Bombay High Court
Bajranglal Gangadhar Khemka And ... vs Kapurchand Ltd. on 9 February, 1950
Equivalent citations: AIR 1950 Bom 336, (1950) 52 BOMLR 363, ILR 1951 Bom 125
Bench: Chagla, Gajendragadkar
[1] This is an appeal from a judgment of Bhagwati J., by which be made an order on a motion for contempt by which he ordered the committal of the appellants unless certain requisitions contained in the order were carried out within the time specified therein.
[2] The suit which led to the taking out of this motion was for specific performance, and alternatively for damages. The plaintiffs were the lessees of a cinema known as the "Paradise Cinema" and in the lease there was a clause which gave the plaintiffs an option to purchase the property. The grievance of the plaintiffs was that, on 3rd February 1942, the defendants had entered into an agreement of sale of the property in favour of the Paradise Cinema, Limited, without giving them the option to which they were entitled; and it was to enforce this option that the suit was filed. The answer given by the defendants was that the plaintiffs were informed of the agreement of sale with the Paradise Cinema, Limited, and that the plaintiffs had failed to exercise the option. The defendants further alleged that, subsequent to the agreement of 3rd February 1942, in view of the objection taken to it by the head lessor, an agreement was arrived at on 4th September 1945, by which the defendants had transferred to the company the rents, issues and profits of the property for a period of fifteen years commencing from 3rd February 1942. A supplemental plaint was filed, and the plaintiffs asked that they should be given the benefit of this agreement which was arrived at with the company. The suit came up for hearing and it went on for about a week. The parties then compromised the action, and the consent terms were reduced to writing and signed by counsel for the parties. The particular term with which we are concerned in this appeal is the one with regard to the execution of a lease within a period of two months by the defendants in favour of the plaintiffs in respect of the property in suit. The term provided that the defendants would execute such a lease ; and the term further provided that the defendants undertook to have the Paradise Cinema, Limited, to join as a confirming party to the lease. The defendants failed to execute the lease as agreed upon, and execution proceedings had to be taken out. It is unnecessary to go into the details of those proceedings, but ultimately an order was made by the Court by which the Prothonotary of this Court had to execute the lease as the defendants failed to do so. The plaintiffs then called upon the defendants to get the Paradise Cinema, Limited, to join as a confirming party to the lease, and the defendants having failed to comply with that requisition, a motion was taken out by the plaintiffs for contempt of Court. Bhagwati J., held that there was a wilful default on the part of the defendants, and thereupon he ordered that the defendants should carry out their undertaking within one month from the date on which the order was passed ; otherwise a warrant was to issue for the committal of the defendants to prison.
[3] Now, Mr. Desai before us has contended that no undertaking was given to the Court in respect of which committal proceedings could be taken out. He says that the undertaking referred to in the decree was merely a solemn promise given by his clients to the other side. Mr. Desai has argued that no undertaking to the Court can be given where an action is compromised and where the Court is bound under O. 23, R. 3, to record the compromise. Mr. Desai says that the Court is not interested in what terms the parties have agreed to; the parties may agree to any terms, and if they are sui juris, the Court is bound to pass a decree in terms of the compromise ; and, therefore, even though the consent terms may provide for an undertaking by one party, such an undertaking can never be construed as an undertaking to the Court. Mr. Desai's contention is that it is only when the Court is interested in passing a decree in a particular form, or is entitled to scrutinise the terms of the compromise, that the Court can insist upon an undertaking being given to it or the parties can give an undertaking to the Court. Such an eventuality, according to Mr. Desai, would only arise in cases where one of the parties was a minor or where charity was interested. Then the Court would have to sanction the terms of the compromise, and before the Court would sanction the compromise the Court may insist upon a particular undertaking or undertakings being given by a party to the suit. In this case, says Mr. Desai, the parties were at liberty to agree to any terms that they thought were proper, and the Court had no voice whatever in dictating to the parties how they should settle their disputes ; and therefore, according to Mr. Desai, the undertaking referred to in the consent terms was not an undertaking to the Court.
[4] We are not prepared to accept a position which seems to us contrary to the long practice that has been established in this Court, and, apparently, also in England. There is no reason why even in a consent decree a party may not give an undertaking to the Court. Although the Court may be bound to record a compromise, still, when the Court passes a decree, it puts its imprimatur upon those terms and makes the terms a rule of the Court ; and it would be open to the Court, before it did so, to accept an undertaking given by a party to the Court. Therefore, there is nothing contrary to any provision of the law whereby an undertaking cannot be given by a party to the Court in the consent decree, which undertaking can be enforced by proper committal proceedings.
[5] It is necessary to understand what the true nature of the committal proceedings is in a case like this. As pointed out by Oswald on Contempt of Court, an undertaking entered into or given to the Court by a party or his counsel or solicitor is equivalent to and has the effect of an order of the Court. So far as any infringement thereof may be made the subject of an application to the Court to punish for its breach. Therefore, when an undertaking is given by a party to the Court, it becomes an order of the Court and a particular mode is prescribed for enforcing that particular order. That mode is that proceedings for contempt can be taken out for the enforcement of that order. Therefore, if we find in this case that an undertaking was given by the party to the Court resulting in that undertaking becoming an order of the Court, then it would be open to the party aggrieved by the non-compliance with the order to come to Court and ask for committal of the party in default. Therefore, what we have to really consider is whether, in fact, the plaintiffs gave an undertaking to the Court, and that we can only decide by looking at the consent decree itself.
[6] It is necessary to look first at the scheme of the consent terms. We have first seven clauses which all deal with agreements between the parties. Each clause begins with the expression "Agreed". Then we come to clause 8, which begins by saying "Ordered that the defendants do execute the said lease within a period of 2 months from the date hereof." Therefore, "Ordered" is used here in contradistinction to an agreement. Whereas the first seven clauses merely recorded an agreement between the parties, clause 8 requires an order of the Court which would be an executable order. And it is in this clause that the undertaking given by the defendants is incorporated. Therefore, clause 8, on the face of it, was not dealing with any agreement between the parties at all. What the parties intended - and parties at all. What the parties intended - and that intention is clear from the language used in clause 8 itself - was that, with regard to a particular subject-matter dealt with in clause 8, an order of the Court should be obtained. And that clause deals with two matters : one was the execution of the lease by the defendants themselves which they were ordered to do and the other was that they undertook to get the Paradise Cinema, Limited, to join as a confirming party to the lease. In our opinion, the second part of clause 8 was as much an order of the Court as the first. The necessity for using the expression "undertake" will become clear when one realises that a mere lease executed by the defendants would not have been of much avail to the plaintiffs, because, as I pointed out earlier, the defendants had already transferred the income for fifteen years of the property in suit to the Paradise Cinema, Limited. Therefore, it was necessary in the interests of the plaintiffs that they should get the Paradise Cinema, Limited, to confirm the lease. It is because of the importance of the defendants getting the Paradise Cinema, Limited, to join in the lease that the parties advisedly used the expression "undertake."
[7] It has been urged by Mr. Desai that there is no warrant for the Court reading into the expression used in clause 8 the words "to the Court." Mr. Desai says that we should put upon this clause its plain and natural construction, and the more so as we are dealing with a matter which involves serious consequences upon his clients. It is perfectly true that, if the word "undertake" bore its plain and natural meaning, then there would be no justification for construing that expression to mean that the undertaking was given to the Court. The clause does not state to whom the understanding is given, and it may be that it would be possible to hold that, as the parties were settling the dispute between themselves, the undertaking was given by one party to the other ; or, at the highest, the only thing that could be urged would be that the expression is ambiguous, and in a contempt matter, unless the Court is clearly satisfied that the undertaking was given to the Court, the Court would not proceed to commit the person in default to jail. But in our opinion, the expression "undertake" has come to acquire through long practice, a technical meaning. In all orders and decrees of the Court, whenever the expression "a party undertakes" has been used, it has always borne the meaning that the undertaking has been to the Court. The Advocate-General has also referred us to the forms and orders that appear in "Set on Decrees and Orders", and in those forms the expression used has always been "a party undertake" and never "a party undertakes to the Court." Therefore, in English Courts as well, the expression "a party undertakes" when used in decrees or orders has come to acquire the same technical meaning. What is more, it has been held by Bhagwati J. - an opinion with which I entirely agree - that it has been the long-standing practice on the original side that, whenever counsel wishes to give an undertaking to the Court, he never expressly uses the words "to the Court" but merely states that he undertakes on behalf of his client, and that undertaking is always understood to be an undertaking to the Court which could be enforced by committal proceedings. In this case, we find that the consent terms were signed by Mr. Rege for Mr. Desai's clients and by Mr. Amin for the plaintiffs, both counsel with very large and extensive practice on the original side. Therefore, in our opinion, looking to the surrounding circumstances, looking to the context, and also looking to the fact that the expression has come to acquire a technical meaning, we can only construe the undertaking given by the defendants as an undertaking given to the Court and not given to the other side.
[8] In support of his contention, Mr. Desai has relied on a judgment of the Calcutta High Court inNisha Kanto v. Saroj Bashini, A. I. R. (35) 1948 Cal. 294 : (49 Cr. L. J. 567). In that case, a Division Bench consisting of Sir Trevor Harries C. J., and Mukherjea J., had to consider a similar question. There also reliance was placed upon the practice on the original side. And the learned Chief Justice expressed the opinion that the sooner the practice was stopped the better. According to the learned Chief Justice, if one of the terms of the compromise was that one of the parties should give an undertaking to the Court, then the compromise should make it clear that such was the case, and if it did not make it clear and the compromise merely stated that one of the parties "undertakes", then the ordinary construction must be given, and that is, a promise or a solemn promise given to the other party and not to the Court. Now, with very great respect to the learned Chief Justice, he seems to have taken the view that the word "undertake" must be given its ordinary dictionary meaning. He has not considered at all as to whether, by long practice understood both by counsel and by Judges, the expression "undertaking" had come to acquire a technical meaning. I am sure, if he had considered that aspect of the case, he would not have come to the conclusion that the only way to construe the expression "undertake" was to give it its plain natural meaning. What is more, there are three judgments of the Calcutta High Court, all delivered by single Judges undoubtedly but all of them sitting on the original side and having experience of the original side practice, which have taken the view that an "undertaking" means an "undertaking to the Court." One was by bench in Nisha Kanta's case, (A. I. R. (35) 1948 Cal. 294 : 49 Cr. L. J. 567) to which I have just referred ; another by Panckridge J., and the third judgment is of Das J., which judgment was not cited before that Bench : this is reported in Prokash Chandra v. Manindra Nath, I. L. R. (1946) 2 Cal. 499. Mr. Desai has also relied on the statement of the law as to undertakings that appears in Halsbury's "Laws of England," Vol. VII, p. 35. Halsbury, in para. 51, puts it this way :
"The breach of an undertaking given to the Court by a person or corporation, pending proceedings, on the faith of which the Court sanctions a particular course of action or inaction, is misconduct amounting to contempt."
According to Mr. Desai, there was no sanction given in this case for a particular course of action or inaction, and, therefore, even if the undertaking was given to the Court, it could not be made the subject-matter of contempt proceedings. In our opinion, Mr. Desai reads the expression "sanctions" used in Halsbury in much too narrow a sense. The very fact that the Court passed a decree after an undertaking was embodied in the consent terms clearly shows that the Court did sanction a particular course ; and that course was the putting of its imprimatur upon the consent terms. The Court was led to pass an order upon the defendants to execute a lease in view of the fact that an undertaking was given by the defendants to get the Paradise Cinema, Limited, to join the lease. As I said before, the mere executing of the lease by the defendants would have been entirely futile, and therefore, the undertaking had to be given in order to ensure to the plaintiffs the benefit of the decree which they were taking from the Court.
[9] The Advocate-General has also drawn our attention to a judgment of the English Court in Cotton v. Heyl, (1930) 1 Ch. 510 : (99 L. J. Ch. 289). That judgment goes to show that even if an undertaking was given in an action which was compromised, and where the parties were neither minors nor was charity interested, the undertaking could be enforced by contempt proceedings.
[10] The next question that we have to consider is whether it could be said that the default of the defendants was a wilful default which would bring down upon them the heavy hand of the Court. It is again perfectly true that it is only in cases of wilful default that the Court entertains contempt proceedings. The mere fact that the defendants have failed to carry out their undertaking is itself not sufficient to invoke the jurisdiction of the Court. The party that comes to Court must satisfy the Court that the other side had deliberately refused to carry out the undertaking given by him to Court. Mr. Desai emphasises the fact that in this particular case the undertaking given was not to do something by the party himself : the undertaking that was given was to make some other party to do something, and that other party was not before the Court and that other party did not give any undertaking at all. Therefore, we ought to be sure in this case that, whatever the defendants undertook to do was not done by them in defiance of the order of the Court and in breach of the undertaking given by themselves. We agree that the fact that the Paradise Cinema, Limited, refused to join as a confirming party to the lease should not be visited upon the heads of the defendants. But in view of the undertaking, it was necessary that the defendants should use their best efforts to induce the Paradise Cinema, Limited, to join the lease as a confirming party. If their endeavours had failed, then they would have a perfect answer to the Court inasmuch as they had done everything that lay in their power. Unfortunately, in this case, as the learned Judge points out when he makes a proper grievance of the fact, no materials whatever were placed before him to satisfy him that any endeavour was made by the defendants to get the Paradise Cinema, Limited, to join as a confirming party to the lease. And the facts with regard to this company are also very significant. It appears from the record that this company has been started with a capital of Rs. 2,00,000 divided into 200 shares of Rs. 100 each ; and out of these 200 shares, 1,508 shares have been issued. 751 shares have been issued to defendant 1, 751 shares have been issued to defendant 2, 1 share has been issued to the father of defendant 1, 1 share to the brother of defendant 1 and 1 share each of the remaining four shares has been issued to the relatives or nominees of defendants 1 and 2. What is more, defendant 1 is the managing director of this company, and defendant 2 is also a director. Therefore, it is patent that the defendants have a dominating voice in the affairs of this company, and nothing would be easier than for the defendants to get this company to join as a confirming party to the lease.
[11] Therefore, it is not merely because the defendants have failed to get the Paradise Cinema, Limited, to join as a confirming party to the lease that they are guilty of contempt of Court ; they are guilty because they have failed to do anything to bring about a situation whereby the company could join the lease as a confirming party. It is not sufficient for the defendants to say that the company is a separate legal entity from themselves, and that whatever their view might be the company might take a different view. As they are in a position to get the company to conform to their view, it is their duty to do so and to give effect to the solemn undertaking that they have given to the Court. We are, therefore, of the opinion that the learned Judge was right in the view that he took that the defendants were guilty of contempt of Court, and he was also right in ordering them to carry out the requisitions contained in his order.
[12] We must, therefore, dismiss the appeal with costs and confirm the order of the learned Judge below. We would only modify the order to this extent, that as the time given by the learned Judge for carrying out the requisitions has expired, we would extend that time for one month from to-day.
[13] We would further like to say that the defendants would be well advised in getting the company to join as a confirming party to the lease and we have no doubt that if they seriously intend to do so there should be no difficulty in their way in bringing about this result.
[14] Appeal dismissed.
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