Supreme Court Confirms Contempt Finding For Alienation Despite Counsel’s Undertaking, Modifies Sentence

A bench of Justices Pankaj Mithal and Sanjay Karol heard an appeal challenging a Karnataka High Court order that held the defendants guilty of contempt for alienating property despite an undertaking not to do so. The appeal arose from interlocutory proceedings under Order XXXIX Rule 2A CPC and raised the question whether the High Court was correct in setting aside the trial court’s finding of no wilful disobedience and in imposing punitive measures, including detention, attachment of property and compensation.

The Supreme Court confirmed that contempt jurisdiction could be exercised where there was an express violation of a court order or undertaking and found no error in the High Court’s conclusion that the appellants had disobeyed the undertaking and the subsequent order. The Court noted the fiduciary character of the lawyer-client relationship and observed that undertakings given in court could not be without requisite authority from the client. The Court, in its reasoning, observed: “The above judgments make clear that a lawyer-client relationship is fiduciary in nature and the former is cast in terms of agency of the latter. It is also clear that the lawyer is to respect the decision-making right of the client. It flows from this that any undertaking given to a Court cannot be without requisite authority from the client.” The bench affirmed the High Court’s use of contempt powers to protect the “majesty and dignity of the courts,” but modified the criminal confinement directed by the High Court by deleting the three months’ civil imprisonment. The attachment of the suit property remained intact and the Court enhanced compensation from Rs.10 lakhs to Rs.13 lakhs, with simple interest at 6% from 2 August 2013. The appeal was partly allowed and disposed of with these modifications.

Background The dispute arose from a Joint Development Agreement dated 30 April 2004 for construction of apartments on a turnkey basis, to be completed by 31 October 2006. The plaintiffs issued a legal notice on 23 March 2007 and later filed Original Suit No. 4191 of 2007 seeking revocation of the JDA. During the trial, counsel for the defendants filed memos on 11 July 2007 and 13 August 2007 undertaking that the defendants “have not alienate[d] the suit schedule property to any third person.” The trial court made an order on 17 November 2007 restraining alienation and extended it periodically. Despite that, sale deeds in respect of parts of the property were executed between 2007 and 2011.

The plaintiffs filed Civil Misc. Application No.38 of 2011 under Order XXXIX Rule 2A CPC alleging breach of the undertaking; the trial court dismissed the application on 2 August 2013, holding that the petitioners had “failed to prove their case beyond all reasonable doubt” that the respondents knowingly and wilfully disobeyed the injunction. The plaintiffs appealed to the High Court in Misc. First Appeal No.7055/2013, which set aside the trial court’s order and held the appellants guilty of contempt by order dated 16 March 2021. The High Court directed detention of one contemnor in civil prison for three months, attachment of the subject property (for one year in respect of one contemnor and for one year in respect of another), and payment of Rs.10 lakhs as compensation; part of the attachment order was stayed for 60 days.

The Supreme Court considered authorities including Samee Khan v. Bindu Khan, Wander Ltd. v. Antox India, Kanwar Singh Saini v. High Court of Delhi and other precedents on the scope of Order XXXIX Rules and contempt jurisdiction. The Court held that the contempt jurisdiction was properly invoked where there was express violation of a court order and that undertakings by counsel carried consequence where they were reduced to orders and subsequently breached. The Court confirmed the High Court’s finding of contempt, deleted the period of confinement, upheld attachment directions, increased compensation to Rs.13 lakhs and directed simple interest at 6% from 2 August 2013. The appeal was accordingly partly allowed and disposed of.

Case Details: Case No.: CIVIL APPEAL NO. 13999 OF 2024 (Arising out of SLP(C) No.13875 OF 2021) Case Title: Smt. Lavanya C & Anr. v. Vittal Gurudas Pai since deceased by LRs. & Ors. Appearances: For the Petitioner(s): Advocate(s) not indicated in the reported judgment For the Respondent(s): Advocate(s) not indicated in the reported judgment