NON­REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION

CONTEMPT PETITION (CIVIL) NOS. 847­848 OF 2017

IN

SPECIAL LEAVE PETITION (CIVIL) NO. 16729­16730 OF 2012

KOTAK MAHINDRA BANK LIMITED                   ...    PETITIONER(S)

VERSUS

MR. SANJIV GUPTA & OTHERS         ... ALLEGED CONTEMNOR (S)

J U D G M E N T

DEEPAK GUPTA, J.

These  Contempt  Petitions  have  been filed  by the  petitioner

alleging that the alleged contemnors have violated the order of this

court dated 07.05.2012.

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2. The factual background is that a Company known as Coventry

Coil­O­Matic, Haryana Limited (hereinafter referred to as the

borrower Company)  had  taken  loans  from ICICI  Bank, IDBI and

IFCI (consortium Banks).  ICICI Bank assigned the debts payable to

it by the borrower Company to the petitioner Kotak Mahindra Bank

Limited (hereinafter called as KMBL).   IFCI assigned its non­

performing assets with regard to the same loan facilities, initially to

Dhir and Dhir Asset Reconstruction and Securitisation Company

Ltd., now known as Alchemist Assets Reconstruction Company

Ltd., (hereinafter referred to as ‘Alchemist’).   It appears IDBI also

assigned the debts payable to it to Alchemist.

3. KMBL filed proceedings for recovery of its dues i.e.

Rs.4,72,06,961/­ before the Debts Recovery Tribunal, Delhi.

Alchemist initiated proceedings under Section 13 of the

Securitisation and Reconstruction of financial Assets and

Enforcement of Security Interest Act, 2002 (for short ‘the SARFAESI

Act’).  Winding up petition under the Companies Act, 1956 was filed

by the KMBL.   The borrower Company filed a writ petition

challenging the  proceedings  and the  SARFAESI  Act.  Both  were

heard together.  The Punjab and Haryana High Court dismissed the

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writ petition filed by the borrower Company.   A Letters Patent

Appeal No.1755 of 2010 (LPA for short) was filed by the borrower

Company.   In this appeal, an interim order was passed on

09.08.2011, relevant portion of which reads as follows:­

“13. Accordingly, we direct that without prejudice to rights and contentions of the parties, the appellant must pay a sum of Rs.12 crores to Alchemist and Rs.6.5 crores to Kotak Mahindra.   The creditors will be at liberty to proceed to recover the same by sale of land appurtenant to plant and machinery which is said to be about 18 acres.  The sale will be by way of a tripartite agreement under which the sale consideration will  be received directly by the creditors and the documents will be executed by the appellant.  The sale  may be finalized  after  permission  of this Court.  Out of deposit of Rs.5 crores in this Court, a sum of Rs.3 crores be given to Alchemist and Rs.2 crores to Kotak Mahindra Bank.   This payment will be adjusted towards the amount mentioned above.   After recovery of Rs.13.5 crores, balance amount may be deposited in this Court.   Interim order is modified accordingly.

xxx                       xxx                xxx”

4. The aforesaid order was challenged by Alchemist  by way of

SLP(C)No.34290 of 2011 as well as by the borrower Company by

way of SLP No.16729­30 of 2012 in this Court.  The SLP filed by the

borrower Company was disposed of vide order dated 07.05.2012.

This court partly modified the directions of the High Court quoted

hereinabove, and passed the following order:­

“1. Respondent No.2 i.e. M/s Alchemist Assets Reconstruction Co. Ltd and the petitioner­Company shall get the land, shown  in  Blocks ‘Z’ and ‘Y’ of the revised  site  plan (as

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discussed in the Court), to be placed on record by the petitioner, evaluated.  Respondent No.2 shall communicate the value of the land to the petitioner within four weeks from today.

2. An option shall be given to the petitioner to accept the said valuation within four weeks of the date of communication and  pay the entire amount in terms thereof  within  a further period of eight weeks from the date of acceptance of the offer.

3. However,  if  the offer made by respondent No.2 is not acceptable to the petitioner, it will be open to the said respondent to take steps for disposal of the land, as directed in the impugned order, strictly in accordance  with the  procedure laid  down in Rules 8 and 9 of the Security Interest (Enforcement) Rules, 2002.

4. Out of the amount(s) so realized, respondent No.2 shall pay to respondent No.9, the balance amount of Rs.4.5 crores, as directed by the High Court.

5. The amount(s), so received by the said two respondents, shall, in the first instance, be appropriated towards the principal amount due from the petitioner.

6. The surplus amount, if any, shall be deposited by respondent No.2 in the High Court and shall be subject to further orders that may be passed by the High Court regarding its disbursement.

7. Revised site plan,  with supporting affidavit, shall be filed in this Court within two days from today with advance copy to learned counsel for the respondents.

xxx                       xxx                xxx”

5. In terms of the order of the High Court, out of Rs. 5 crores

lying in deposit, Rs. 3 crores were to be paid to Alchemist and Rs. 2

crores to KMBL.  This Court ordered that after sale of the property

by Alchemist in terms of the order, Alchemist was to pay Rs.4.5

crores to KMBL and Alchemist was to get Rs. 9 crores.   Surplus

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amount beyond Rs. 13.5 crores were to be deposited in the High

court subject to further order for its disbursement.

6. It is important to note that Alchemist filed Review Petition Nos.

1288 & 1289 of 2012 for review of the orders which were dismissed

on 24.07.2012.   Thereafter, it appears that some application was

filed in the SLP filed by the borrower Company.  Both the SLPs filed

by the borrower Company and the one filed by Alchemist were listed

on 02.07.2014.  The IAs filed in SLP by the borrower Company were

disposed of having become infructuous.  The SLP filed by Alchemist

was disposed of on 02.07.2014 in the following terms:­

“I.A.Nos.14­15 in SLP (C) No. 16729­16730/2012

In view of the latest development in the matter, these Interlocutory Applications have become infructuous and are disposed of as such.

SLP( C) No.34290 of 2011

The learned senior counsel appearing for the petitioner has submitted that  in view of  the judgments delivered by this Court in  “United Bank of India   vs.  Satyawati  Tondon & Ors (2010)  8  SCC 110”, “Kanaiyalal  Lalchand  Sachdev  & Ors.  Vs. State of Maharashtra & Ors.  (2011) 2 SCC 782”       and “General Manager,  Sri Siddeshwara Cooperative Bank  Ltd. & Anr.  Vs. Ikbal & Ors.  (2013) 10 SCC 83, the appeal which has been filed by the petitioner in the High Court should be allowed.

However, the learned senior counsel appearing for the respondents did not agree to the said submission.

In view of the said fact, we feel that it would be better if the petitioner  approaches the High Court  with  an  appropriate application so that the High Court can decide the issue at an early date.”

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    xxx                       xxx                xxx”

7. According to the Alchemist, it made various attempts to sell

the property at a higher price but the property could only be sold

pursuant to auction notice dated 24.01.2016 for a sum of Rs.13.50

crores.  According to the KMBL this sale was done in a clandestine

manner, without informing KMBL about the dates fixed and also in

violation of the directions of the High Court.  This has been denied

by Alchemist.  We make  it  clear that we are not going  into this

aspect of the matter because it will be for the High Court to decide

whether Alchemist has conducted the sale properly or not?

8. On coming to know of the sale, KMBL sent various e­mails to

Alchemist requesting for details of the sale and further requested

that a sum of Rs.4.5 crores be paid to it in terms of the order of the

High Court and as directed by this Court in its order dated

07.05.2012.  This amount was not paid and hence these Contempt

Petitions.

9. At this stage we may note that on 08.02.2019 the Alchemist

was directed to deposit a sum of Rs. 4.5 crores in this Court.  It was

further ordered as follows:­

   “xxx                      xxx                xxx

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Once the aforesaid deposit is made the contentions advanced by the alleged contemnors that no amount is due to the petitioner  –  Kotak Mahindra Bank Limited and the scope and purport of the settlement agreement will be considered by the Court.

xxx                       xxx                xxx”

10. KMBL contends that Alchemist, by not paying Rs.4.5 crores in

terms of the order dated 07.05.2012, is guilty of  contempt.   The

stand of the alleged contemnors is that Alchemist being an assignee

of IFCI and IDBI, is entitled to recovery of  98.12% of the total

outstanding proceedings, whereas the KMBL is entitled to recover

1.88%.  In the alternative, it is submitted that as per the claim filed

by KMBL it is entitled to 9.76% out of the total recoveries.  The case

of the Alchemist is that KMBL has already been paid Rs. 2 crores

which  is much in excess of the amount due to  it.   It is further

stated that pursuant to the order dated 02.07.2014 passed by this

Court, Alchemist filed an application in February, 2017 before the

High Court for modification of the interim order dated 09.08.2011

and this application is pending.  It  is submitted that the alleged

contemnors are not guilty of wilful disobedience of the order of this

Court.

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11.  On going through the records and on careful perusal of the

entire material and the orders referred to above, we cannot

appreciate the conduct of Alchemist and its officers.  Both the High

Court and this Court had clearly directed that out of the amount

recovered by sale of the properties of the borrowed Company by

Alchemist, Rs.4.5 crores were to be paid to KMBL, and Rs.9 crores

were to be retained by Alchemist.  Any amount in excess was to be

deposited in Court.   This was in addition to the disbursal of Rs. 5

crores already made in which Alchemist got Rs. 3 crores and KMBL

got Rs. 2 crores.   This order of 07.05.2012 has not been varied,

modified or vacated by any subsequent order.   The alleged

contemnors can derive no benefit from the order of this Court dated

02.07.2014 permitting them to approach the High Court.   Unless

the earlier order is modified, the alleged contemnors were bound to

obey the orders of this Court as well as the High Court.

12. We may also note that though liberty was given to Alchemist

on 02.07.2014 to approach the High Court, such application was

filed only in February, 2017.   There is no explanation as to why

such application was not filed for three years.   It is obvious that

this application was filed only after the sale certificate was issued

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and KMBL sent various communication to Alchemist to pay a sum

of Rs.4.5 crores to it.   Having held so, we are of the view that it

may not be necessary to take action against the alleged contemnors

under the Contempt of Courts Act, in view of the fact that pursuant

to the order of this Court they have now deposited Rs.4.5 crores.

13. It was urged on behalf of the Alchemist that in terms of order

dated 08.02.2019, the alleged contemnors’ contention that no

amount is due to KMBL has to be considered.  We are not inclined

to do so because according to KMBL even the sale was not

conducted in a proper manner.  In these proceedings it may not be

proper for the Court to decide all these issues, especially when they

arise out of interim orders of the High Court.  It would be better if

the High Court goes into all these aspects.

14. In view of the above discussion, we direct that the amount of

Rs.4.5 crores deposited by Alchemist shall be paid to KMBL along

with interest, if any, accrued thereupon.  This payment will however

be  subject to the  decision of the  High Court  with  regard  to the

amount actually due to KMBL and if the High Court finds that a

lesser amount is due to KMBL then KMBL shall refund the excess

amount along with interest, if any, as determined by the High Court

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to Alchemist.   The Contempt Petitions are closed in the aforesaid

terms.

.............................J. (Deepak Gupta)

..............................J. (Aniruddha Bose)

New Delhi September 23, 2019

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