Supreme Court Holds Respondent Guilty of Contempt for Non-Compliance, Grants Final Ultimatum for Payment.


24 April 2025 Arbitration Law >> Business & Commercial Law   |   Annual Compliance of Private Limited Company >> COMPLIANCES  

The Supreme Court of India has delivered a stern judgment in a contempt petition, holding the respondent, Mr. Shaji Augustine, guilty of wilful disobedience of its earlier order. The case, arising from a dispute over use and occupation charges for a property in Munnar, Kerala, highlights the apex court's unwavering stance against the deliberate flouting of its directives and the misuse of judicial proceedings.

The contempt petition was filed by M/s Chithra Woods Manors Welfare Association, alleging non-payment of arrears of use and occupation charges by Mr. Augustine, as directed by the Supreme Court in its order dated November 7, 2022. Despite the clear mandate for payment in six monthly installments, Mr. Augustine failed to remit any amount, even after being provided with the necessary bank details.


 

 

The genesis of the dispute dates back to a 2014 agreement between the Petitioner Association and Mr. Augustine, allowing him to occupy and use their property for a monthly license fee of INR 12 Lakhs. Persistent defaults in payment led to legal proceedings, including arbitration and subsequent challenges in various courts. Eventually, a settlement agreement was reached before the Kerala High Court in 2017, reducing the monthly license fee and the arrears.

However, Mr. Augustine continued to default, leading to execution proceedings and an order for the delivery of the property. He then challenged this order before the High Court and subsequently before the Supreme Court. On November 7, 2022, while the main petition was pending, the Supreme Court, as an interim measure, directed Mr. Augustine to pay INR 12 Lakhs per month as use and occupation charges and clear the arrears in six monthly installments.

Despite this clear order, Mr. Augustine failed to make any payment. He even sought and received the Petitioner Association's bank details but did not transfer any funds while continuing to occupy the property. This blatant disregard for the court's order prompted the Petitioner Association to file the contempt petition.

The Supreme Court, after a series of hearings, noted Mr. Augustine's consistent pattern of seeking legal remedies while failing to honor his financial obligations. The court observed that his conduct from the initial settlement agreement onwards indicated a clear intention to retain possession of the property without making due payments. The court found it implausible that a viable business proposition would be continued if it were consistently incurring losses, especially without any disclosure of the business's financial receipts.

The apex court specifically pointed to Mr. Augustine's email seeking bank details as evidence of his initial capability and intent to comply, which was subsequently belied by his complete inaction. The court also emphasized that if Mr. Augustine genuinely faced financial difficulties, he should have approached the court seeking a modification or withdrawal of the order.

Drawing upon established jurisprudence on contempt of court, including the wilful disobedience of a court's order as defined in the Contempt of Courts Act, 1971, the Supreme Court held Mr. Augustine guilty of civil contempt. The court reiterated that parties who misuse the judicial process for their benefit without intending to comply with consequential orders cannot be allowed to go unpunished.

Referencing its earlier judgments, the Supreme Court underscored the importance of maintaining the sanctity of judicial proceedings and ensuring that the authority of the law is upheld. The court asserted that deliberate attempts to mislead the court and flout its orders erode public confidence in the judicial system.

Considering the gravity of Mr. Augustine's wilful disobedience, the Supreme Court sentenced him to simple imprisonment for three months and imposed a fine of INR 20,000, with an additional one month of simple imprisonment in case of default in payment of the fine.

However, in a final opportunity for Mr. Augustine to purge the contempt, the court granted him 30 days to comply fully with its order dated November 7, 2022, and submit a compliance report thereafter. Failure to do so will result in the immediate enforcement of the punishment.

Contempt of Courts Act, 1971  

Section 37, Arbitration and Conciliation Act - 1996  

Arbitration and Conciliation Act, 1996