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Kotak Mahindra Bank Ltd. v. Sanjiv Gupta & Ors.

Contempt Petition (Civil) · 2019 INSC 1065Decided 23 Sept 2019
Contempt Petition (Civil) Nos. 847-848 of 2017
Justice Deepak Gupta · Justice Aniruddha Bose

Background

Kotak Mahindra Bank Ltd. (KMBL) and Alchemist Asset Reconstruction Company were both creditors (by assignment) of a borrower company, Coventry Coil-O-Matic. After earlier litigation, the Supreme Court's order of 07.05.2012 had directed that, out of recoveries from the sale of the borrower's assets, Rs.4.5 crores was to be paid to KMBL and the balance retained/dealt with by Alchemist. When Alchemist did not pay KMBL the Rs.4.5 crores as directed, KMBL filed these contempt petitions alleging wilful disobedience of the 2012 order.

Decision Breakdown

The Supreme Court found fault with Alchemist's conduct, noting the 2012 order had never been modified or vacated, and that Alchemist could not justify years of delay in approaching the High Court for any variation, having only filed its application in 2017, apparently prompted by KMBL's demands for payment. However, since Alchemist had by then deposited the Rs.4.5 crores in court (pursuant to a February 2019 order), the Court held it was not necessary to punish the alleged contemnors for contempt. It directed that the deposited amount, with any accrued interest, be paid to KMBL, but made this payment subject to the Punjab and Haryana High Court's final determination of the actual amount due to KMBL in the underlying dispute, with KMBL liable to refund any excess if the High Court later found a lesser amount was owed. The contempt petitions were accordingly closed on these terms.

Lesson Learnt

A court will not necessarily punish a party for contempt if that party ultimately complies with the court's order, even belatedly, but genuine disputes over how much money is actually owed between the parties are properly resolved through the regular course of litigation (here, before the High Court), not decided within contempt proceedings themselves.

Official source (sci.gov.in)View Judgment (PDF)

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