Ltd. now cannot withdraw from the undertaking; (ii) in the event of PDCs handed over by the applicant Omaxe Ltd. to the decree holders in terms of the undertaking bouncing, the decree holders can initiate contempt proceedings as well as suit for recovery against the applicant Omaxe Ltd.; (iii) that every property of the judgment debtors is attached and has been taken away; and, (iv) the decree holders have already spent Rs.1.89 crores in this litigation and for this reason alone the applicant Omaxe Ltd. cannot be permitted to withdraw the undertaking.
15. The counsel for the judgment debtors has contended that the MOU executed by the applicant Omaxe Ltd. was with the judgment debtors and one Ghanshayam (who is judgment debtor No.3 in Ex.P. No.142/2013) with respect to 28 acres of land and out of which 23 acres was/is owned by Ghanshayam.
16. I have considered the rival contentions.
17. It cannot be lost sight of,(a) that the money decrees in favour of the decree holders under execution are not against the applicant Omaxe Ltd. but against the judgment debtors;(b)the monies under the said decrees could have been realized only from the movable and immovable properties of the judgment debtors;(c) one of the properties of the judgment debtors from which money was sought to be realized was land situated at Village Belaka, Alwar, Rajasthan which had been mortgaged by the judgment debtors in favour of the decree holders;(d)vide order dated 21st January, 2014, the judgment debtors were directed to maintain status quo in respect of title and possession of the said property and restrained from creating any third party rights in respect of their properties;however since it was informed that some of the properties of which list had been furnished by the decree holders then did not belong to the judgment debtors and some of the other properties were subject matter of certain interim orders passed by the High Court of Rajasthan in proceedings for winding up of judgment debtor no.1, the order was made subject to the orders passed and to be passed in the Company Petition being CP No.277/2011 and by the Rajasthan High Court;(e) the applicant Omaxe Ltd. is a stranger to these Execution Petitions; (f) it was the judgment debtors who vide EAs No.213/2019 & 214/2019 in these Execution Petitions brought a proposal for satisfaction of the decree by entering into an arrangement with the applicant Omaxe Ltd. for development of the land and to which the decree holders agreed; (g) however, the said proposal whereunder the applicant Omaxe Ltd. Agreed to pay monies to the decree holders on behalf of the judgment debtors in satisfaction of the decree was a contingent one and the payments, though PDCs therefor were handed over, were also contingent with consequence of bouncing of PDCs being inbuilt therein; (h) it is not as if, under EAs No.213/2019 & 214/2019, the applicant Omaxe Ltd. stepped into the shoes of the judgment debtors or undertook to satisfy the decree, irrespective of the arrangement entered into with the judgment debtors with respect to the land; (i) this Court also in order dated 8th May, 2019 did not substitute the applicant Omaxe Ltd. in place of the judgment debtors; (j) the proceedings pending before this Court are only for execution of a decree and which can be executed only in terms thereof; there is no decree against the applicant Omaxe Ltd. and the question of this Court as an Executing Court passing any order against the applicant Omaxe Ltd., save an order to which applicant Omaxe Ltd. has consented on 8th May, 2019, does not arise; and, (k) however, the order to which the applicant Omaxe Ltd. has consented is only of forfeiture of Rs.[1] crore paid on 8th May, 2019, of return of possession of the land and the title deeds to the decree holders and to all of which the applicant Omaxe Ltd. is still willing.
18. Thus, the only question which remains for adjudication is, whether any proceedings for breach/violation of the undertaking, can be initiated against the applicant Omaxe Ltd.
19. The undertaking which the applicant Omaxe Ltd. furnished to this Court under cover of EAs No.213/2019 & 214/2019 was for (i) clearance/payment of PDCs, to return the original title deeds in case any of the PDCs gets bounced for any reason whatsoever; and, (ii) to forfeit the monies paid to the decree holders till then, and to decree holders continuing appropriate legal proceedings against the judgment debtors as well as the applicant Omaxe Ltd. What needs adjudication is that in the face of such an undertaking, whether the decree holders are entitled to maintain proceedings for breach of undertaking against the applicant Omaxe Ltd.
20. Though these applications of the applicant Omaxe Ltd. are only for permitting withdrawal of undertaking and there is no application of the decree holders for initiation of contempt proceedings against the applicant Omaxe Ltd. (inasmuch as the matter is being considered before PDCs are due for payment), but the question aforesaid nevertheless arises.
21. I am of the view that since the undertaking is not unequivocal and unconditional and is expressly setting out the consequence of breach of undertaking, no action for initiating proceedings for contempt of Court against the applicant Omaxe Ltd. for breach of undertaking lies. As far back as in Supreme Court Bar Association Vs. Union of India (1998) 4 SCC 409, it was held that contempt of Court is a special jurisdiction to be exercised sparingly and with caution whenever an act adversely affects the administration of justice or which tends to impede its course or tends to shake public confidence in the judicial institutions; this jurisdiction may also be exercised when the act complained of adversely affects the majesty of law or dignity of Courts; it is a matter between the Court and the contemnor and the third parties cannot intervene; such jurisdiction is to be exercised whenever any act has the tendency to shake the public confidence in the fairness and impartiality of administration of justice. To the same effect is Dr. Prodip Kumar Biswas Vs. Subrata Das (2004) 4 SCC 573 also holding that contempt proceedings should not be initiated lightly. Recently, in R. Muthukrishnan Vs. Registrar General of the High Court of Judicature at Madras 2019 SCC OnLine SC 105 it was also held that the lethal power of contempt is accompanied with greater responsibility, to be used sparingly to remain effective.
22. Applying the aforesaid law, neither the decree holders nor anyone else reading EAs No.213/2019 & 214/2019 and the proceedings of this Court on 8th May, 2019 could understood the same as meaning that on bouncing of any of the cheques, proceedings for contempt of Court would lie against the applicant Omaxe Ltd. The decree holders, with their eyes and ears open accepted the proposal of the judgment debtor and the applicant Omaxe Ltd. and though undoubtedly changed their position by agreeing to suspension of the interim order of status-quo earlier in force and to delivery of title documents lying with them as security and to the applicant Omaxe Ltd. taking possession of the land, but knowing fully well that there was no certainty of receiving the monies which the applicant Omaxe Ltd. had agreed to pay and for which PDCs were issued and being reverted to the same position as immediately before the order dated 8th May, 2019 on any of the cheques bouncing. The decree holders, realizing the difficulties in recovery of monies for which decree had been obtained, had agreed to take a calculated risk and cannot now seek anything more than what they had bargained for. It thus cannot be said that bouncing of the PDCs handed over by the applicant Omaxe Ltd. to the decree holder has affected the decree holders more adversely or unfairly than they had bargained for, and to which bargain this Court had put its imprimatur. It thus also cannot be said that on bouncing of the cheques in spite of undertaking, the majesty of the Court has been lowered or the process of law has been interfered with, inasmuch as the process provided for consequences of such eventuality. Though no precedent is necessary, but I find a Division Bench of the High Court of Calcutta in Sukumar Mitra Vs. Tara Sankar Ghosh AIR 1952 Cal 591to have also held that the undertaking given to the Court in that case, to vacate the premises on or before 2nd January, 1952, had to be read with clause (5) of the joint petition for compromise which provided that in case of failure to vacate the premises, certain consequences would follow and there was thus no unqualified undertaking for breach whereof the undertaking party could be held guilty of contempt of Court.
23. It is also significant to note that this Court on 8th May, 2019, after accepting the undertakings did not dispose of the Execution Petitions as would have been the case, if in terms of the undertaking the decree in any case was to stand satisfied and on breach of undertaking only, the action for contempt of Court were to lie. This Court owing to the contingent nature of the compromise, adjourned the execution proceedings to 7th November, 2019 to find out, whether the PDCs were honored or not and to proceed further in the execution, if the cheques were dishonored. Once, the Court itself has proceeded in such manner, the question of the applicant Omaxe Ltd. interfering with the administration of justice does not arise.
24. Thus, the applications of the applicant Omaxe Ltd. are entitled to be allowed. However, before the applicant Omaxe Ltd. is relieved, it has to be ensured that all the consequences undertaken and/or agreed to are complied with.
25. List for the said purpose on 7th November, 2019, as already scheduled.