Bombay High Court

PADMASHREE DR. VITTHALRAO VIKHE PATIL SAHAKARI SAKHAR KARKHANA LTD, TRHU. ABHIJIT ARJUNRAO DIGHEversusTHE AHMEDNAGAR DISTRICT CENTRAL CO-OP. BANK LTD THRU. CHIEF EXECUTIVE OFFICER R. L. VARPE AND ORS.

Disposal: DISMISSED

Holding

The court held that the interim injunction restrains creation of third‑party interest only for the purpose of expansion or modernization, and the mortgages were not for that purpose; therefore, no contempt occurred.

Summary

The High Court examined two contempt petitions filed by Padmashree Dr. Vitthalrao Vikhe Patil Sahakari Sakhar Karkhana Ltd. alleging that the respondent sugar factory violated an interim arbitration order dated 2 September 2024, which restrained creation of third‑party interests over certain properties for the purpose of expansion or modernization. The petitioner claimed the factory created multiple mortgages on the properties and failed to furnish a Rs 17.06 crore bank guarantee, thereby breaching the order. The respondents argued that the order only prohibited such interests when used for expansion or modernization, and that the mortgages were taken for routine operating expenses with the Commissioner’s permission. The Court held that the injunction was limited to mortgages intended for expansion or modernization, and the evidence showed the loans were for ordinary expenses, so no willful non‑compliance existed. Consequently, the contempt petitions were dismissed without costs, and the request to extend the Supreme Court’s interim relief was denied.

Issues considered

Whether the creation of mortgages over the suit property amounts to a breach of the arbitrator’s interim order restraining creation of third‑party interest.
Whether the interim order imposes an absolute prohibition on any mortgage irrespective of its purpose.
Whether the respondent’s failure to furnish the stipulated bank guarantee constitutes contempt of court.
Whether an injunction can be granted in a contempt petition after the petition has been dismissed on merits.
Whether the Supreme Court’s interim relief can be extended after dismissal of the contempt petitions.

Legislation cited

Contempt of Courts Act

Subjects

contempt of court
interim injunction
arbitration order
mortgage
third‑party interest
sugar industry
bank guarantee
interpretation of order
judicial discretion

Judgment

2026:BHC-AUG:43003
1 11 & 12-CP-221-2025.odt

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD

11 CONT. PETITION NO. 221 OF 2025

Padmashree Dr. Vitthalrao Vikhe Patil Sahakari Sakhar Karkhana Ltd.
Through Its Managing Director
VERSUS
The Shri Ganesh Sahakari Sakhar Karkhana Ltd.,thru. Incharge,
Managing Dir. Nitin R. Bhosle And Ors
WITH
CIVIL APPLICATION NO. 10472 OF 2026
IN CP-221-2025
AND
12 CONT. PETITION NO. 793 OF 2025

Padmashree Dr. Vitthalrao Vikhe Patil Sahakari Sakhar Karkhana Ltd,
Trhu. Abhijit Arjunrao Dighe
VERSUS
The Ahmednagar District Central Co-op. Bank Ltd Thru. Chief Executive
Officer R. L. Varpe And Ors.
WITH
CIVIL APPLICATION NO. 10471 OF 2026
IN CP-793-2025
…..
Mr. V. D. Hon, Senior Counsel i/by Mr. P. D. Bachate, Advocate for the
Petitioner in CP No.221 of 2025.
Mr. A. D. Ostwal for Petitioner in CP No.793 of 2025.
Mr. R. N. Dhorde, Senior Counsel i/by V. R. Dhorde & Mr. R. L. Kute,
Advocate for Respondent Nos.1 and 2 to 25 in CP No.221 of 2025.
Mr. R. N. Dhorde, Senior Counsel i/by V. R. Dhorde & Mr. R. L. Kute,
Advocate for Respondent Nos.1 and 2 to 20, 22 to 24 in CP No.793 of
2025.
Mr. M. L. Sangit, AGP for Respondent No.3 in CP No.221 of 2025.
Mr. S. K. Shirse, AGP for Respondent No.25 in CP No.793 of 2025.

…..

CORAM : ROHIT W. JOSHI, J.
DATE : 21 SEPTEMBER 2026

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2 11 & 12-CP-221-2025.odt

PER COURT :

1. Learned senior advocate, Mr. Hon tenders across the Bar an

affidavit dated 20.9.2026. The affidavit is taken on record, although

learned senior advocate Mr. Dhorde, has a strong objection to taking the

said affidavit on record.

2. The petitioner has filed application for amendment of petition,

being Civil Application No.10472 of 2026. Mr. Dhorde, learned Senior

advocate for the respondent, stated that the contents of the said

application can be taken into consideration while hearing of the

Contempt Petitions.

3. The present contempt petitions are filed alleging willful and

deliberate and non compliance of the order dated 2.9.2024 passed by the

Arbitrator/Sugar Commissioner, Maharashtra State, Pune. The operative

portion of the order dated 2.9.2024 reads thus:

“a. The Application dated 01/09/2023 filed by the Claimant is partly
allowed;

b. The Respondent is restrained from creating third party interest /
alienating the suit property mentioned in paragraph no. 24 of the
Statement of Claim by way of Sale / Lease / Permanent Transfer of any
kind of the suit property and also for the purpose of any capital
investment in relation to expansion and / or modernization of the suit
property / Respondent No. 2 Factory, from the date of this Order till the
disposal of present arbitration proceedings.

c. The Respondent is directed to furnish bank guarantee of any
nationalized bank of Rs. 17.06 Crores before this Tribunal within a period
of one month from date of this Order.

d. The order be communicated to the parties of the present Arbitration
proceedings.

e. Matter be taken on 19th September 2024, at 11.30 am for further

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consideration.”

4. The interim order dated 2.9.2024 was subsequently modified on

19.9.2024. The modified order reads thus:

“a. The Application dated 01/09/2023 filed by the Claimant is partly
allowed;

c. The Respondent is directed to furnish bank guarantee of any
nationalized bank of Rs. 17.06 Crores before this Tribunal within a period
of one month from date of this Order.

d. The order be communicated to the parties of the present Arbitration
proceedings.

e. Matter be taken on 19th September 2024 at 11.30 am for further
consideration.”

5. The present petitions were earlier dismissed by this Court vide

judgment dated 19.12.2025. The said judgment dismissing the contempt

petitions was assailed by the petitioner before the Hon’ble Supreme Court

vide Civil Appeal Nos.9846 of 2026 and 9847 of 2026. The said appeals

came to be allowed by the Hon’ble Supreme Court vide order dated

31.7.2026, and both the Contempt Petitions were remitted to this Court

for deciding the same expeditiously.

6. The contention of Mr. Hon, learned senior advocate for the

petitioner in Contempt Petition No.221 of 2025, is that despite being

aware of the order dated 2.9.2024 passed by the learned Arbitrator, the

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respondent – Sugar Factory has created third-party interests over the

properties enumerated at item No.24 of the statement of claim by way of

registered mortgages dated 2.9.2024, 28.1.2025, 1.9.2025, 17.1.2026

and 17.03.2026. The contention is that the respondent has not furnished

bank guarantee in the sum of Rs.17.06 crores as directed by the

Arbitrator and yet, by executing the aforesaid registered deeds of

mortgage, third-party interest in favour of the lender bank have been

created over the properties, which amounts to willful and deliberate of

non-compliance of the interim order dated 2.9.2024, as modified on

19.9.2024.

7. Mr. Hon, learned senior advocate argues that by creating mortgage

with respective to properties specified in Item 24, the respondent – Sugar

Factory has in fact transferred the said property. He argues that mortgage

is also a transfer of property and therefore the act of mortgage by the

respondent – Sugar Factory amounts to breach of the interim order

passed by the learned Arbitrator.

8. In reply, the contention of Mr. Dhorde, learned senior advocate, is

that the interim order passed by the learned Arbitrator merely restrains

the respondents from creating third-party interest over the suit property

or alienating the same, either by sale or lease or by any other mode of

permanent transfer and that too only for the purpose of expansion or

modernization of the sugar factory. His contention is that the interim

order does not prohibit creation of third-party interest or alienation for
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any purpose other than expansion or modernization of sugar factory. The

learned senior advocate vehemently argues that by creating mortgage

over the suit property, the respondent has neither sold nor leased nor

permanently transferred the properties in question. He further argues

that loan is not obtained by mortgaging the properties for expansion or

modernization of the sugar factory and therefore mortgage of the

properties for securing the loan does not result in violation of the interim

order passed by the Arbitrator. The learned senior advocate would

contend that since the petitioner is attributing the contempt against the

respondent, the interim order will have to be interpreted strictly to mean

that injunction is granted only against creation of third party interest or

alienation for the purpose of seeking investment in relation to expansion

and/or modernization and that mortgage for any other purpose is not

prohibited.

9. The learned senior advocate argues that the first mortgage dated

2.9.2024 was executed and registered between 10.30 a.m. to 6.00 p.m.

and the interim order dated 2.9.2024 was communicated at around 10.30

p.m. on 2.9.2024. The learned senior advocate therefore argues that as

regards the first mortgage, there cannot be any question of contempt

since the mortgage was executed and registered prior to communication

of the injunction order.

10. With respect to the other four mortgages dated 28.1.2025,

1.9.2025, 17.1.2026 and 17.03.2026, the contention of the learned senior
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advocate is that all these mortgages have been executed and registered

pursuant to permission granted by the Commissioner of Sugar acting in

his administrative Capacity. The learned senior advocate points out that

the Arbitration proceedings are conducted by the Commissioner of Sugar

himself.

11. The learned senior advocate draws attention to the prayer clauses

of interim application, which reads as under:

“A. The property mentioned in scheduled annexed herewith and
mentioned in para no. 24 may kindly be subjected to attachment before
judgment.

B. Respondent be restrained from creating any encumbrance / alienation
in the nature of charge of any kind on the property mentioned in Exhibit
A.

C. Respondent District Central Co-operative bank be further injuncted
from disbursing any loan amount or creating any mortgage in respect of
suit property owned by the respondent.

D. Any other suitable and equitable relief may kindly be passed in
favour of the present claimant in the interest of justice.”

12. Referring to prayer clauses (b) and (c), the learned senior advocate

would contend that although restraining orders against creating any

encumbrance or alienation in the nature of charge and also mortgage

were made in the interim application, the said prayers are not granted.

Particularly, by drawing the attention to prayer clause (c), it is contended

that restraining orders were also sought against District Central

Cooperative Bank from disbursing any loan to the respondent – sugar

factory which is not granted. It is argued that any relief which is claimed

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and not granted is deemed to be refused. He argues that although blanket

injunction against creation of encumbrance or alienation was prayed, the

arbitrator has granted limited injunction that third-party interest should

not be created or property should not be alienated for the purpose of

expansion or modernization of the sugar factory. The learned senior

advocate therefore contends that there is no injunction against creation

of mortgage for availing a loan for any purpose other than the purpose of

expansion and/or modernization of sugar factory.

13. The learned senior advocate draws attention to the affidavit-in-

reply, particularly paragraphs 5 to 9 thereof, to contend that the loan is

not sought either for expansion or modernization of the plant.

Particularly attention is drawn to paragraph 6 of the affidavit to argue

that loan of Rs.74 crores was obtained for upgradation of the plant and

machinery on the basis of guarantee furnished by the State Government

and that property of respondent – sugar factory was not mortgage for the

said purpose.

14. In reply, Mr. Hon, learned senior advocate appearing in Contempt

Petition No.221 of 2025, and Mr. Ostwal, learned advocate appearing for

the petitioner in Contempt Petition No.793 of 2025, contend that

although the documents of mortgage do not indicate that the loan is

obtained for expansion or modernization of the plant, the amounts are

actually utilized for the said purpose. It is therefore contended that action

against the respondent – Sugar Factory should be taken under the
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relevant provisions of the Contempt of Courts Act. In support of the

contention, the learned senior advocate as also learned advocate Mr.

Ostwal draw attention to the 65th Annual Report of the respondent –

Sugar Factory for the year 2025-26. It is stated that in the said financial

year, an amount of Rs.9,95,66,543.89 was expended towards,

‘installation of new factory machinery’ and Rs.16,65,10,847.94/- towards,

‘machinery under erection’. It is therefore contended that the the amount

received from the bank was, in fact, spent for expansion and

modernization of the plant. Mr. Ostwal also draws attention to the

statements in the affidavit dated 16.9.2026, filed by the petitioner to

contend that amount is actually spent towards modernization and

expansion of the plant.

15. At the outset, it must be stated that although prayer for mortgage

or encumbrance by way of charge is not specifically granted, the

operative order restrains the respondent – Sugar Factory from creating

third-party interest or alienating the property in question by way of sale,

lease or permanent transfer of any kind for the purpose of capital

investment in relation to expansion and/or modernization of the sugar

factory. Mortgage is also a mode of transfer of property and amounts to

creation of third-party interest. However, mortgage by itself is not

prohibited under the interim order. Mortgaged is prohibited only for the

purpose of obtaining investment for expansion and/or modernization of

the sugar factory.
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16. The loan sanction letters issued by the respondent - bank do not

state that the loans are granted for modernization or expansion of the

plant. Perusal of the loan sanction letters will indicate that the loans are

granted for making payments to contractors, for repairs and maintenance

of the machinery, salaries of employees, administrative expenses and

other expenses.

17. Perusal of paragraph 6 of the affidavit-in-reply dated 30.8.2026

filed by respondent – Sugar Factory will indicate that a specific statement

is made that loan of R.74 Crores was availed for upgradation of the

sugarcane crushing machinery and that the said loan was availed on a

guarantee furnished by the State Government. It is stated that in the said

affidavit that no property of the respondent – Sugar Factory was

mortgaged as security for the said loan of Rs.74 Crores. This statement

made in paragraph 6 of the reply affidavit has not been specifically

controverted by the petitioners in their counter-affidavit/s. Therefore

even if one accepts that amount of Rs.16,65,10,847.94/- and

Rs.9,95,66,543.89/- is spent towards installation of new machines and

further event if the contention of the petitioner that the said expenditure

amounts to upgradation and/or modernization of the sugar factory is

accepted, it cannot be said that the amount received by mortgage was

utilized for the purpose of modernization and expansion.

18. It must also be stated that the Commissioner of Sugar, who has

passed the injunction order acting as arbitrator has granted no objection
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for obtaining loans from the respondent – bank by creating mortgage

over properties of the respondent – sugar factory. Mr. Hon learned Senior

advocate points out that the third mortgage dated 1.9.2025 is created

although permission for obtaining loan by mortgaging the properties was

refused by the Commissioner. Mr. Dhorde, learned senior counsel,

counters the contention by stating that permission was initially refused

since the Contempt Petition was pending and that after the petition was

initially dismissed, permission for obtaining loan against mortgage was

granted vide letter dated 30.12.2025 for the entire crushing season for

the year 2025-26. The issue in the present contempt petition is not as to

whether mortgage is created with or without permission of the

Commissioner. What is relevant is that the Commissioner who has acted

as Arbitrator has granted permission for obtaining loan against mortgage

being aware about the interim order passed by him in the capacity of

Arbitrator. This facts assumes significant for the purpose of the

interpretation of the order. The author of the order has also interpreted

the order as not imposing absolute prohibition against mortgage of

property for obtaining loan.

19. It is a well settled legal principle that unless a clear and explicit

case of willful and deliberate non-compliance is made out, action under

Contempt of Courts Act should not be taken. In case of two possible

interpretation of the order, an action under contempt should not be

initiated if the action is in accordance with a possible interpretation of
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the order, of which non-compliance is alleged.

20. In the present case, I find that the restriction against creation of

third-party interest and/or alienation of the property by way of sale, lease

or permanent transfer of any kind is only prohibited for the purpose of

expansion and/or modernization. The injunction granted is not against

creating any third-party interest or alienating the property for any

purpose other than the purpose of expansion and/or modernization. The

material on record does not indicate that the mortgages are created for

obtaining loan either for modernization or for expansion of the sugar

factory. The petitioner has failed to establish the same on the contrary

perusal of mortgage deeds, sanction letters and no objection by

Commissioner will indicate that properties were mortgaged to obtain

loan for meeting expenses for running of the sugar factory which is not

prohibited. In that view of the matter, the creation of mortgages for

obtaining loans does not result in breach or violation of the interim order

dated 2.9.2024 passed by the Arbitrator.

21. No case for taking action for contempt is made out. The Contempt

Petitions are therefore dismissed with no order as to costs.

22. At this stage, Mr. Ostwal, learned advocate for the petitioner in

Contempt Petition No.793 of 2025, makes a request to continue the

interim order passed by the Hon’ble Supreme Court for a period of two

weeks. Mr. Dhorde, has a strong objection to the request. He contends

that since the Contempt Petition is dismissed on merits, the question of
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continuation of the interim order does not arise. It is argued that in the

first round of litigation, the Contempt Petition was dismissed on the

ground of maintainability and not on merits and therefore the Hon’ble

Supreme Court deemed it appropriate to pass the aforesaid interim order

while remitting the matter to this Court for deciding the Contempt

Petition afresh. He further argues that granting an interim order in a

Contempt Petition and that too after dismissal of the same on merits,

would be beyond the jurisdiction of this Court.

23. In the considered opinion of this Court, an injunction cannot be

granted in a Contempt Petition after dismissing the same on merits.

24. In view of the aforesaid, the prayer being extension of interim

relief granted by the Hon’ble Supreme Court is rejected.

[ ROHIT W. JOSHI, J. ]

Kiran Kawre

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