Chithra Woods Manors Welfare Assn. v. Shaji Augustine - Any person who misuses the process of the Court with ulterior motives cannot be said to be a person having approached the Court with clean hands. A person who tries to tarnish the process of litigation to the extent of misguiding and misleading the proceedings before the Court resulting in passing of order(s) which are to his benefit at the cost of the loss of dignity, leading to shrinkage of the faith of the common man in the judicial process cannot be permitted.

 SCI (2025.04.24) in Chithra Woods Manors Welfare Assn. v. Shaji Augustine  [2025 INSC 567, Contempt Petition (Civil) No. 712 Oo 2023 in SLP (Civil) No. 17433 Oo 2021] held that.

• The power and jurisdiction of this Court to initiate and punish for its contempt has not been disputed. It is well settled by now and it is apparent from the provisions of the Contempt of Court Act that Civil contempt means wilful  disobedience of judgment, decree, or direction, order, writ or other process of the Court or wilful breach of an undertaking given to the Court.

• Civil contempt, as is apparent from Section 2(b) of the Contempt of Court Act 1971, means a wilful disobedience of any judgment, direction or order passed by the Court.

• Any person who misuses the process of the Court with ulterior motives cannot be said to be a person having approached the Court with clean hands. A person who tries to tarnish the process of litigation to the extent of misguiding and misleading the proceedings before the Court resulting in passing of order(s) which are to his benefit at the cost of the loss of dignity, leading to shrinkage of the faith of the common man in the judicial process cannot be permitted.

• This is certainly an extraordinary power which must be sparingly exercised but where the public interest demands it, the court will not shrink from exercising it and imposing punishment even by way of imprisonment, in cases where a mere fine may not be adequate.

• This Court with reference to Section 2 & 12 of Contempt of Courts Act, 1971 held that the jurisdiction so conferred is to be exercised after having come to the conclusion and satisfaction with regard to the commission of contempt.

• A party, misguiding the Court to pass an order which was never intended to be complied with, would constitute an act of overawing the due process of law and, thus, commit contempt of Court.

• The Courts ordinarily take lenient approach in a case of some delay in compliance of the orders, unless the same is deliberate and willful, on confronting the conduct of the contemnor that strikes the very heart of judicial authority.

Excerpts of the Order;

# 1. The instant Contempt Petition (Civil) No. 712 of 2023 (hereinafter referred to as “instant Petition”) in SLP (C) No. 17433 of 2021 (hereinafter referred to as “main Petition”) was filed during its pendency by M/s Chithra Woods Manors Welfare Association, being the Respondent No. 01 therein (hereinafter referred to as “Petitioner Association”), alleging non-payment of arrears of use and occupation charges for period between 20.09.2021 and 31.11.2022 in six monthly instalments beginning 31.12.2022, as directed by this Court vide Order dated 07.11.2022 in the main Petition.

# 2. This petition was then tagged along with the main Petition vide Order dated 24.02.2023 and eventually, owing to the said non-payment of arrears, the main Petition was disposed of as this Court observed to not entertain theprayer of Mr Shaji Augustine, the Petitioner therein

(hereinafter referred to as “Respondent-Contemnor”) but the proceedings in instant Petition sustained. 

# 3. Facts forming the backdrop of the instant Petition are that the Petitioner Association is owner of the decree scheduled building, consisting of 96 furnished studio apartments, at Munnar, Kerala (hereinafter referred to as the “said roperty”). An agreement was entered between the  Petitioner Association and Respondent-Contemnor on 26.01.2014, permitting the latter to occupy and use the said Property for a period of 10 years as against payment of licence fees of INR 12 Lakhs per month (hereinafter referred to as the “said Agreement).

# 4. Within a short period of entering into the said Agreement, Respondent-Contemnor defaulted in payment of the license fees. On persistent default, Petitioner Association was constrained to institute OS No.30 of 2015 before the Sub Court at Thodupuzha, Kerala for realization of the arrears and other reliefs. As there was an arbitrationclause in the said Agreement and on consent of the parties herein, the dispute was referred to a Sole Arbitrator.

# 5. Before the Sole Arbitrator, the Petitioner Association moved I.A. No. 01 of 2016 under Section 17 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as “A&C Act”), seeking direction to the Respondent- Contemnor to deposit INR 1,65,73,459/- (Rupees One crore Sixty-Five Lakhs Seventy-Three Thousand Four Hundred Fifty-Nine only) during pendency of the proceedings. The same was partially allowed vide Order dated 23.06.2016 with direction to deposit INR 1,36,49,439/- (Rupees One crore Thirty-Six Lakhs Forty- Nine Thousand Four Hundred Thirty-Nine only) and per undertaking of the Respondent-Contemnor, payment of INR 12 lakhs per mensem for month of June 2016 onwards, on or before the 10th of the succeeding month, pending disposal of the proceedings.

# 6. Both Respondent-Contemnor and Petitioner Association moved in appeal under Section 37 of the A&C Act before the District Court at Ernakulam, Kerala. A Common Order dated 21.01.2017 was passed, staying the proceedings before the Sole Arbitrator with reiteration of direction to Respondent-Contemnor to pay arrears at the rate of INR 12 Lakhs per month with effect from 08.09.2016 with a further order to continue to pay INR 12 Lakhs per month towards monthly license fee.

# 7. This common order was challenged by the Respondent-Contemnor before the High Court of Kerala in O.P. (C) No 552 of 2017. The matter was referred for mediation at the request of the parties. The said mediation proceedings, lead to a Compromise dated 03.04.2017 (hereinafter referred to as the “Settlement Agreement”), Petitioner Association agreed to reduce the monthly license fees to INR 8 Lakhs per month. Arrears, as claimed before the Sole Arbitrator, were also reduced from INR 1,65,73,439/- to INR 75 Lakhs. Moreover, it was specifically recorded that the settlement entered between the parties would form part of the judgment. There was a specific clause that in case of default by any of the parties to any of the terms of the agreement the other would be entitled to proceed against the other party. The parties resolved their disputes, and the terms of settlement arrived at between them were accepted by the High Court of Kerala and were incorporated in the Order dated 11.04.2017.

# 8. On default on the part of the Respondent-Contemnor in making payment through a promissory note, as per the Settlement Agreement, Petitioner Association preferred Execution Petition No. 58 of 2020 on 11.03.2020, no money was paid by the Respondent-Contemnor with effect from the month of July 2018. The Respondent-Contemnor was unsuccessful before the District Court in EA No. 14 of 2021 in its challenge to the maintainability of the execution petition. The Execution Court passed an Order dated 23.03.2021, giving an instalment facility to the Respondent-Contemnor for payments of its arrears, with the first being due on 01.06.2021 and the last being 01.09.2021. Furthermore, the amount of arrears being undisputed, and nothing having been paid, the Execution Court ordered delivery of the said Property. The Respondent-Contemnor challenged the order of the Execution Court before the High Court of Kerala, which was dismissed vide Judgment dated 20.09.2021.

# 9. It is at this stage that the respondent preferred the main Petition before this Court challenging the Judgment dated 20.09.2021. Notice was issued vide Order dated 12.11.2021 and subsequently, status quo was ordered vide Order dated 04.02.2022 vis-à-vis the said Property. The matter ultimately came for consideration on 07.11.2022 when following Order was passed:- “List on a non-miscellaneous day in the month of March, 2023. In the meanwhile, as an interim measure, we are inclined to direct that the petitioner will pay Rs. 12

lakhs per month to the respondent as use and occupation charges w.e.f. 20.09.2021 (the date of the impugned judgment). As prayed on behalf of the petitioner, the arrears @ Rs. 12 lakhs per month from 20.09.2021 till 31.11.2022, would be paid in six monthly instalments beginning 31.12.2022. The petitioner would also continue to make payment of Rs. 12 lakhs per month in the future by the 10th day of each succeeding calendar month. The payment would be subject to the outcome of the present Special Leave Petition.”

# 10. A perusal of the above would show that a direction was issued to the Respondent-Contemnor to pay arrears for the period specified therein in six monthly instalments beginning from 31.12.2022, totalling to INR 172 Lakhs, at  the rate of INR 12 Lakhs per month, and being INR 28.60 Lakhs per instalment.

# 11. Pursuant to the Order dated 07.11.2022, the Respondent- Contemnor sent an e-mail to the Petitioner Association containing a letter dated 17.11.2022 seeking the concerned account details of the Petitioner Association for the Respondent-Contemnor to transfer the arrears enabling him to affect compliance with Order dated 07.11.2022 passed by this Court. The said details were provided by the Petitioner Association on 14.12.2022 in response to the aforesaid e-mail. Despite getting the required information, no amount was paid to the Petitioner Association and yet, the Respondent-Contemnor continued to enjoy and occupy the said Property. It is apparent that the intention on the part of the Respondent- Contemnor was not to do away with the possession of the said Property and to hold on to it owing to his act of moving the main Petition for challenging the handing over of the possession of the said Property.

# 12. Petitioner Association asserts that deliberate action on behalf of the respondent in not complying with the direction issued by this Court on 17.11.2022 with continuous default on his part amounts to civil contempt which is deliberate and intentional disobedience of the order of this Court.

# 13. Subsequently, on 01.12.2023, when both the main Petition and instant Petition were taken up for hearing following order was passed:-

• “The learned counsel appearing for the petitioner states that the petitioner has already vacated the premises subject matter of this Special Leave Petition. We find that the order dated 7th November, 2022 directing the petitioner to deposit money has not been complied with. The petitioner has expressed inability to pay the money. The jurisdiction of this Court under Article 136 of the Constitution of India is always discretionary. Considering the conduct of the petitioner of not paying a single farthing after 7th November, 2022, we decline to entertain this Special Leave Petition and the same is accordingly dismissed. However, the question of law is kept open to be considered in an appropriate case. Pending application also stand disposed of.

• CONMT. PET. (C) No. 712/2023 in SLP(C) No. 17433/2021. List on 22nd January, 2024.”

# 14. With the main Petition having been dismissed, the instant Petition continued to survive and was taken up for hearing on various dates. Respondent-Contemnor was called upon by this Court on 15.03.2024 to file an affidavit giving details of all his movable and immovable assets as also that of his immediate family members along with the necessary documents. This was in light of the statement of the counsel of the Respondent-Contemnor that he is not

in a position to deposit any amount. 

# 15. After filing of the affidavit by the Respondent-Contemnorand on perusal thereof this Court on 12.09.2024 found the Respondent-Contemnor, who was appearing through video conferencing, of having committed wilful breach of the directions contained in the Order dated 07.11.2022. The Respondent-Contemnor was ordered to be heard on the said charge as no amount had been paid by him and was directed to be personally present in Court. The

Respondent-Contemnor subsequently appeared and an opportunity was given to comply with the Order while being heard on charge. Owing to his non-intention to comply, the case was kept reserved for orders. 

# 16. Stand of the Respondent-Contemnor in the affidavit which has been filed is that the compliance of the Order dated 07.11.2022 passed by this Court is beyond his financial and physical capabilities. It is thus, neither deliberate nor an intentional non-compliance of the order and is only on account of his penury. He has, thus, prayed for dropping of the current contempt proceedings.

# 17. Counsel for the Petitioner Association, on the other hand, has asserted that the conduct of the Respondent- Contemnor from the very beginning was clearly indicative of an attempt on the part of the Respondent-Contemnor to hold on to the possession of the said Property. Despite the Settlement Agreement, which has attained finality by virtue of not being challenged, to retain the possession of the said Property, Respondent-Contemnor has constantly litigated across forums. Such an act on part of the Respondent-Contemnor clearly showed that without making payment of the amount due to the petitioners, he was reaping the fruits of the scheduled property in violation of the terms of settlement.

# 18. Had it not been a viable preposition, the possession could have been easily handed over by the Respondent- Contemnor. Having taken benefit of the said Property, Respondent-Contemnor cannot be now permitted to take the plea of penury. Rather, it is an intentional noncompliance of the directions issued by this Court even after partial monetary benefit had been conferred upon him vide Order dated 07.11.2022. Even till date no payment whatsoever has been made which clearly reflects the malafide of the Respondent-Contemnor. A reference is also made to the Order dated 04.02.2022 when status quo was ordered by this Court in relation to the property in question to be maintained. Prayer has thus been made for punishing the Respondent-Contemnor for having committed contempt of this Court’s Order dated 07.11.2022.

# 19. Having considered the submissions made by the counsels for the parties, we are of the considered view that the Respondent-Contemnor has deliberately and with malafide intention, not only mislead and misused the process of the courts but has also intentionally violated the order passed by this Court on 07.11.2022 by not making the payment as directed therein.

# 20. At the prospect of reiteration of the factual matrix, the conduct of the Respondent-Contemnor since the Settlement Agreement reflects his patent intent to retain the said Property and this indicates that the business proposition was not only a viable one but was yielding profits. No person with a modest business acumen would  continue with a loss-causing endeavour. Respondent- Contemnor has nowhere reflected the receipts from the business being undertaken in the said Property.

# 21. Subsequently, he even sought time from the Execution Court, but failed to comply, prompting an order for delivery of possession of the said Property. This, he then challenged through Revision Petition before the High Court of Kerala and ultimately before this Court through the main Petition.

# 22. It was on his insistence that this Court ordered status quo vide Order dated 04.02.2022. However, he neither paid the dues nor complied with the subsequent Order dated 07.11.2022 mandating payment of INR 12 lakhs per month from 20.09.2021 and arrears in instalments.

# 23. The e-mail dated 17.11.2022, which was addressed to the Petitioner Association by the Respondent-Contemnor, seeking account details for the concerned amount to be transferred, was responded accordingly by the Petitioner Association vide e-mail dated 26.11.2022. Despite all this, not even a rupee was credited to the account of the Petitioner Association.

# 24. Faced with this situation, Petitioner Association had no option but to file the instant Petition before this Court leading to issuance of notice on 24.02.2023 along with an opportunity to the Respondent-Contemnor to remedy the default. After various dates, the matter ultimately came for hearing on 01.12.2023, when, owing to non-compliance of Order dated 07.11.2022 for depositing money, the main Petition was dismissed and the instant Petition survived. 

# 25. It is only on 15.03.2024 that for the first time counsel for the Respondent-Contemnor stated that he was not in a position to deposit any amount, whereupon this Court called for details of his immovable and movable assets and that of his immediate family members, along with necessary documents. Physical presence of the Respondent-Contemnor was also ordered in Court on the next date of hearing.

# 26. Respondent-Contemnor appeared through video conference in Court on 12.07.2024 when the affidavit which was filed by the respondent-contemnor was considered. On perusal thereof, Court found the Respondent-Contemnor having committed a wilful breach of the directions contained in the order dated 07.11.2022. He was, therefore, called upon to face the said charge and with an intention to give him an opportunity of being  heard. The matter was listed for hearing with a direction to the contemnor to personally remain present before the Court. The contemnor was heard in person in Court and  was again given an opportunity to comply with the order of which he had committed contempt i.e. non-payment of the amount and the arrears. The contemnor did not express any remorse nor showed any intention to comply with the order passed by this Court rather asserted that he was not in a position to make any payment. It is in these circumstances that the matter is being considered.

# 27. The e-mail dated 17.11.2022 intrinsically reflects financial capability and liquidity at hands of the Respondent- Contemnor. Had the Respondent-Contemnor been in dire financial difficulty, the said communication would not have come to the fore. Besides, had it been that the Respondent-Contemnor was unable to comply with the Order dated 07.11.2022 he should have moved this Court for modification or withdrawal of the order.

# 28. All throughout, the Respondent-Contemnor had been in possession of the said Property and had been utilising the income generated from running of the said resort. Acceptance on the part of the Respondent-Contemnor with regard to the viability of the project is apparent from the Order dated 07.11.2022 and his conduct. This would not permit the Respondent-Contemnor to now turn around and state that he is unable to make payment of not only the monthly dues for use and occupation charges after passing of the Order dated 07.11.2022 but also the arrears as per which terms and conditions were fixed by this Court in accordance with the prayer made by him. Non- fulfilment of the mandate and direction of this Court which were at the request of the Respondent-Contemnor himself reflects the intent on the part of the Respondent- Contemnor to not to comply with the order rather to violate with the same with impunity. The conduct clearly reflects that the intention of the Respondent-Contemnor was to gain the benefit by running the resort in the subject property without paying the current liability, what to say of the arrears.

# 29. Moreover, the amount which has been earned from the resort being run by the Respondent-Contemnor has not been accounted for. It can therefore easily be said that there has been intentional and deliberate non-compliance on the part of the Respondent-Contemnor of the order passed by this Court, contempt of which stands committed, but on getting an interim order of continuing in possession usurped the earnings instead of paying off the dues.

# 30. The malafide is therefore writ large and reflect the misuse of the process of the Court. After seeking an order from this Court where benefit has been conferred on the basis of the submissions of the Respondent-Contemnor, not complying therewith amounts to contempt of Court. 

# 31. The power and jurisdiction of this Court to initiate and punish for its contempt has not been disputed. It is well settled by now and it is apparent from the provisions of the Contempt of Court Act that Civil contempt means wilful  disobedience of judgment, decree, or direction, order, writ or other process of the Court or wilful breach of an undertaking given to the Court.

# 32. Civil contempt, as is apparent from Section 2(b) of the Contempt of Court Act 1971, means a wilful disobedience of any judgment, direction or order passed by the Court. All through, as has been detailed above, the intention on the part of the Respondent-Contemnor was to use the judicial proceedings for his advantage taking undue benefit at the peril and cost of wrong assertions and submissions put forth before the Court which would amount to misleading the Court into believing the bonafide at the hands of the Respondent-Contemnor. It would amount to an attempt to exploit the procedural process of Court to outreach and manoeuvre it resulting in abuse of law and legal proceedings.

# 33. Any person who misuses the process of the Court with ulterior motives cannot be said to be a person having approached the Court with clean hands. A person who tries to tarnish the process of litigation to the extent of misguiding and misleading the proceedings before the Court resulting in passing of order(s) which are to his benefit at the cost of the loss of dignity, leading to shrinkage of the faith of the common man in the judicial process cannot be permitted.

# 34. This Court, in Hira Lal Dixit v. State of Uttar Pradesh [(1954) 2 SCC 325] in paras 9 and 10 held as follows:

• “9. It should no doubt be constantly borne in mind that the summary jurisdiction exercised by the superior courts in punishing contempt of their authority exists for the purpose of preventing interference with the course of justice and for maintaining the authority of law as is administered in the court and thereby affording protection to public interest in the purity of the administration of justice. This is certainly an extraordinary power which must be sparingly exercised but where the public interest demands it, the court will not shrink from exercising it and imposing punishment even by way of imprisonment, in cases where a mere fine may not be adequate.

• 10. After anxious consideration we have come to the conclusion that in all the circumstances of this case it is a fit case where the power of the Court should be exercised and that it is necessary to impose the punishment of imprisonment. People must know that they cannot with impunity hinder or obstruct or attempt to hinder or obstruct the due course of administration of justice.”

# 35. Further, in Bank of India v. Vijay Transport And Others [(2000) 8 SCC 512], this Court with reference to Section 2 & 12 of Contempt of Courts Act, 1971 held that the jurisdiction so conferred is to be exercised after having come to the conclusion and satisfaction with regard to the commission of contempt. This Court further went on to hold that the said satisfaction can be derived by the Court with regard to the commission of the contempt from the circumstances of the case. The conduct of the party who/which is facing the charge of contempt, not only after the issuance of the  notice but prior thereto, could also be taken into Consideration.

# 36. A party, misguiding the Court to pass an order which was never intended to be complied with, would constitute an act of overawing the due process of law and, thus, commit contempt of Court. In the instant case, the opportunity having been availed, time having been sought and granted by the Court further reflects the intent on the part of the Respondent-Contemnor to discard and tarnish the judicial process by polluting it. Disobedience of the order of the Court in such circumstances would be the only result and

thus, civil contempt.

# 37. The pure stream of justice cannot be allowed to be polluted at all. Reference at this stage needs to be made to the latest decision of this Court in Sitaram Enterprises v. Prithviraj Vardichand Jain [2024 SCC OnLine SC 2493] wherein in para 1 to 3 it has been held as follows:-

• “Disregarding a Court's order may seem bold, but the shadows of its consequences are long and cold.” 

• 1. Contempt of court is a serious legal infraction that strikes at the very soul of justice and the sanctity of legal proceedings. It goes beyond from mere defiance of a Court's authority, but also denotes a profound challenge to the principles that underpin the rule of law. At its core, it is a profound disavowal of the respect and adherence to the judicial process, posing a concerning threat to integrity of judicial system. When a party engages in contempt, it does more than simply refusing to comply with a Court's order. By failing to adhere to judicial directives, a contemnor not only disrespects the specific order, but also directly questions the Court's ability to uphold the rule of law. It erodes the public confidence in the judicial system and it's ability to deliver justice impartially and effectively. Therefore, power to punish for Contempt of Court's order is vital to safeguard the authority and efficiency of the judicial system. By addressing and penalizing contemptuous conduct, the legal system reinforces its own legitimacy and ensures that judicial orders and proceedings are taken seriously. This deterrent effect helps to maintain the rule of law and reinforces public's faith in the judicial process, ensuring that Courts can function effectively without undue interference or disrespect. 

• 2. Contempt powers are integral to maintaining the sanctity of judicial proceedings. The ability to address contempt ensures that the authority of the court is respected and that the administration of justice is not hampered by willful disobedience. In the said context, the power of this Court to punish for contempt is a cornerstone of its authority, integral to the administration of justice and the maintenance of its own dignity. Enshrined in Article 129 of the Constitution of India, this power is essential for upholding the rule of law and ensuring due compliance by addressing actions that undermine its authority, obstruct its proceedings, or diminish the public trust and confidence in the judicial system.

• 3. The Courts ordinarily take lenient approach in a case of some delay in compliance of the orders, unless the same is deliberate and willful, on confronting the conduct of the contemnor that strikes the very heart of judicial authority. Undoubtedly, this appalling breach of legal decorum has in its face challenged the sanctity of the orders passed by this Court and hence we are constrained to examine Contemnor/tenant's willful and deliberate act of non-compliance of the order and also the undertaking furnished by him as directed.”

# 38. The above principles and the observations, as made by this Court, would fully apply to the case at hand where, from the very beginning till the very end the Respondent- Contemnor has been taking the Court for a ride. The misuse of the process of Court with an intent to tarnish the image of judiciary, threatening the integrity, and the efficiency of the judicial system cannot be allowed to be overlooked and ignored in the garb of non-fulfilment of the directions because of now said to be faced financial constraints.

# 39. The Respondent-Contemnor cannot be allowed to go scot free after having taken this Court at a stage where his  conduct leaves this Court with no option but to take strict action and to punish him for the contempt committed by him, i.e., non-compliance of the directions issued by this Court vide Order dated 07.11.2022.

# 40. This case, in our opinion, would not be one where mere imposition of fine would suffice. In the given facts and circumstances of the present case, we are convinced that the Respondent-Contemnor is liable to be punished for the contumacious conduct.

# 41. We, in the above facts and circumstances, hold Shaji Augustine-Respondent, guilty of Civil Contempt and impose punishment of Simple Imprisonment for three months along with fine of INR 20,000/- to be deposited in two weeks, and in case of default, further Simple Imprisonment for one month.

# 42. Giving one more opportunity to the Respondent- Contemnor to purge the contempt, 30 days time is granted to him to comply with the Order dated 07.11.2022 and submit compliance report to the Registrar Judicial of this Court a week thereafter. The punishment, as aforesaid, would come into effect in case the directions as contained in the Order dated 07.11.2022 are not complied with, within 30 days of the pronouncement of this judgment. The contempt proceedings are disposed of.

# 43. Pending application(s), if any, also stand disposed of.

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Mr.Sanjay Gupta Liquidator Vs. Mr. Tarun Kumar Panda Deputy Commissioner & Ors - That once a direction is issued by a competent Court, it has to be obeyed and implemented without any reservation. If an order passed by a Court of Law is not complied with or is ignored, there will be an end of Rule of Law. If a party against whom such order is made has grievance, the only remedy available to him is to challenge the order by taking appropriate proceedings known to law.

 NCLT Hyderabad (2024.05.09) in Mr.Sanjay Gupta Liquidator Vs. Mr. Tarun Kumar Panda Deputy Commissioner & Ors. [Contempt Petition No.16 of 2023 in IA No.939 of 2020 in CP (IB) No.296/7/HDB/2018] held that;.

• Contempt Petition under Section 425 of the Companies Act, read with Sections 10 and 12 of the Contempt of Courts Act, and Rule 11 of the National Company Law Tribunal Rules, 2016 for holding the Respondents guilty for wilful and deliberate violation of the impugned order and further punishing them appropriately.

• Thus, it is to be proved that despite having knowledge of such an order, the person concerned had deliberately and wilfully breached, with an intention of lowering the dignity and image of the 'Court',

• That once a moratorium is imposed in terms of Section 14 or 33(5) of the IBC, the Custom Authorities do not have the power to initiate the recovery of dues by means of sale/confiscation, as provided under the Customs Act.

• That once a direction is issued by a competent Court, it has to be obeyed and implemented without any reservation. If an order passed by a Court of Law is not complied with or is ignored, there will be an end of Rule of Law. If a party against whom such order is made has grievance, the only remedy available to him is to challenge the order by taking appropriate proceedings known to law.

Excerpts of the order;

# 1. Aggrieved with violation of the order dated 29.03.2023 in IA No.939 of 2020 in CP (IB) No.296/7/HDB/2018, Mr.Sanjay Gupta, Liquidator for the M/s.Lanco Babandh Power Limited (hereinafter referred as Petitioner) filed the present Contempt Petition under Section 425 of the Companies Act, read with Sections 10 and 12 of the Contempt of Courts Act, and Rule 11 of the National Company Law Tribunal Rules, 2016 for holding the Respondents guilty for wilful and deliberate violation of the impugned order and further punishing them appropriately.

# 2. The brief facts, leading to the filing of the present application, as stated, are that:

2.1 M/s. Lanco Babandh Power Limited was put in Corporate Insolvency Resolution Process (CIRP) vide order dated 29.08.2018 and in the absence of any Resolution Plan, order for Liquidation Process was passed on 27.11.2019.

2.2 The Corporate Debtor had registered a Project Import Contract for the import of goods, items and machinery in setting up a “2×600 MW Thermal Power Plant” in Khadagprasad P.S, Motagan, District, Dhenkanal, Odisha.

2.3 The Corporate Debtor had filed 45 numbers of Bills of Entry for import and clearance of Project Import Goods/Items/Machinery (goods) falling under Chapter Heading No.98010013 of the Customs Tariff Act, 1975 against Project Import Registration No.02/PROJ. CONTRACT REGN/PDP/2011 dated 04.08.2011 and No.06/PROJ. CONTRACT REGN/PDP/2011 dated 30.12.2011.

2.4 For non-payment of the customs duty etc., the goods are lying at the Paradeep Port in the custody of the Respondents. The Petitioner wrote a letter dated 24.01.2020 (Annexure A-2 of the application), to the Respondent No.2 asking for the release of 17,273 MT of goods of the Corporate Debtor lying in the Port. He was also informed that after the initiation of the liquidation, the Liquidator was to take into custody and control all the assets, property, effects etc., of the Corporate Debtor.

2.5 Subsequently, the Respondent No.1 filed claim of pending customs duty with the Petitioner for a total sum of Rs.346,43,38,61/-. The Respondent No.2 also filed claim of Rs.4,36,30,691/-. However, Respondent No.1 sent e-mail dated 11.02.2020 (Annexure A-3 of the application) giving reference of Section 48 of the Customs Act, which gives power to the proper officer to sell the imported goods.

2.6 The Petitioner has quoted Sections 35 and 238 of the IBC to press his point that the Liquidator has power to take into custody and control all the assets, property, effects and actionable claims of the Corporate Debtor and further, the IBC overrides any other law for the time being in force.

2.7 When the Liquidator failed to take possession of the goods despite his best endeavours, he filed an IA No.939/2020 seeking direction for its release.

2.8 During the pendency of the IA No.939/2020, the goods of the Corporate Debtor were e-auctioned and M/s.Jindal Steel & Power Limited purchased the assets including the imported goods lying at the Paradeep Port, subject to the pending litigation. In view of nonrelease of the imported goods, the balance sale consideration was not paid by M/s. Jindal Steel & Power Limited. 

2.9 Finally, the IA No. 939/2020 was allowed vide order dated 29.03.2023 and the Respondents were asked to release the goods lying with them.

2.10 After passing of the order in IA No. 939/2020, the Petitioner asked both the Respondents vide letter dated 17.04.2023 (Annexure A-4 of the application) to comply with the directions passed by this Authority. The Respondent No.2 was also requested vide letter dated 09.05.2023 by M/s. Jindal Steels & Power Limited for the release of the goods. Instead of releasing the goods, the Respondent No.2 vide letter dated 20.05.2023 (Annexure A-5 of the application) informed that the goods would be released only upon the submission of No Objection/Out of Charge Order (OCC) pertaining to the entire quantity of cargo of Corporate Debtor by M/s.Jindal Steel & Power Limited, who was also asked to approach the Liquidator for the purpose of considering the settlement of outstanding dues owed to the Paradeep Port. The Petitioner again vide letter dated 23.05.2023 (Annexure A-6 of the application) asked the Respondents to handover the assets and they were further notified that the failure to release the goods would amount to disruption of the Liquidation Process.

2.11 Again, the Respondent No.1 vide letter dated 01.06.2023 (Annexure A-7 of the application) stated that the goods can be released as per the Customs Act. The Liquidator also personally visited the offices of the Respondent No.1 and 2 along with the representatives of the M/s.Jindal Steels & Power Limited on 09.06.2023 for the release of the goods, but the same was of no avail.

2.12 In these circumstances, it is claimed that the Respondents have not only violated the order dated 29.03.2023, but also disobeyed the law laid down by the Hon’ble Supreme Court in the matter of Sudarshan Bhatt, Liquidator of ABG Shipyard versus Central Board of Indirect Taxes and Customs in Civil Appeal No.7667 of 2021, dated 26.08.2022, wherein it has been specifically held that once the moratorium is introduced under the Code, either under Section 14 or Section 33(5), the authorities under the Customs Act have limited powers to the extent that they can only initiate assessment or reassessment of the duties and other levies, but not recovery proceedings.

# 3. The Respondents No.2 and 3 were set ex-parte and it is only the Respondent No.1 who has contended and contested the averments in the petition by submitting:

3.1 The Corporate Debtor had filed 42 Bills of Entry in between July 2011 and April, 2016 for importation and clearance of project import goods/ machinery falling under Chapter Heading No 9810013 of the Customs Tariff Act, 1975. Out of these Bills, 42 Bills of entry were assessed provisionally under Section 18(1) of the Customs Act, 1962, but the required documents were not furnished by the importer even after more than 3 years of their last import. Finally, the Respondent No.1 assessed with demand of Rs.200,54,23,826/- vide order No.3570-74 dated 10.05.2019.

3.2 On the passing of the liquidation order dated 27.11.2019, final claim for an amount of Rs.346,43,38,610/- including interest was lodged with the Liquidator. After the disposal of the IA No.939/2020 in CP (IB) No.296/7/HDB/2018 vide order dated 29.03.2023, the Liquidator intimated that request has been made to the replying Deputy Commissioner, Paradeep Customs Division as well as the Traffic Manager of Paradeep Port Authority vide letters dated 17.04.2023 and 23.05.2023 for releasing the assets/goods of the Corporate Debtor lying at Paradeep Port. Similarly, letters dated 09.05.2023 and 24.05.2023 were also received from M/s. Jindal Steel & Power Limited, Paradeep requesting to release and handover the goods of the Corporate Debtor.

3.3 It is explained that under the Customs Act, 1962, the Respondent No.1 is empowered to issue/grant ‘Out of Charge’ (OOC) on the imported cargo/goods in cases where Bill of Entry has been filed by the importer and provisionally assessed by the Customs Officer. Subsequently, order of movement of such imported goods/items is to be issued by the custodian of the property i.e., Port Authority who is to issue gate pass for the transportation of the imported goods.

3.4 The Respondent No.1 has already intimated the Liquidator vide letter dated 01.06.2023 (Annexure-1 of the counter) which was also addressed to the Traffic Manager and M/s.Jindal Steel & Power Limited that the Customs Authority has already issued Out of Charge (OOC) on 42 Bills of Entry and accordingly, the OOC may be treated as No Objection Certificate (NOC).

3.5 On the question of remaining cargo involved under 3 Bills of Entry, no OOC was granted because the importer had not filed any Bill of Entry even after more than one year of importation. In such situation, the cargo/goods are to be treated as Unclaimed/Uncleared goods under Section 48 of the Customs Act, 1962. The liability to release the said cargo shall lie exclusively with the custodian i.e., the Paradeep Port Authority in view of Circular No.50/2005-Cus dated 01.12.2005 (Annexure-2 of the counter) and Circular No.49/2018- Cus dated 03.12.2018 (Annexure-3 of the counter). In this regard, reliance has also been placed on the judgement of the Hon’ble Supreme Court in ‘Sudarshan Bhatt, Liquidator of ABG Shipyard versus Central Board of Indirect Taxes and Customs’ decided on 26.08.2022.

3.6 In view of the factual decision, the Respondent No.1 issued letter dated 24.07.2023 (Annexure-4) to the Traffic Manager of the Paradeep Port Authority, requesting him to take appropriate action in releasing the cargo.

# 4. Heard. We have also gone through the entire records.

# 5. For the purpose of setting up Thermal Power Plant in Khadagprasad, P.S,Motagan, District, Dhenkanal, Odisha, the Corporate Debtor imported goods/items/machinery in between July 2011 and April, 2016 against 45 number of Bills of Entry, the details of which have been given in (Annexure-4 of the counter). However, the goods could not be released because the Corporate Debtor failed to furnish required documents. The Corporate Debtor provided Bills of Entry in respect of 42 bills (Items No.1 to 42 of Annexure-4 of the counter) and accordingly the Respondent No.1 issued Out of Charge (OOC) in respect of those goods. As far as 3 Bills of Entry (Items No.43 to 45 of Annexure-4 of the counter), no OOC was granted by the Respondent No.1 because the Corporate Debtor had not filed any Bill of Entry even after completion of more than one year of import. 

# 6. Meanwhile, the Corporate Debtor was put under CIRP vide order dated 27.11.2019. The Respondent No.1 filed claim of Rs.346,43,38,61/- and Respondent No.2 of Rs.4,36,30,691/- before the Liquidator. 

# 7. M/s Jindal Steels and Power Limited has purchased the assets including the imported goods of the Corporate Debtor in pursuance of the e-auction conducted on 27.08.2021, but the successful bidder did not pay the balance sale consideration because the cargo/goods are still in the custody of the Respondents.

# 8. When the Respondents did not release the cargo/goods despite the request, the liquidator filed an IA No.939/2020 for initiating contempt proceedings by impleading both the Deputy Commissioner, Paradeep Customs Division and Traffic Manager of Paradeep Port Authority as parties. Finally, this Authority vide order dated 29.03.2023 allowed the application and the relevant part of the order is reproduced as below:

• We, accordingly, hereby direct the Respondents to release the goods belonging to the Corporate Debtor lying with them without insisting for filing the Installation Certificate, reconciliation statement, final payment certificate etc. or a payment of customs duty by the corporate debtor under liquidation, within 30 days from the date of this order, besides 1st Respondent to issue No Objection Certificate for sale of these goods by the Liquidator in accordance with the provisions of the IB Code. It is further ordered that upon complying the first direction, the Liquidator shall sell the goods of the Corporate Debtor within three months as per the provisions of the Code and the relevant regulations and deposit the sale proceeds into the liquidation account of the Corporate Debtor.

# 9. After passing of the directions for the release of the goods covered under 45 Bills of Entry, the liquidator sent notices dated 17.04.2023 (Annexure- A4 of application) and 23.05.2023 (Annexure-A6 of application) asking Paradeep Customs Division and the Paradeep Port Authority, respectively to release the said goods. When nothing happened, the present petition has been filed on 24.07.2023.

# 10. In the aforesaid background, we have to decide whether there is any contempt of the directions passed by this Authority. Initiating contempt has a dual purpose, (a) upholding majesty of law by punishing the contemnor, and (b) coercing the contemnor to do what the law requires him to do. 

# 11. For punishing the guilty on account of disobedience, there is no specific provision in IBC like section 425 under the Companies Act, which says:

• "425. Power to punish for contempt - The Tribunal and the Appellate Tribunal shall have the same jurisdiction, powers and authority in respect of contempt of themselves as the High Court has and may exercise, for this purpose, the powers under the provisions of the Contempt of Courts Act, 1971, which shall have the effect subject to modifications that-

• (a) the reference therein to a High Court shall be construed as including a reference to the Tribunal and the Appellate Tribunal; and

• (b) the reference to Advocate-General in section 15 of the said Act shall be construed as a reference to such Law Officers as the Central Government may, specify in this behalf."

# 12. Under Section 425, the Tribunal and the Appellate Tribunal are only empowered with powers under Contempt of Courts Act, 1971 in respect of contempt of itself as the High Court. Section 469 of the Companies Act, 2013 vests in the Central Government the authority to "makes rules" for carrying out the provisions of this law, by notification, clarifying by subsection (2) that such enabling power confers the jurisdiction to make rules "for all or any of the matters which by this Act are required to be, or may be, prescribed or in respect of which provision is to be or may be made by rules." The Central Government framed rules, known as the National Company Law Tribunal Rules, 2016, by virtue of power conferred under section 469 by issuing notification G.S.R. 716(E) in the official Gazette on 21.07.2016.

# 13. In case of contempt of any order passed under the IBC, this Authority has power to punish contemnor by following the procedure prescribed under the Contempt of Courts Act. Here, reference can be made to the decisions in 

• Shailendra Singh versus Nisha Malpani (2021) ibclaw.in 528 NCLAT; 

• Mahesh Kumar Panwar versus M/s Mega Soft Infrastructure Pvt. Ltd. and Ors. (2019) ibclaw.in 331 NCLAT; 

• C.Vinod Hayagriv and Ors. versus C. Ganesh Narayan and Ors., Contempt Case (AT) No. 13 of 2023 in Company Appeal (AT) No. 65 of 2019, decided on 09.08.2023  and 

• Registrar NCLT and Ors. versus Manoj Kumar Singh, IRP Palm Developers Pvt. Ltd., Contempt Petition No. CA/11/2021 in Company Petition No. 894/ND/2019, decided on 17.01.2022.

# 14. Section 2(a) & 2(b) of the Contempt of Courts Act, 1971 defines the contempt as under:

• 2. Definitions: - In this Act, unless the context otherwise requires,-

• (a) "contempt of court" means civil contempt or criminal contempt;

• (b) "civil contempt" means wilful disobedience to any judgment, decree, direction, order, writ or other process of a court or wilful breach of an undertaking given to a court;

# 15. Non-compliance of the order of this Authority is civil contempt, for which two elements are required to be established, i.e.,

• (i) Disobedience of any judgment, decree, directions, orders or other process of Court.

• (ii) Disobedience or breach must be wilful, deliberate and intentional.

# 16. The key ingredient of civil contempt as defined under Section 2(b) of the Contempt of Courts Act, 1971 is deliberate flouting of orders of this Authority. The element of willingness is an indispensable requirement to bring home the charge within the Act, in view of the decision in Anil Ratan Sarkar & Ors. versus Hirak Ghosh & Ors., AIR 2002 SC 1405. It has been held by the Hon'ble Supreme Court in Indian Airports Employees' Union versus Ranjan Chatterjee (1999)2 SCC 537:

• 7. It is well settled that disobedience of orders of Court, in order to amount to 'Civil Contempt' under Section 2(b) of the Contempt of Courts' Act, 1971 must be 'wilful' and proof of mere disobedience is not sufficient. S.S. Roy v. State of Orissa and Ors. AIR 1960 SC 190. Where there is no deliberate flouting of the orders of the Court but a mere misinterpretation of the executive instructions, it would not be a case of Civil Contempt Ashok Kumar Singh and Ors. v. State of Bihar and Ors. 1992 CriLJ 284.

# 17. In Kapildeo Prasad Sah & Ors. versus State of Bihar & Ors. (1999)7 SCC 569 also it is clearly stipulated that disobedience should be wilful and should be clear violation of court's order with the knowledge of contemnor. It also records that initiation of contempt proceeding is not a substitute for execution proceedings though at times purpose may also be achieved. The Hon'ble Supreme Court of India in U.N. Bora versus Assam Roller Flour Mills Ass. reported in (2022)1 SCC 101 has elaborately dealt with the issue as what amounts to civil contempt and how it is to be proved. The relevant paragraphs of the judgment read as under:

• "8. We are dealing with a civil contempt. The Contempt of Courts Act, 1971 explains a civil contempt to mean a wilful disobedience of a decision of the Court. Therefore, what is relevant is the "wilful" disobedience. Knowledge acquires substantial importance qua a contempt order. Merely because a subordinate official acted in disregard of an order passed by the Court, a liability cannot be fastened on a higher official in the absence of knowledge. When two views are possible, the element of wilfulness vanishes as it involves a mental element. It is a deliberate, conscious and intentional act. What is required is a proof beyond reasonable doubt since the proceedings are quasi-criminal in nature. Similarly, when a distinct mechanism is provided and that too, in the same judgment alleged to have been violated, a party has to exhaust the same before approaching the court in exercise of its jurisdiction under the Contempt of Courts Act, 1971. It is well open to the said party to contend that the benefit of the order passed has not been actually given, through separate proceedings while seeking appropriate relief but certainly not by way of a contempt proceeding. While dealing with a contempt petition, the Court is not expected to conduct a roving inquiry and go beyond the very judgment which was allegedly violated. The said principle has to be applied with more vigour when disputed questions of facts are involved and they were raised earlier but consciously not dealt with by creating a specific forum to decide the original proceedings.

• 9. We do not wish to reiterate the aforesaid settled principle of law except by quoting the reasoned decision of this Court in Hukum Chand Deswal v. Satish Raj Deswal [Hukum Chand Deswal v. Satish Raj Deswal, (2021) 13 SCC 166 ] wherein the celebrated judgment in Ram Kishan v. Tarun Bajaj [Ram Kishan v. Tarun Bajaj, (2014) 16 SCC 204 : (2015) 3 SCC (L&S) 311], has been quoted. The following paragraphs would govern the aforesaid principle: (Hukum Chand Deswal case [Hukum Chand Deswal v. Satish Raj Deswal, (2021) 13 SCC 166 ], SCC paras 20-21 & 25-27).

• "20. At the outset, we must advert to the contours delineated by this Court for initiating civil contempt action in Ram Kishan v. Tarun Bajaj [Ram Kishan v. Tarun Bajaj, (2014) 16 SCC 204 : (2015) 3 SCC (L&S) 311]. In paras 11, 12 and 15 of the reported decision, this Court noted thus : (SCC pp. 209-11) '11. The contempt jurisdiction conferred on to the law courts power to punish an offender for his wilful disobedience/contumacious conduct or obstruction to the majesty of law, for the reason that respect and authority commanded by the courts of law are the greatest guarantee to an ordinary citizen that his rights shall be protected and the entire democratic fabric of the society will crumble down if the respect of the judiciary is undermined. Undoubtedly, the contempt jurisdiction is a powerful weapon in the hands of the courts of law but that by itself operates as a string of caution and unless, thus, otherwise satisfied beyond reasonable doubt, it would neither be fair nor reasonable for the law courts to exercise jurisdiction under the Act. The proceedings are quasi-criminal in nature, and therefore, standard of proof required in these proceedings is beyond all reasonable doubt. It would rather be hazardous to impose sentence for contempt on the authorities in exercise of the contempt jurisdiction on mere probabilities…

• 12. Thus, in order to punish a contemnor, it has to be established that disobedience of the order is "wilful". The word "wilful" introduces a mental element and hence, requires looking into the mind of a person/contemnor by gauging his actions, which is an indication of one's state of mind. "Wilful" means knowingly intentional, conscious, calculated and deliberate with full knowledge of consequences flowing therefrom. It excludes casual, accidental, bona fide or unintentional acts or genuine inability. Wilful acts does not encompass involuntarily or negligent actions. The act has to be done with a "bad purpose or without justifiable excuse or stubbornly, obstinately or perversely". Wilful act is to be distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It does not include any act done negligently or involuntarily. The deliberate conduct of a person means that he knows what he is doing and intends to do the same. Therefore, there has to be a calculated action with evil motive on his part. Even if there is a disobedience of an order, but such disobedience is the result of some compelling circumstances under which it was not possible for the contemnor to comply with the order, the contemnor cannot be punished. "Committal or sequestration will not be ordered unless contempt involves a degree of default or misconduct."

• 15. It is well-settled principle of law that if two interpretations are possible, and if the action is not contumacious, a contempt proceeding would not be maintainable. The effect and purport of the order is to be taken into consideration and the same must be read in its entirety. Therefore, the element of willingness is an indispensable requirement to bring home the charge within the meaning of the Act. 

# 18. Thus, it is to be proved that despite having knowledge of such an order, the person concerned had deliberately and wilfully breached, with an intention of lowering the dignity and image of the 'Court', as per decision of the  Hon'ble Supreme Court in Salauddin Ahmed versus Samta Andolan AIR 2012 SC 3891.

# 19. Given the factual background and the principles applicable for prosecuting a person under the Contempt of Courts Act, the Applicant is required to prove that the Respondents have wilfully disobeyed the order of this Authority. Thus, we need to know the role played by the Respondents in dealing with the issue. Respondent No.1 is Deputy Commissioner, Paradeep Customs Division and Sri Ravi Kiran Saladi, Respondent No.2 was the Senior Assistant Traffic Manager, Paradeep Port Authority before 23.08.2023, when he was replaced by Respondent No.3.

# 20. From the discussion as above, two situations have emerged: 

• 1. Cargo/goods where Bills of Entry filed by the Corporate Debtor or OOC granted by the Respondent No.1.

• 2. Where Bills of Entry not filed by the Corporate Debtor or OOC not granted by the Respondent No.1.

# 21. For Item Nos.1 to 42 in Annexure-4 of the counter, the Respondent No.1 has issued OOC which was pleaded to be treated as NOC by the Respondent No.1. In case of item Nos.43 to 45 in Annexure-4, the OOC was not issued by the Respondent No.1 because of Bills of Entry were not furnished by the Corporate Debtor. However, the Respondent No.1 has given NOC to the Paradeep Port Authority for the release of entire lot of goods. Now the custody of item Nos.1 to 45 in Annexure-4 is with the Paradeep Port Authority as the movement order/gate pass is to be issued by it.

# 22. The imported goods lying with the Paradeep Port Authority is part of the “liquidation estate” consisting of the assets as defined under section 36(3) of IBC. Once the liquidation order was passed by this Authority, the Liquidator was to take into custody and control all the assets, property, effects and actionable claims of the Corporate Debtor. The provisions Section 35(a) to 35(f) give powers to Liquidator to take into possession the cargo/goods lying with the Respondents and sell them, subject to the provisions of Section 52. Both Deputy Commissioner, Paradeep Customs Division and Traffic Manager of Paradeep Port Authority have already filed the claims with the Liquidator. Despite this, the goods were not released and good sense prevailed on the Respondent No.1 after the passing of the order in IA No.939/2020, but the Respondent No.2 and 3 are so obsessed with power that they not only refused to obey the directions of this Authority but even not thought fit to appear before this Authority. In this context, Section 48 of the Customs Act, 1962 and the Circular No. 50/2005-Cus dated 01.12.2005 (Annexure-2 of the counter) and Circular No.49/2018-Cus dated 03.12.2018 (Annexure-3 of the counter) have been referred by the Respondent No.2 in its communication for not releasing the goods.

# 23. Here, we would like to reiterate the position of law that provisions of the IBC will prevail over the provisions of the Customs Act. The Hon’ble Supreme Court in Sudarshan Bhatt, Liquidator of ABG Shipyard supra said that once a moratorium is imposed in terms of Section 14 or 33(5) of the IBC, the Custom Authorities do not have the power to initiate the recovery of dues by means of sale/confiscation, as provided under the Customs Act. In this case, a three judges bench of the Hon’ble Apex Court was considering an appeal against NCLAT order in which it held that the  goods lying in the customs bonded warehouse were not the Corporate Debtor's assets as they were neither claimed by the Corporate Debtor after their import, nor were the bills of entry cleared for some of the said goods. It was of the view that demand notices to seek enforcement of customs dues during the moratorium period would violate the said provisions of the IBC. Therefore, anything contrary in the Customs Act or the circulars as noted above would not be law of land. The relevant portion of the judgement is reproduced as below:

• "(a) Whether the provisions of the IBC would prevail over the Customs Act, and if so, to what extent? The IBC would prevail over The Customs Act, to the extent that once moratorium is imposed in terms of Sections 14 or 33(5) of the IBC as the case may be, the respondent authority only has a limited jurisdiction to assess/determine the quantum of customs duty and other levies. The respondent authority does not have the power to initiate recovery of dues by means of sale/confiscation, as provided under the Customs Act.

• (b) Whether the respondent could claim title over the goods and issue notice to sell the goods in terms of the Customs Act when the liquidation process has been initiated? Answered in negative.

• 54. On the basis of the above discussions, following are our conclusions: 

• (i) Once moratorium is imposed in terms of Sections 14 or 33 (5) of the IBC as the case may be, the respondent authority only has a limited  jurisdiction to assess/determine the quantum of customs duty and other levies. The respondent authority does not have the power to initiate recovery of dues by means of sale/ confiscation as provided under the Customs Act.

• (ii) After such assessment, the respondent authority has to submit its claims (concerning customs dues/operational debt) in terms of the procedure laid down, in strict compliance of the time periods prescribed under the IBC, before the adjudicating authority.

• (iii) In any case, the IRP/RP/liquidator can immediately secure goods from the respondent authority to be dealt with appropriately, in terms of the IBC." 

• Own emphasis

# 24. Thus, there is no doubt that the Respondent No.1 as well as Paradeep Port Authority cannot keep the cargo/goods of the Corporate Debtor after the  passing of the liquidation order. They were apprised about the position of law and direction of this Authority not only after passing of the order dated 29.03.2023 in IA No.939/2020 but prior to this also. They were intimated vide letters dated 24.01.2020 (Annexure-A2 of the application), dated 17.04.2023 (Annexure-4 of the application) and dated 23.05.2023 (Annexure-6 of the application) and e-mails (Annexure A-3 of the application). Even the successful bidder M/s. Jindal Steel & Power Limited also informed both the Respondents about the passing of the order vide letter No.JSPL/PDP/Traffic/ 2023-24/0119 dated 09.05.2023. The Paradeep Port Authority in pursuance of letter written by M/s Jindal Steels & Power Limited wrote letter dated 20.05.2023 (Annexure-5 of the application), the relevant portion of which is extracted below.

• It is to inform that the materials may be released on submission of custom No Objection/Out of Charge Order (OOC) on full balance quantity of cargo of corporate debtor by your firm. You are also requested to take up the matter with liquidators for considering payment of outstanding dues of Paradeep Port, on priority basis, as Paradeep Port Authority is an autonomous organisation under the Ministry of Ports, Shipping & Waterways, Govt, of India. As on 31.05.2023, outstanding dues against M/s.Lanco Babandha Power Limited is Rs.13,76,35,956/-.

# 25. However, the stand of Paradeep Port Authority was more flexible before the passing order in IA No. 939/2020 when they replied by email dated 02.06.2020 (Annexure-3) that the Applicant can release the goods: 

• Paradeep Port has no objection to release the assets of the Corporate Debtor to enable you to take custody to sell the assets as per Section-35 of the code. You are requested to obtain No-objection/Out of Charge Order from Customs to sell the assets of the Corporate Debtor. You are also requested to consider payment of the outstanding dues of PPT, on priority basis, as PPT is an autonomous organization under the Ministry of Shipping, Govt. of India.

# 26. At the same time, the Respondent filed No.2 filed claim of Rs. 4,36,30,691/- dated 23.12.2019 with the liquidator and he informed the said Authority in response to the email dated 21.05.2020 vide e-mail dated 22.05.2020 that the claim will be dealt with as per section 53 IBC. Once the Corporate Debtor is put in liquidation, all its assets including in possession of the Respondents have become part of the ‘liquidation estate’ under section 36 IBC and the liquidator is empowered under section 35 IBC to dispose of the said property to discharge the liabilities of the Corporate Debtor. If the Respondents had any grievance about the disbursement of property of the Corporate Debtor under section 53 IBC, they should have challenged the order of the liquidator after it was received by them within 14 days under section 42 IBC, but their intention appears to derail the process of liquidation which is time bound.

# 27. It shows that the Paradeep Port Authority was changing its stand like chameleon as per its convenience. They became more rigid when specific direction was given in IA No. 939/2020. The Paradeep Port Authority was also intimated about the seriousness of the issue by the Respondents No.1 by writing letter dated 01.06.2023 (Annexure-7 of the counter), but the latter neither filed any reply in the present petition nor wrote any letter to the liquidator as to why goods should not be released to the liquidator. 

# 28. It is unbecoming on the part of the Government Authority not to respond to the lawful directions issued by this Authority. They have neither complied with the directions of this Authority, nor preferred any appeal. They sat on the matter despite knowing fully well that lawful directions have been issued by the competent authority and on account of the gross disobedience of the Paradeep Port Authority, this matter is being unnecessarily dragged, causing loss to the exchequer as the goods in its possession have remained unutilised and would not be put to productive use.

# 29. In the beginning, it was all the Respondents but later on it was Respondent Nos. 2 and 3, who deliberately and continuously ignored the directions of this Authority. As far as Respondent No.1 is concerned, the directions have been complied with, though after the passing of specific order in IA 939/2020.

# 30. Considering the entire facts and circumstances of the case and having regard to the legal position concerning the point in issue, we think that the Respondent Nos. 2 and 3 have intended to undermine the administration of justice and their intentional acts cannot be disregarded. Administration of justice would be defeated if the order of any Authority is disregarded with impunity. There can be no laxity in such a situation because otherwise the orders of this Authority would become the subject of mockery. We want to quote the observations of Hon’ble Supreme Court in Commissioner, Karnataka Housing Board versus C. Muddaiah AIR 2007 SC 3100 that once a direction is issued by a competent Court, it has to be obeyed and implemented without any reservation. If an order passed by a Court of Law is not complied with or is ignored, there will be an end of Rule of Law. If a party against whom such order is made has grievance, the only remedy available to him is to challenge the order by taking appropriate proceedings known to law.

# 31. The Respondent Nos.2 and 3 have left no stone unturned to avoid the directions of this Authority despite the liquidator and even Respondent No.1 bringing to their knowledge about the requirements of law after the passing of the order in IA No. 940 of 2020, not to speak of the fact that the Respondent No.2 first agreeing to release the goods and subsequently refusing to do so. No one has the authority to conduct in a manner which would demean and disgrace the majesty of justice which is dispensed by a Court of law.

# 32. In view of our above mentioned discussions, we hold both Respondent Nos. 2 and 3 guilty of contempt of disobeying the directions of this Authority. Accordingly, the Respondent Nos.2 and 3 are sentenced for simple imprisonment of one month each and further fine of Rs.1000/- is also imposed on each of them. In case of default in making payment of fine, they shall further under go simple imprisonment for 15 days each. 

# 33. Hence, the Contempt Petition No.16 of 2023 in CP (IB) No.296/7/HDB/2018 is disposed of.

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