Court on Its Own Motion v. Vinod Kumar Jain

VIPIN SANGHI, J"

¶6Mr. Jain had averred in the application-C.A. No.562/2008, in paragraphs 5, 6 and 10 as follows: "XXXXXX XXXXXX

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¶5It is not out of place to mention that till today there is no ascertained claim, though no doubt, Punjab and Sind Bank claims to be secured creditor and have filed application before the Ld. DRT and same is being contested………….. XXXXXX

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¶6Applicant respectfully submits and say that no ascertained amount is there much less payable……………. XXXXXX

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¶10It is evident that there is no ascertained amount …"

¶7Based on these averments in the application, and the consequent statements made by counsel appearing for Mr. Jain, disputing the debt due to the PSB and the order of 27th May, 2008 that recalled the order of sale, subsequently, PSB filed an application, Co.Appl.755/2008 for the recall of the order of 27th May, 2008 (recalling the order of 13th March, 2008) which was allowed by the learned Single Judge. PSB Page 6

filed an application (Co.Appl.1112/2008) seeking suo motu initiation of contempt proceedings against Mr. Jain, for false statements made in paragraphs 5, 6 and 10 quoted above as the deponent in those applications. The learned Single Judge agreed with this view, and concluded at paragraph 17 as follows: "XXXXXX XXXXXX

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¶17I am of the prima facie opinion that Mr. Vinod Kumar Jain by making false, misleading and mischievous statements and submission before this Court has interfered with and/or attempted to interfere with the administration of justice and has also prejudiced the due course of judicial proceedings. XXXXXX

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¶8The learned Single Judge based this opinion (which are also the reasons provided in PSB's application for initiation of contempt proceedings) on the following facts: first, the annual returns of the respondent company for the financial years 1998-99, 2000-01, 2002-03, and 2003-04 admit the claims of PSB, as shown below:

i) Financial Year 1998-1999:- UNSECURED LOANS As at 31.03.1999 (Rs.) As at 31.03.1998 (Rs.) Punjab & Sind Bank, New Delhi

ABLC Account 7,99,98,398 7,99,98,398 Cash Credit Account 4,50,76,141 4,50,76,141 Sundry Loan Account 1,07,39,582 1,07,39,582

Page 7

ii) Financial Year 2000-2001:- UNSECURED LOANS As at 31.03.2001 (Rs.) As at 31.03.2000 (Rs.) Punjab & Sind Bank, New Delhi

ABLC Account 7,99,98,398 7,99,98,398 Cash Credit Account 4,50,76,141 4,50,76,141 Sundry Loan Account 1,07,39,582 1,07,39,582

iii) Financial Year 2001-2002:- UNSECURED LOANS As at 31.03.2002 (Rs.) As at 31.03.2001 (Rs.) Punjab & Sind Bank, New Delhi

ABLC Account 7,99,98,398 7,99,98,398 Cash Credit Account 4,50,76,141 4,50,76,141 Sundry Loan Account 1,07,39,582 1,07,39,582

iv) Financial Year 2002-2003:- UNSECURED LOANS As at 31.03.2003 (Rs.) As at 31.03.2002 (Rs.) Punjab & Sind Bank, New Delhi

ABLC Account 7,99,98,398 7,99,98,398 Cash Credit Account 4,50,76,141 4,50,76,141 Sundry Loan Account 1,07,39,582 1,07,39,582 Page 8

v) Financial Year 2003-2004:- UNSECURED LOANS As at 31.03.2004 (Rs.) As at 31.03.2003 (Rs.) Punjab & Sind Bank, New Delhi

ABLC Account 7,99,98,398 7,99,98,398 Cash Credit Account 4,50,76,141 4,50,76,141 Sundry Loan Account 1,07,39,582 1,07,39,582

¶9Secondly, in W.P.(C) 2974/1996, while questioning an order of the AAIFR passed on 19th April, 1996, Mr. Jain had admitted the indebtedness of the company towards the PSB to the tune of `12.68 crores in the following terms: "8. It submitted that the Punjab and Sind Bank has filed suits in Delhi High Court against the company for Rs. 12.68 crores in the year 1986. XXXXXX

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¶11That in these circumstances, when the petitioner company, its shareholders, State of UP., New Bank of India & other creditors were ready and willing to put the Industrial Unit into production merely on the rigid attitude by the Punjab & Sind Bank and that too when the petitioner company was ready and willing to pay the suit amount, the order passed by AAIFR and BIFR are contrary to the essence and spirit of the aim and object which have been sought to be achieved enacting Sick Industrial Act, 1985. Page 9

(emphasis supplied)"

¶10Thirdly, that this liability had also been admitted again in paragraph 7 of the additional objections filed by Mr. Jain dated 17th January, 2000 in CP No. 115/1991, which stated as follows: "In 1981, liability of the company towards the PSB was Rs. 262 lacs and in 1986 the liability of PSB alone was Rs. 12.68 crores and for which suit was filed by PSB (including interest thereon)." Finally, in the settlement proposal dated 11th October, 2000, to settle the debt due, a similar admission was made in the following terms: "17. After the hearing dated 17.7.89 before the BJFR, the Management of the company started negotiation with the Senior Officer of the bank and thereafter the negotiation was finalised on 27.9.89 and on the request of the bank the company had given a letter addressed to the Branch Manager of PSB which contained details of the undertaking reached with the bank. In the said understanding the amount of liability was determined Rs.

12.89 crores, as the bank was adamant for an amount not less than the suit amount and in order to arrive at the said figure the cut off date was taken 1984 and the dues in 1984 were Rs. 6.84 crores though the cut off date should have been taken of 1981 (when the company started making loss) and the dues be taken at Rs. 262 lacs."

¶11Accordingly, based on these prior admissions of the debt due, and the subsequent averments that no ascertainable debt was due, which led to the recall of the sale order, the learned Single Judge issued, suo motu, criminal contempt notice to Mr. Jain under the Contempt of Courts Act, 1971. Page 10

¶12Consequently, on 16th July, 2012, a memorandum of charge was issued against Mr. Jain, on the basis of the contempt notice, and the order sheet was signed by Mr. Jain. The Charge read as follows: "

MEMORANDUM OF CHARGE XXXXXX

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¶2That you moved an application registered as C.A.No. 562/2008 in C.P. No 115/1991 wherein you averred that there is no ascertained amount due or payable to Punjab & Sind Bank and that there is no ascertained claim against Elephanta Oil & Vanaspati Industries Ltd.;

¶3That in the annual returns of Elephanta Oil & Vanaspati Industries Ltd., pertaining to the financial years 1998-99 till 2003-04, amount payable to Punjab & Sind Bank is indicated and that Punjab & Sind Bank is shown as a creditor of Elephanta & Vanaspati Industries Ltd.;

¶4That you filed WP (C) NO. 2974/1996 challenging the order dated 19th April, 1996 passed by AAIFR in which writ-petition it was admitted that Elephanta Oil & Vanaspati Industries Ltd. is in debt to Punjab & Sind Bank in sum of ` 12.68 crores;"

¶13The framing of charges was recorded by this Court in its order of 16.07.2012, but it was noted that the "contemnor need not be present in Court till his presence is specifically ordered." Subsequently, Mr. Jain's presence was required by the Court by its order dated 14.01.2013 "to answer the charges". The matter came up for hearing on 05.02.2013, when Mr. Jain was present in Court. The charges were read over in open court by the Court to Mr. Jain. Thereafter, after due deliberations and consultations with his counsel, Page 11

Mr. Jain entered a plea of guilt (simply, the statement reads: "I plead guilty to the charges"), which was recorded in writing separately, and where Mr. Jain was identified by his advocate, Mr. Praveen Kapoor (Enrolment No. D-1531/1995), and a copy of Mr. Jain's Voter Identity Card (No. ARE0030528) was taken on the record of this Court. Consequently, in view of the plea entered, the Court bound Mr. Jain to appear in Court for further hearings and also required the furnishing of a surety for his appearance in the Court. He complied with the order, furnished a bail bond and surety bond, which were accepted by the Registrar.

¶14It was argued that the contemnor, Mr. Jain is genuinely repentant and tenders his unqualified apology for his conduct. Mr. Rawal, Senior counsel, argued that though in the affidavit in answer to the contempt proceeding, Mr. Jain had sought to explain his conduct, yet, by reason of his plea of guilt, recorded by the Court, he expressed unconditional apology. The contemnor had unreservedly purged his contempt, and therefore, the Court should be lenient and not impose a jail sentence. Mr. Rawal also stressed that Shri Jain is of advanced age and is suffering from a number of ailments. It was also submitted that the contemnor is 68 years old and had undergone a liver surgery in 1993, and that he was also operated for LAP – Cholecystectomy + Adhesiolysis under GA in February 2010. Counsel submitted that the contemnor is willing to pay the fine which may be imposed, and also abide by any other order which the Court may in its discretion require him to comply with. Page 12

¶15The Contempt of Courts Act, 1971, from which the Court draws its power to punish instances of contempt defines criminal contempt in Section 2(c) as follows: "(c) "Criminal contempt" means the publication (whether by words, spoken or written, or by signs, or by visible representation, or otherwise) of any matter or the doing of any other act whatsoever which:

(i) Scandalizes or tends to scandalize, or lowers or tends to lower the authority of, any court, or

(ii) Prejudices, or interferes or tends to interfere with, the due course of any judicial proceeding; or

(iii) Interferes or tends to interfere with, or obstructs or tends to obstruct, the administration of justice in any other manner;" Section 13 reads as follows: "13. Contempts not punishable in certain cases-Notwithstanding anything contained in any law for the time being in force, no Court shall impose a sentence under this Act for a contempt of Court unless it is satisfied that the contempt is of such a nature that it substantially interferes, or tends substantially to interfere with the due course of justice."

¶16The Supreme Court in Chandra Shashi v. Anil Kumar Verma,

(1995) 1 SCC 421 expressed its views on the issue stating that: "8. To enable the courts to ward off unjustified interference in their working, those who indulge in immoral acts like perjury, pre-varication and motivated falsehoods have to be appropriately dealt with, without which it would not be possible for any court to administer justice in the true sense and to the satisfaction of those who approach it in the hope that truth would ultimately Page 13

prevail. People would have faith in courts when they would find that "satyamev jayate" (truth alone triumphs) is an achievable aim there; or "yatormastato jaye" (it is virtue which ends in victory) is not only inscribed in emblem but really happens in the portals of courts.

¶9The aforesaid thoughts received due support from the definition of criminal contempt as given in Section 2(c) of the Act, according to which an act would about be so if , inter alia, the same interferes or tends to interfere, or obstructs or tends to interfere, or obstructs or tends to obstruct the administration of justice. The word "interfere", means in the context of the subject, any action which checks or hampers the functioning or hinders or tends to prevent the performance of duty, as stated at p. 255 of Words and Phrases (Permanent Edition.), Volume 22. As per what has been stated in the aforesaid work at page 147 of Volume 29 obstruction of justice is to interpose obstacles or impediments, or to hinder, impede or in any manner interrupt or prevent the administration of justice. Now, if recourse to falsehood is taken with oblique motive, the same would definitely hinder, hamper or impede even flow of justice and would prevent the courts from performing their legal duties as they are supposed to do. XXXXXX

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¶17This case falls squarely within the third limb of that definition, as interfering with the administration of justice, through false averments wilfully made to the Court. The fact that Mr. Jain, in his affidavit to the Court in C.A. Nos. 562-3/2008 in C.P. No. 115/1991 specifically misled the Court (which is clear from the contrary admissions made in previous statements to the Court, and in the Page 14

settlement proposal), in order to recall the order of sale of 13th March, 2008 and frustrate the rights of the secured creditor, PSB by misusing and abusing the process of this Court is clear. The false and mischievous statements made, after having admitted liability before, in order to mislead the Court are an archetypal instance of criminal contempt. Indeed, Mr. Jain has entered a plea of guilty on the charges levelled against him, and thus the question of proving the charges beyond reasonable doubt does not arise, but the nature of the statements made, and the attendant circumstances clearly inform the gravity of the offence that had occurred in this case.

¶18The Supreme court had noted, far back, in Rizwan-ul-Hasan and Another v. State of Uttar Pradesh, AIR 1953 SC 185, that: "11…………………the jurisdiction in contempt is not to be invoked unless there is real prejudice which can be regarded as a substantial interference with the due course of justice and that the purpose of the court's action is a practical purpose and it is reasonably clear on the authorities that the court will not exercise its jurisdiction upon a mere question of propriety. XXXXXX

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XXXXXX" The question, here, was not only of propriety, but rather, open denial of liability made to interfere with the administration of justice. Indeed, this sentiment – specifically as to the seriousness of making false statements before the Court – was echoed by the Supreme Court in Dhananjay Sharma v. State of Haryana and Ors., (1995) 3 SCC 757, in the following words: Page 15

"39. ………………………..The swearing of false affidavits in judicial proceedings not only has the tendency of causing obstruction in the due course of judicial proceedings but has also the tendency to impede, obstruct and interfere with the administration of justice. The filing of false affidavits in judicial proceedings in any court of law exposes the intention of the concerned party in perverting the course of justice. The due process of law cannot be permitted to be slighted nor the majesty of law be made a mockery by such acts or conduct on the part of the parties to the litigation or even while appearing as witnesses. Anyone who makes an attempt to impede or undermine or obstruct the free flow of the unsoiled stream of justice by resorting to the filing of false evidence, commits criminal contempt of the court and renders himself liable to be dealt with in accordance with the Act. Filing of false affidavits or making false statement on oath in Courts aims at striking a blow at the Rule of Law and no court can ignore such conduct which has the tendency to shake public confidence in the judicial institutions because the very structure of an ordered life is put at stake. It would be a great public disaster if the fountain of justice is allowed to be poisoned by anyone resorting to filing of false affidavits or giving of false statements and fabricating false evidence in a court of law. The stream of justice has to be kept clear and pure and anyone soiling its purity must be dealt with sternly so that the message perculates loud and clear that no one can be permitted to undermine the dignity of the court and interfere with the due course of judicial proceedings or the administration of justice………………….."

¶19In the present case, PSB, the secured creditor, had duly followed the process of law by filing suits before this Court in respect of its dues in 1986, and after several rounds of litigation, having achieved an order of sale from this Court in 2008, after a period of Page 16

approximately twenty years. At this point, and after having suffered an adverse order against him, Mr. Jain wilfully, and with a clear intention to provide contradictory and false facts to the Court in order to further obstruct the due administration of justice, i.e. in allowing the Court to exercise its powers in order to vindicate PSB's rights, made false depositions. Such statements clog the judicial process, and while individually may seem small in respect of the entire matter of liquidation of the company, are cumulatively, as a trend, highly detrimental to the Court's ability to administer its powers as provided under the law. There cannot be any two opinions that such conduct is calculated and meant to undermine the authority of the courts and erode the rule of law. To allow such wilfully false statements to remain as they are, without the use of the contempt powers of this Court, would render the sanctity of ensuring the presentation of true facts before the Court redundant. In Advocate-General, State of Bihar v. Madhya Pradesh Khair Industries 1980 (3) SCC 311, the Supreme Court held that abuse of the process of court, calculated to hamper the due course of judicial proceedings or the orderly administration of justice, is contempt of court. Where the conduct is reprehensible as to warrant condemnation, then the Court essentially should take such contempt proceedings to their logical end. There cannot be mercy shown by the Court at the cost of injury to the institution of the justice system. These observations were reiterated in Kalyaneshwari v. Union of India, (2012) 12 SCC 599. Page 17

¶20The Court is conscious of the fact that Mr. Jain has entered a plea of guilt, and admitted to his unlawful actions. While this, no doubt, does form a relevant mitigating factor in determining the adequate sentence to be awarded, it cannot, by itself, deny the gravity of the offence of making false and misleading statements before the Court. This was recorded by the Supreme Court in M.Y. Shareef and Anr. v. The Hon'ble Judges of the High Court of Nagpur [AIR 1955 SC 19], while explaining the requirements of genuine apology that: "17. The proposition is well settled and self-evident that there cannot be both justification and an apology………………….. Again an apology is not a weapon of defense to purge the guilty of their offence; nor is it intended to operate as a universal panacea, but it is intended to be evidence of real contriteness……………………………….." Again the Supreme Court noted in LD Jaikwal v. State of Uttar Pradesh, (1984) 3 SCC 862 that: "We do not think that merely because the appellant has tendered his apology we should set aside the sentence and allow him to go unpunished. Otherwise, all that a person wanting to intimidate a Judge by making the grossest imputations against him has to do, is to go ahead and scandalize him, and later on tender a formal empty apology which costs him practically nothing. If such an apology were to be accepted, as a rule, and not as an exception, it would in virtually be tantamount to issuing a 'licence' to scandalize courts and commit contempt of court with impunity." Or, as the Court quipped, Page 18

"We are sorry to say we cannot subscribe to the 'slap-say sorry-and forget' school of thought in administration of contempt jurisprudence …"

¶21In a similar vein, the Supreme Court later remarked in Murray & Co. vs Ashok Kr. Newatia & Anr. AIR 2000 SC 833, that: "27………………..The learned Advocate appearing for the respondent made a frantic bid to contend that the statement has been made without releasing the purport of the same. We are, however, not impressed with the submission and thus unable to record our concurrence therewith. It is not a mere denial of fact but a positive assertion and as such made with definite intent to pass off a falsity and if possible to gain advantage. This practice of having a false statement incorporated in an affidavit filed before a Court should always be deprecated and we do hereby record the same. The fact that the deponent has in fact affirmed a false affidavit before this Court is rather serious in nature and thereby rendered himself guilty of contempt of this Court as noticed hereinbefore. This Court in our view, would be failing in its duties, if the matter in question is not dealt with in a manner proper and effective for maintenance of majesty of Courts as otherwise the Law Courts would lose its efficacy to the litigant public…………………………………"

¶22A litigant's proclivity to depose falsely and contumaciously and then, on being caught, seek forgiveness, has to be closely scrutinized, in the context of his plea for leniency in a criminal contempt action. Whether the contrition is bona fide, and not merely a feint to escape penalty is a dilemma that the Courts would resolve, looking at the overall conduct of the individual. Here, in the settlement proposal dated 11th October, 2000 and the averments in the affidavit of 17th January, 2010 (in CP No. 115/1991), categorically admitted that in Page 19

1991, liability of the company towards the PSB was `262 lakhs and in 1986 the liability of PSB alone was `12.68 crores (including interest) and for which suit was filed by PSB. These averments and affidavits were known to Mr. Jain; despite these, he made false averments in the affidavit, calculatedly to mislead the Court and stall the sale. He was successful in doing so. Upon being caught, he initially and unabashedly denied allegations of misconduct; later, he somersaulted from his position, admitted guilt and begged mercy. This behaviour does not inspire any confidence in the Court that his latter apology is bona fide or genuine; if he was contrite, Mr. Jain should have admitted his guilt in the very first instance, and not allowed the proceedings to go further to framing of charges.

¶23In view of the above discussion, the Court is not inclined to accept the contemnor's apology. Having regard to the overall conspectus of circumstances, Mr. Jain is convicted of criminal contempt as charged, and sentenced to undergo simple imprisonment for one month. His bail and surety bonds are cancelled. He shall surrender and serve his sentence forthwith. The criminal contempt proceedings are closed, in the above terms. S. RAVINDRA BHAT

(JUDGE)

SUDERSHAN KUMAR MISRA (JUDGE) OCTOBER 22, 2013

Page 1 * IN THE HIGH COURT OF DELHI AT NEW DELHI Reserved on: 12.04.2013 Pronounced on: 22.10.2013 + IN THE MATTER OF COURT ON ITS OWN MOTION IN RE.: SH. VINOD KUMAR JAIN ......Contemnor Through : Sh. G.L. Rawal, Sr. Advocate with Sh. Alok Aggarwal and Sh. Praveen Kapur, Advocates, for Contemnor. Sh. Pallav Saxena, Advocate, for Punjab and Sind Bank. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE SUDERSHAN KUMAR MISRA MR. JUSTICE S. RAVINDRA BHAT % 1. These contempt proceedings arise from an order of this Court dated 02.02.2011 passed in Co.Pet. 115/1991 in the matter of Elephanta Oil & Vanaspati Industries Ltd., by which this Court took suo moto cognizance of the certain accusations made against Mr. Vinod Kumar Jain (hereinafter "the contemnor"). 2. Before addressing the charge of contempt, a background of the facts that led to the accusation and the charge is important. Mr. Jain Page 2 was the Director of Elephanta Oil & Vanaspati Industries Ltd. (hereinafter "the company"), a private limited company incorporated on 24th October, 1969, (though subsequently converted into a Public Limited Company from 29th May, 1970) for the setting up of a project for manufacture of Hydrogenated Vegetable Oils (Vanaspati) and Refined Oils, with an installed capacity of 50 TPD, located in the outskirts of Ghaziabad, Uttar Pradesh. While the company performed well till 1980, its performance deteriorated sharply during the year 1981, as it also started to incur losses. This eventually led to the suspension of manufacturing activities from October, 1983. 3. Subsequent changes in the export policy did not assist matters, with the company's net worth getting eroded 24 times by 1986, by its (the company's) own admission in its additional objections in C.P. No. 115/1991, dated 17.01.2000. Accordingly, the company became a sick unit and thus, a reference was made to the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985, which was registered by the BIFR on 17th May, 1988. 4. Concurrently, the Punjab Sind Bank (hereinafter "PSB"), one of the company's secured creditors (and mortgagee of the companies' properties bearing No. A1, A3 & A3/1, Industrial Area, Meerut Road, Ghaziabad, UP, hereafter "the Ghaziabad property") filed two recovery suits against the company in liquidation: the first being Suit No. 2147/1986 for recovery of `4,50,76,141.84/- with interest and costs, filed on the file of this Court and later transferred to the Debt Page 3 Recovery Tribunal, Delhi (registered as OA No. 341/1995), and the second, Suit No. 2194/1986 for recovery of `8,16,58,516.84/- with interest and costs, again filed on the file of this Court and later transferred to the Debt Recovery Tribunal, Delhi (registered as OA No. 1250/1995). 5. The controversy leading to the present contempt proceedings arises in respect of the company's two applications, C.A. Nos. 562- 63/2008 in C.P. No. 115/1991. In the liquidation proceedings before the High Court, by an order dated 13th March, 2008, this Court had issued a sale proclamation for sale of the Ghaziabad property as well as for the plant and machinery in the premises. This sale was to be conducted on 29th May, 2008. However, this order of 13th March 2008 was recalled by an order of 27th May, 2008 on the basis of the two applications (CP Nos 562-63) filed by Mr. Jain, as an ex-director of the company in liquidation. That order, in its operative part, noted as follows: "27.5.2008 Present: Mr. G.L. Rawal, Sr. Advocate with Mr. Kuljeet Rawal for the petitioners. Mr. S.K. Luthra for official liquidator. Co.A.No.562-63/2008 in the matter of Elephanta Oil & Vanaspati I have heard learned counsel for the applicant/ex- management and Mr. Luthra on behalf of the O. L. It is submitted by learned counsel for the applicant that the order dated 13.3.2008 had been passed in chambers without notice or information to the ex-management.