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Urban Infrastructure Real Estate Fund vs Dharmesh S. Jain and Anr.

Not available · 2022 INSC 296Decided 10 Mar 2022
Not available
M.R. Shah · B.V. Nagarathna

Background

An Arbitral Tribunal had, in 2018, awarded Urban Infrastructure Real Estate Fund (the "Award Creditor") over Rs. 78 crore with 18% interest against Dharmesh S. Jain and his company, arising from a Share Purchase Agreement dispute. When the respondents challenged this award in the Bombay High Court, the High Court agreed to stay the award only if they deposited 50% of the awarded amount: a condition the respondents repeatedly failed to meet despite seeking multiple extensions. After the Supreme Court itself dismissed their further appeal but still gave them eight more weeks to deposit the money (order dated 17.09.2021), and then reaffirmed that direction in a later order (28.10.2021) warning that non-compliance would be treated seriously, the respondents still did not pay. The Award Creditor then filed this contempt petition alleging wilful disobedience of the Supreme Court's own orders.

Decision Breakdown

The Court rejected the respondents' argument that the deposit condition was merely "directory" (optional, enforceable only through execution proceedings) rather than a mandatory court direction. It held that once the Supreme Court's own orders (17.09.2021 and 28.10.2021) expressly required deposit within a specified time and warned of serious consequences, ignoring them, while simultaneously enjoying the benefit of the stay and the extended time, amounted to wilful disobedience. The Court distinguished case law cited by the respondents (holding that contempt should not be used as a substitute for execution) on the ground that here the orders in question came directly from the Supreme Court itself, not merely from an executable decree with no other order attached. It also rejected a late-stage plea of "financial difficulty" as an afterthought, noting it was never raised earlier and lacked bona fides. The Court accordingly held the respondents, particularly respondent No. 1 (Dharmesh S. Jain), guilty of civil contempt for disobeying both the High Court's order dated 08.08.2019 and the Supreme Court's order dated 28.10.2021, and directed that the respondents now be heard separately on the question of sentence/punishment.

Lesson Learnt

A court order that fixes a deadline for payment or compliance is not optional just because the underlying dispute (like an arbitral award) could also be enforced through separate execution proceedings: deliberately taking the benefit of extended time from a court and then not complying can itself amount to contempt, inviting punishment independent of and in addition to normal execution remedies.

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

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