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            REPORTABLE

IN THE SUPREME COURT OF INDIA

 CIVIL APPELLATE JURISDICTION

   CIVIL APPEAL NO.  18834  OF 2017    (Arising out of SLP (Civil) No. 12596 OF 2017)

ECL FINANCE LTD                                    .. APPELLANT (S)

                                                  VERSUS HARIKISHAN SHANKARJI  GUDIPATI & ORS.       .. RESPONDENT (S)

J U D G M E N T

KURIAN, J.,  

1. Leave granted.

2. The appellant is before this Court aggrieved by an order

dated 14th February, 2017 passed by the Division Bench

of the High Court of Bombay in Appeal (LDG.) No.2 of

2017.  The said appeal was filed against the order dated

22nd December,  2016  in  Contempt  Petition  No.  17  of

2016 in Suit No. 802 of 2014.

3. The appellant filed a Contempt Petition alleging that the

respondents  herein  had  not  honoured  the  consent

decree drawn on 14th August, 2015, and hence they are

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liable to be punished for contempt. It appears that the

appellant  had  also  initiated  execution  proceedings,

since in the decree, it is stated that in case the terms of

the consent are violated, the suit would stand decreed

in terms of the prayer made in the plaint.  Be that as it

may, we find from the order dated 22nd December, 2016

of  the  learned  Single  Judge  that  the  learned  Single

Judge  has  admitted  the  contempt  petition  and  has

issued notice to the respondents.   It  is,  at that stage

that the respondents filed an intra-Court appeal under

Section  19  of  the  Contempt  of  Courts  Act,  1971

(hereinafter  referred  to  as  “the  Act”).  The  Court

admitted the appeal,  despite the objections regarding

the  maintainability,  leaving  the  question  of  the

maintainability  of  the appeal  to  be considered at the

time of final hearing.

4. It  appears  from  the  impugned  order  passed  by  the

Division Bench that, during the pendency of the appeal

before  the  Division  Bench,  a  direction  was  issued  to

deposit  an  amount  of  Re.  1,00,00,000/-  which  has

subsequently  been withdrawn by the appellant as per

Order dated 21st July, 2017 passed by this Court.

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5. Learned counsel for the respondents has referred to two

decisions  of  this  Court  in R.N.  Dey and Others   v.

Bhagyabati  Pramanik  and  Others  1 and  Tamilnad

Mercantile  Bank  Shareholders  Welfare

Association (2) v. S.C. Sekar and Others  2 and made

a persuasive submission regarding the maintainability

of the appeal.  We are afraid that the decisions relied

upon by the respondents do not further their case, in

the given facts  and circumstances.  R.N. Dey (supra)

was a case where the High Court declined to accept the

unconditional  apology  tendered  by  the  contemnor.  It

was  in  that  context  that  this  Court  held  that  the

contemnor could file an appeal since he was otherwise

entitled  to  be  discharged  in  case  the  unconditional

apology had been accepted. In other words, this Court

was  of  the  view  that  the  decision  to  reject  the

unconditional apology and proceed further was an order

or decision to proceed to punish the contemnor. Hence,

it  was  held  that  such  a  decision  or  order  was

appealable.  That  is  not  the  situation  in  the  present

case. And in any case, at paragraph 13, the Court made

1  (2000)4 SCC 400 2  (2009)2 SCC 784

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it  clear that “In the present proceedings the question

whether appeal under Section 19 is maintainable or not

is  not  required  to  be  decided finally  as,  in  our  view,

facts  of  this  case  are  grossly  inadequate  and  the

contempt proceedings were not required to be initiated

at  all.”  In  Tamilnad  Mercantile  Bank (supra),  this

Court  referred  to  Midnapore  Peoples'  Coop.  Bank

Ltd. and Others v. Chunilal Nanda and Others  3 and

took the view that though an appeal under Section 19

of the Act,   may not  be maintainable against certain

orders, still the aggrieved person can file an intra-court

appeal  if  in  the  impugned  order  an  issue  has  been

decided or a direction has been issued, relating to the

merits of the disputes between the parties, in exercise

of its contempt jurisdiction. No doubt, in paragraph-39,

this  Court  has  held  that  an  appeal  would  be

maintainable even against a notice to show cause. But

it has to be seen that such a notice is in a case where

the  court,  preceding  the  notice,  had  decided  some

disputes  raised before  it.  Hence this  Court  guardedly

put a caveat as follows: “Thus, in a given situation, an

appeal would be maintainable even against a notice to 3  (2006) 5 SCC 399

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show  cause”. In  other  words,  notice  referred  in

paragraph-39  is  a  notice  apparently  after  taking

decision on contempt and proceeding further.  For the

sake of completion of the discussion, we have extracted

paragraph-39 also:-  

“39. We  may  repeat  that  it  may  be  a different matter if the court while passing an order decided some disputes raised before it by  the  contemnor  asking  it  to  drop  the proceedings  on  one  ground  or  the  other. Thus, in a given situation, an appeal would be  maintainable  even  against  a  notice  to show cause. Here even such a notice has not been  issued  and  thus  the  question  of satisfying the court  by showing cause that the  respondent  contemnors  had  not committed  any  contempt  did  not  arise. Allegations had not been made against the Chairman  of  the  meeting.  The  contempt proceedings had been initiated only against the Managing Director of the Bank.”

6. In  Midnapore  Peoples'  Coop.  Bank   Ltd.  and

Others  v.  Chunilal  Nanda and Others  4  after  an

extensive discussion on various case laws,  this  Court

has summarised the legal position as follows:

“11. The  position  emerging  from  these decisions, in regard to appeals against orders in contempt proceedings may be summarised thus:

I.     An appeal under Section 19 is maintainable  only  against  an

4  (2006) 5 SCC 399

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order  or  decision  of  the  High Court  passed  in  exercise  of  its jurisdiction  to  punish  for contempt,  that  is,  an  order imposing  punishment  for contempt.

II. Neither  an  order  declining  to initiate  proceedings  for contempt, nor an order initiating proceedings for contempt nor an order  dropping  the  proceedings for  contempt  nor  an  order acquitting  or  exonerating  the contemnor,  is  appealable under Section  19  of  the  CC  Act.  In special circumstances, they may be  open  to  challenge  under Article 136 of the Constitution.

III. In  a  proceeding  for  contempt, the  High  Court  can  decide whether  any  contempt  of  court has been committed,  and if  so, what should be the punishment and  matters  incidental  thereto. In  such  a  proceeding,  it  is  not appropriate to adjudicate or de- cide  any  issue  relating  to  the merits  of  the  dispute  between the parties.

IV. Any direction issued or decision made by the High Court on the merits of a dispute between the parties,  will  not be in the exer- cise of “jurisdiction to punish for contempt”  and,  therefore,  not appealable  under  Section 19 of the CC Act. The only exception is where such direction or decision is  incidental  to  or  inextricably connected  with  the  order punishing for contempt, in which

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event the appeal  under Section 19 of  the Act,  can also encom- pass  the  incidental  or inextricably  connected directions.

V. If the High Court, for whatsoever reason,  decides  an  issue  or makes any direction, relating to the  merits  of  the  dispute  be- tween the parties, in a contempt proceedings,  the  aggrieved person  is  not  without  remedy. Such  an  order  is  open  to challenge  in  an  intra-court appeal  (if  the  order  was  of  a learned Single Judge and there is a provision for an intra-court ap- peal),  or  by  seeking  special leave  to  appeal  under  Article 136 of the Constitution of India (in other cases).

The first point is answered accordingly.”

7.  Learned  counsel  for  the  respondents  submits  that

before  issuing  notice,  the  learned  Single  Judge  had

considered  the  merits  of  the  case  and  had  already

made  his  mind  to  punish  the  respondents  and,

therefore, an appeal would lie, in view of the decisions

referred to above. We are afraid the contention made

by  learned  counsel  for  the  respondents  cannot  be

appreciated.  The  observations  made  by  the  learned

Single Judge in the Order dated 22nd December, 2016,

while issuing notice in the contempt petition, is only for

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the prima facie satisfaction as to whether the contempt

petition needs to be considered on merits.  Only after

such a preliminary stage, notice can be issued.  Now, it

is open to the respondents to file their reply and after

considering the defence, the learned Single Judge will

have to  take a  call  as  to  whether  it  is  a  case  to  be

proceeded against  for  punishing the respondents.   In

case such a decision is taken by the High Court, it is, at

that stage, that the respondents get a right to file an

appeal  before the Division Bench in  terms of  Section

19(1)(a) of the Act.  Such a stage having not arisen, the

impugned order passed by the Division Bench is only to

be set aside. Ordered accordingly.  

8. Having said so, since it is brought to our notice that the

appellant  has  also  initiated  the  proceedings  for

execution of  the decree and since the said matter  is

also before us, we request the learned Single Judge who

has exercised the contempt jurisdiction, to consolidate

the  execution  petition  and the  contempt  proceedings

and take a decision as to what exactly would be the

amount  payable  by  the  respondents  in  terms  of  the

decree.  We also make it clear that nothing said by us or

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by the learned Single Judge or the Division Bench shall

stand in the way of the parties settling their disputes.

9. With these observations, the appeal is disposed of.

          .……........................J.

         (KURIAN JOSEPH)

          ……........................J.

                    (R. BANUMATHI)

NEW DELHI NOVEMBER 16, 2017