In a landmark judgment delivered by a Supreme Court bench comprising Justice J.B. Pardiwala and Justice Manoj Misra, the apex court has ruled that deliberate and calculated actions to obstruct judicial directives amount to contempt, even in the absence of explicit prohibitory orders. The judgment came in Contempt Petition (C) Nos. 158-159 of 2024, filed by Celir LLP against the borrower, Mr. Sumati Prasad Bafna, and a subsequent transferee, Greenscape IT Park LLP.
The Court found that the respondents’ actions in defying its earlier directives regarding a disputed property auction under the SARFAESI Act were a clear attempt to frustrate the judicial process. The ruling underscores the judiciary’s commitment to upholding the integrity and enforceability of its orders.
Background of the Case
The dispute arose from a secured loan advanced by Union Bank of India to the borrower, with property in Navi Mumbai mortgaged as collateral. Following the borrower’s default, the bank initiated proceedings under the SARFAESI Act, eventually auctioning the property after eight unsuccessful attempts. In the ninth auction held in June 2023, Celir LLP emerged as the highest bidder.
While the borrower sought redemption of the mortgage after the auction, the matter escalated to the Bombay High Court, which permitted the borrower to redeem the property. This decision was subsequently overturned by the Supreme Court on September 21, 2023, which ruled that the borrower’s redemption rights ceased upon confirmation of the auction.
Despite these directives, the borrower and subsequent transferee allegedly engaged in actions that hindered the auction purchaser from taking possession of the property. This led to the filing of the contempt petitions.
Key Legal Issues
The Court addressed several important issues:
1. Whether the respondents’ actions constituted contempt of court:
The bench concluded that the respondents’ deliberate interference with the enforcement of the Supreme Court’s prior decision amounted to contempt. The Court highlighted that such conduct undermines the judiciary’s authority and erodes public trust.
2. Necessity of a prohibitory order for contempt proceedings:
The respondents argued that their actions were lawful in the absence of a specific stay or prohibitory order. Rejecting this contention, the Court held that knowledge of ongoing proceedings and judgments imposes a duty to act in good faith. It noted:
“The deliberate and calculated efforts to frustrate the implementation of the Court’s orders amount to contempt, irrespective of whether a prohibitory order or stay was expressly in place.”
3. Validity of the ninth auction:
The borrower and subsequent transferee challenged the auction process, alleging procedural violations under the SARFAESI Act. However, the Court dismissed these claims as barred by constructive res judicata, as they had not been raised in earlier proceedings.
Observations of the Court
In a strongly worded opinion, Justice Pardiwala and Justice Misra emphasized the sanctity of judicial orders, stating:
“When a judgment has attained finality, any calculated action to delay its enforcement is not just a defiance of the law but an affront to the institution of justice itself.”
The Court further observed that litigants must refrain from using procedural loopholes to undermine the finality of judicial decisions. It condemned the respondents’ actions, which included executing a release deed, transferring the property, and filing multiple frivolous proceedings to block the petitioner’s possession rights.
Final Decision
The Supreme Court issued the following directives:
1. Physical possession of the property:
The petitioner, Celir LLP, is to be handed over physical possession of the property, along with its original title deeds.
2. Nullification of fraudulent deeds:
The release deed executed by the borrower in favor of Greenscape IT Park LLP was declared null and void.
3. Penalties for contempt:
The respondents were fined for contempt and warned against further obstruction of justice.
The Court also instructed the authorities to ensure compliance with its orders, emphasizing that any further delay or non-compliance would attract more stringent penalties.
