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2008 DIGILAW 220 (AP)

V. Amarender Rao v. Pattern Surya Prakash Rao

2008-03-26

B.PRAKASH RAO, L.NARASIMHA REDDY

body2008
JUDGMENT (Per B. Prakash Rao, J.) This is an appeal under Section 19 of the Contempt of Courts Act, 1971 filed by the contemnor who has been held guilty of violating orders of this Court made in W.P.M.P. No. 2333/2005 in W.P.No. 23156/ 2004, dated 8-2-2005 as per the orders in C.C.No. 525/2006, dated 17-9-2007 and imposing Simple Imprisonment for a period of 4 months and fine of Rs. 1,000/- in default Simple Imprisonment for one month. 2. Briefly stated, the facts of the case, which gave rise to these proceedings are that the respondent is the petitioner who filed a Writ under Section 226 of the Constitution of India in W.P.23156/2004, as against the appellant herein, assailing the order dated 6-12-2004 of the Reserve Bank of India canceling the license of the Prudential Co-operative Bank Limited (for short 'the Bank') in exercise of powers conferred under Section 22 of the Banking Regulation Act and also the consequential order passed by the Registrar of the Cooperative Societies appointing the appellant herein as the liquidator of the Bank. While the said writ petition was pending, the Bank after obtaining permission from the State Government, introduced a scheme of One Time Settlement (for short 'OTS Scheme'). Thereupon, the respondent-petitioner has filed an interlocutory application in W.P.M.P. No. 2333/2005 in the said Writ Petition and in pursuance of which this Court passed the orders on 8-2-2005 granting interim suspension of the said OTS Scheme. However, ultimately the main writ petition along with other connected matters was disposed of by a common order dated 5-5-2005, whereby the said writ petition was partly allowed setting aside both, the aforesaid orders of winding up by the Reserve Bank of India and consequential order of the Registrar appointing the respondent as a Liquidator, and the said interlocutory application in W.P.M.P./2333/ 2005 was also dismissed. Thereupon, an appeal in WA 1053 of 2005 was filed 8ggrieved against the orders allowing the writ in part. At the time of the filing of the present contempt proceedings, the said writ appeal was pending and the matter was heard and reserved for orders. 3. Thereupon, an appeal in WA 1053 of 2005 was filed 8ggrieved against the orders allowing the writ in part. At the time of the filing of the present contempt proceedings, the said writ appeal was pending and the matter was heard and reserved for orders. 3. The grievance of the respondent petitioner in the contempt proceedings was that in spite of the aforesaid interim orders, the appellant herein as the Liquidator had extended the benefit of OTS Scheme to some of the borrowers viz., Y. Rajiv Reddy and his associates and thereby has violated the interim orders in the said interlocutory application in W.P.M.P/2333/2005 dated 8-2-2005, and therefore, sought for punishing the appellant for the contempt of court. 4. These contempt proceedings were admitted by the learned Single Judge as per the orders dated 9-8-2006. After the appearance, the appellant contested the contempt proceedings by filing the counter affidavit stating that after introduction of OTS Scheme, he received 66 applications in respect of the over draft account and 123 applications in respect of overdue loans till 5-2-2005, and thereafter no application has been received. The interim orders were passed by this Court on 8-2-2005. It was further stated that the borrowers, who borrowed Rs. 22,36,25,492/- under different accounts by creating equitable mortgage by way of title deeds, repaid an amount of Rs. 22,66,44,108/- up to 31-12-2004 in terms of the OTS Scheme and expressed their willingness to settle their loan account in full under option-I of the OTS Scheme whereunder they have to pay Rs. 10,29,82,489/- towards full and final settlement, and they had in fact paid Rs. 7,44,82,489/- through 3 demand drafts dated 2-2-2005 and for the balance amount of Rs. 2,85,00,000/- issued post dated cheques bearing dates from 10-3-2005 to 30-3-2005 and handed over on 2-2-2005 itself earlier to the date of the orders. The said scheme was introduced on 24-1-2005 itself. The demand drafts were encashed even prior to the passing of the interim order on 8-2-2005, and he did not accept any cheques from borrowers after 8-2-2005 and, therefore, thee is no contempt as such on presenting those cheques for encashment, and he has not flouted the orders of this court dated 8-2-2005. He further pleaded that in case it is felt by this Court that there is any impropriety, he tendered unconditional apology. 5. He further pleaded that in case it is felt by this Court that there is any impropriety, he tendered unconditional apology. 5. In the additional counter affidavit filed by the appellant, he raised a further plea that since this contempt petition is filed after lapse of more than one year from the date of the alleged contempt, the same is barred by limitation as contemplated under the law. 6. In reply the respondent herein sought to sustain that the contempt petition has been filed within one year from the date of the knowledge of the contempt committed by the appellant and, therefore, bar of limitation does not apply. 7. After hearing both sides, in detail, And on considering the submissions made by them, the learned Single Judge held that there is a contempt by violation of the orders of this Court dated 8-2-2005 and the proceedings are not barred by limitation. It was further held that the unconditional apology offered by the appellant cannot be accepted and therefore the appellant deserves to be punished for the contempt, and thereby imposed the above-mentioned sentence, hence the appeal. 8. Sri E. Manohar, learned Senior Counsel appearing on behalf of the appellant heroin, by taking us through the entire material on record, mainly submitted that having regard to the chequered events, both prior to and after the filing of the writ p8tition or even after introduction of the OTS Scheme, quite earlier to the passing of interim orders, no contempt as such has been made out and further by taking into consideration the ultimate end result of the proceedings, vis-a-vis, the steps taken, there is no malice nor any wilful default on behalf of the appellant, who has only discharged the duties of the Liquidator and nothing as such can be attributed for any wilful disobedience or flouting of the orders of this Court. Even otherwise, it was contended that the bar of limitation goes against the respondent. That apart, the learned Judge erroneously rejected the unconditional apology, which has been tendered by the appellant especially where nothing personal can be attributed against him. 9. Even otherwise, it was contended that the bar of limitation goes against the respondent. That apart, the learned Judge erroneously rejected the unconditional apology, which has been tendered by the appellant especially where nothing personal can be attributed against him. 9. Sri V. Srinivas, learned counsel appearing on behalf of the respondent herein sought to support the findings of the learned Single Judg8 holding categorically that there is clear and utter violation and flouting of the orders of this Court in encashing the cheques in pursuance of the OTS Scheme, which was already suspended by this Court earlier, which itself is enough to hold that the appellant has committed contempt and, therefore, no indulgence need he shown in his favour and the findings as arrived at by ( the learned Single Judge did not warrant any interference, either on the aspect of violation nor on the sentence imposed therein. 10. After considering the elaborate submissions made from both sides, and on perusal of the material, the point which ultimately arises for consideration is as to whether on the facts and circumstances the appellant had committed any violation of the orders of this Court and thereby committed contempt of the orders of this Court and thus liable for the punishment. 11. At the outset, there is no dispute in regard to the chequered events, which are already mentioned above. In the writ petition, the respondent sought a Mandamus assailing both, the aforesaid orders dated 6-12-2004 of the Reserve Bank of India canceling the licence of the Bank under Section 22 of the Banking Regulation Act and the consequential order passed by the Registrar of the Co-operative Societies appointing the appellant as Liquidator by orders dated 6-12-2004. The said writ petition was filed on 12-12-2004 as is seen from the date shown in the writ affidavit. Subsequently, the State Government has introduced OTS Scheme with effect from 24-1-2005. On the application filed by the petitioner in W.PJv1.P.2333/2005, this Court by orders dated 8-2-2005, granted interim suspension of the said scheme. Later, on behalf of the appellant an application has been filed seeking to vacate the interim orders along with the counter affidavit in the main writ petition. On the application filed by the petitioner in W.PJv1.P.2333/2005, this Court by orders dated 8-2-2005, granted interim suspension of the said scheme. Later, on behalf of the appellant an application has been filed seeking to vacate the interim orders along with the counter affidavit in the main writ petition. However, the main writ petition itself was taken up along with other connected m8tters, and the same were partly allowed as per the orders dated 5-5-2005 setting aside, both the orders of canceling the licence of the Bank an a appointment of the appellant as Liquidator. However, the interim application wherein the interim order was passed in W.P.M.P.2333 of 2005was also dismissed. As against the same, the Reserve Bank of India filed an appeal before the Division Bench assailing the orders of the learned Single Judge canceling the licence of the bank and appointing the liquidator, and pending thereof, it filed an interim application W.A.M.P.1976 of 2005 wherein the Division Bench of this Court as per the orders dated 13-6-2005 passed the interim orders to the following effect: "Order of the learned single Judge is suspended. In the meanwhile, the appeal which is pending before the Central Government against the order of Reserve Bank of India shall proceed. Further, the respondents are at liberty to seek one time settlement (OTS) in accordance with any scheme prepared by the Reserve Bank of India. But such agreement shall not be finalized without specific permission of this Court. Notice," 12. Subsequently, all these appeals were taken up by the Division Bench and were disposed of as per the orders dated 10-10-2007 holding the correctness of the orders of the Reserve Bank of India in canceling the licence of the Bank and holding that no interference is warranted with the OTS Scheme introduced by the Liquidator. Thus, ultimately the entire action on the part of the Reserve Bank of India canceling the licence of the bank, appointing the liquidator and the OTS Scheme stood upheld. 13. However, the contempt proceedings were initiated by filing a petition on 6-6-2006, the date on which those appeals were pending and even according to the appellant, as alleged in the affidavit filed in support of the petition, it was stated that the appeals were heard and the cases were reserved for judgment. 13. However, the contempt proceedings were initiated by filing a petition on 6-6-2006, the date on which those appeals were pending and even according to the appellant, as alleged in the affidavit filed in support of the petition, it was stated that the appeals were heard and the cases were reserved for judgment. However, since there is encashment on the part of the appellant in regard to the cheques, which have been issued in terms of the scheme, there is violation of the interim orders of this Court dated 8-2-2005 and as well as they sought for punishing the appellant for flouting the said orders. 14. There is no serious dispute on the part of the respondent herein, at any stage, on the facts that the State Government had introduced the OTS Scheme on 24-1-2005 nor there is any serious dispute in regard to specific averments made on behalf of the appellant as a Liquidator that in terms of the said scheme, he received 66 applications in respect of the overdraft account and 123 applications in respect of overdue loans till 5-2-2005, and thereafter, no application has been received subsequent to the interim orders dated 8-2-2005. There is also no serious dispute to the fact that borrower who borrowed Rs. 22,36,25,492/- under different accounts repaid an amount of Rs. 22,66,44,108/- up to 31- 12-2004. It is they who expressed their willingness to settle their loan account in full under Option-I of the OTS Scheme and as per. the terms of the OTS Scheme they expressed their willingness to settle their loan of Rs. 10,29,82,489/- towards full and final settlement and in terms of which they had in fact paid Rs. 7,44,82,489/- through 3 demand drafts dated 2-2-2005, and for the balance amount of Rs. 2,85,00,000/- issued post dated cheques bearing dates from 10-3-2005 to 30-3-2005 and were handed over to the appellant on 2-2-2005 itself. It is also not in dispute that the said Demand Drafts were encashed much earlier to the said interim orders of this Court dated 8-2-2005. Therefore, the entire gamut and the controversy falls only in regard to the action on behalf of the appellant herein in presenting those post dated cheques for encashment and whether such action really amount to flouting of the orders. Therefore, the entire gamut and the controversy falls only in regard to the action on behalf of the appellant herein in presenting those post dated cheques for encashment and whether such action really amount to flouting of the orders. The learned Single Judge by taking into account these circumstances had no doubt specifically held at para 18 of the order to the following effect: "Encashing of post dated cheques bearing dates in March, 2005 after 8-2-2005 per se may not amount to violation of the order dated 8-2-2005 of the Court, because by mere encashment of the cheques issued by the borrowers, they i.e. the borrowers would not get the benefit of the suspended OTS Scheme." 15. However, the learned Single Judge rested his finding on the footing that granting the benefit of the scheme by the appellant to the borrowers subsequent to 8-2-2005 without the knowledge or permission of the Court is a violation of the orders of the Court as no ordinary prudent man would have made such exercise and, therefore, he deserves to be punished for contempt. In support, the learned Judge proceeded observing that there is absolutely no repentance by the appellant herein for the breach committed by him and by rendering such unconditional apology as a mere formality they expect to get purged of the contempt alleged against them. That apart, it was pointed out that since the beneficiaries are close relatives with the people on the helm of the affairs and, therefore, it is only due to political influence, the appellant had obliged by writing to the government on 3-2-2005, even before encashment of post-dated cheques that the borrowers had cleared the loan due to the bank. Even otherwise, the learned Single Judge proceeded to hold that the appellant being a responsible officer could not plead any ignorance nor can afford to plead any lack of knowledge and further by stating such false report he was deliberately under the impression that his action would go unnoticed by tendering unconditional apology. Though in spite of the observation as made by the learned Single Judge based on the statements made on oath against oath, the events and dates, themselves do not support nor would it lead to any such presumption. Though in spite of the observation as made by the learned Single Judge based on the statements made on oath against oath, the events and dates, themselves do not support nor would it lead to any such presumption. There is not a single act or any action as such, on the part of the appellant herein subsequent to the passing of the interim orders by this Court on 8-2-2005, which itself is a beginning and end of either extending or finalizing or even initiating such extension of benefit under the scheme, to show that the appellant had committed acts leading to contempt. As observed by the learned Single Judge much water has flown under the bridge by the date of the passing of the order by this Court on 8-2-2005. No doubt the Writ Appeal was pending assailing the action of cancellation of the licence by the Bank and appointing the appellant as Liquidator, which have been ultimately upheld by this Court in the final adjudication. The Scheme under the OTS was introduced on 24-1-2005 and the applications, the details of which in both the categories, as stated already above, were received much 9arlier and there has been substantial clearance of the arrears by 31-12-2004, by those defaulters and even in terms of the Option-I under the Scheme, the said defaulters had to pay Rs. 10,29,82,489/- towards full and final settlement, out of which, they did make payment of Rs. 7,44,82,489/- through three demand drafts received on 2-2-2005 and towards the balance of Rs.2,85,00,000/- the post dated cheques were issued from 10-3-2005 to 30-3-2005, which was received on 2-2-2005, by the appellant in respect of which there is no dispute. Therefore, it is only in regard to the balance tail end amount, in respect of the post-dated cheques, which have been issued already and the same were presented for encashment. Since there is no dispute in regard to the receipt of post dated cheques as long back as on 2-2-2005, itself when the interim orders were granted on 8-2-2005, it cannot be said that mere presentation as such would amount to any wilful act on the part of the appellant who was only discharging his duties as liquidator having been appointed by the Reserve Bank of India, as a consequence to the canceling of the licence of the bank. The scheme has already came into force and it was further acted upon not only by the bank, but also, by the borrowers who gave their willingness by filing their applications and they have also made substantial part payment on 20-2-2005 (sic.2-2-2005) itself out of the amounts which are to be paid towards full and final settlement. Therefore, it cannot be said that the appellant either has vitiated whole process as such or any action is taken in pursuance thereof finally extending the said benefit. It is also evident from these chequered events that the extension of the I benefit even in respect of those applications, which have been received and acted upon even much earlier to the date of order by this Court, do not include only of those who are alleged to be close to the political quarters or higher ups, but also include many I several other borrowers and defaulters I against whom nothing as such can be attributed. Therefore merely trying to put a I sweeping blame on such premise is not sustainable. It is not the case where the' said post dated cheques were not honored and no amounts came forth and, therefore, the" letter which has been stated to have been written by the appellant on 3-2-2005 sending the report to the government about the discharge of the loans by the borrowers cannot be found fault with. Further even the reasoning adopted that the appellant had not taken care to make or to seek any notification would not also go against him since on behalf of the appellant application has been filed to vacate the stay pointing out all these events namely the receipt of the applications and the amounts were paid. However, the main writs themselves were taken up and disposed of and, therefore, it cannot be said that there was a total lull or silence on the part of the appellant herein in quietly proceeding with the extension of benefit. Thus by the date of the order of this Court, the scheme has been very much acted upon and the substantial amounts were encashed and for the extent of balance remaining post dated cheques were issued and received by the appellant, is also much earlier to the date of the order of this Court. Thus by the date of the order of this Court, the scheme has been very much acted upon and the substantial amounts were encashed and for the extent of balance remaining post dated cheques were issued and received by the appellant, is also much earlier to the date of the order of this Court. Thus no intention as such can be attributed against the appellant personally or even otherwise to draw any inference of willfulness to flout the orders. 16. Even otherwise, as rightly contended on behalf of the appellant that having regard to the fact that the scheme had come into force with effect from 24-1-2005 and the applications were received till 5-2-2005, and the demand drafts were given and substantial payments were already made much earlier thereto Le., up to 31-12-2005 and even the , demand drafts stood encashed on 2-2-2005, could not have been without any notice or knowledge of the respondent herein to plead that they have come to know at a later date so that the contempt proceeding are initiated within the time prescribed. Be that as it may, having regard to the availment of the benefits by several such borrowers even before the date of the order and discharge of their liabilities to the substantial extent, and even on the finding of the learned Single Judge that mere encashment of post-dated cheques, the borrowers would not get the benefit of the suspended OTS Scheme are sufficient to indicate that no intentional violation is there on the part of the appellant who is only a liquidator, and thus, it cannot be said to be held that he is liable for punishment. In regard to the principles as laid down by the decisions cited across the bar, in the order under appeal, and also even in this appeal, it is not necessary to delve into the same, since on the facts of this case it has been held that the respondent has not made out a clear cut case of any violation of the order on the part of the appellant willfully and with knowledge and after the date of the order. It is now well established that the proceedings under the Contempt of Court Act are quasi-criminal and the very same principle normally would apply on the criminal jurisprudence to show that it is for the respondent herein to establish the case beyond any reasonable doubt, and this principle would amply apply to the present case. The proceedings in the contempt are quasi-criminal in nature. The Supreme Court in Rosnan Sam Boyce v. BR. Cotton Mills Ltd.1, held that law of contempt has to be strictly interpreted and the requirements of that law must be strictly complied with before any person can be committed for contempt. Therefore, even extending those principles in slightest doubt or circumstances would not directly rope in the appellant to show the act of violation post to the date of the order, at his stance and on his own and initiating the extension of benefit under the scheme giving finality thereto under the scheme. As already held the scheme apart from having come into force quite earlier was very much availed and acted upon by the borrowers and the amounts having been paid and the paltry amount having been discharged by issuance of post dated cheques, which are handed over much earlier to the date of the interim order dated 8-2-2005, it cannot be said that the appellant herein had committed any contempt post to the date of the passing of the interim order on 3-2-2005 for attributing any violation. The respondent had approached belatedly. Having regard to the aforesaid finding, it is not necessary to delve into the question as to what extent and how far the unconditional apology is, bona fide or can be accepted or to be gone into. Accordingly, it cannot be said that the appellant has violated the order and thus the findings of the learned Single Judge are liable to be set aside. 17. The appeal is accordingly allowed. The Judgment of he learned Single Judge made in C.C.No. 525 of 2006, dated 17 -9-2007 is set aside, holding that in view of the aforesaid reasons, there is no violation or flouting of the orders.