Holding

Under Article 142, the Supreme Court may lift the corporate veil, attach the family’s property and order payment of Rs. 10 crore to fully reimburse the defrauded purchasers, and a contemnor cannot enjoy the fruits of his contempt.

Summary

The Delhi Development Authority (DDA) auctioned a plot of land in 1980, which was won by Skipper Construction Company (Skipper). Skipper paid only 25% of the price, repeatedly defaulted on the balance, and despite court orders continued to sell space in the proposed building, collecting about Rs. 25 crore from purchasers. The Supreme Court found Skipper and its directors, Tejwant Singh and Surinder Kaur, in contempt for wilfully violating prohibitory orders and for defrauding the public. Using its power under Article 142, the Court lifted the corporate veil, attached the family’s property at No. 3, Aurangzeb Road, and ordered the contemnors to deposit Rs. 10 crore to reimburse the pre‑ and post‑January 29, 1991 purchasers, while rejecting the contention that DDA should bear the loss. The Court also directed the Embassy of Israel to deposit rent in Court and appointed a one‑man commission to identify post‑January 1991 purchasers. The judgment emphasizes that a contemnor cannot retain the fruits of contempt and that the Supreme Court may make equitable orders even in the absence of a specific statute.

Issues considered

The scope of the Supreme Court's power under Article 142 to pass equitable orders for restitution in the absence of a statutory provision.
Whether the corporate veil of Skipper and related family companies can be lifted to treat them as a single entity for attachment and reimbursement purposes.
The extent of liability of the contemnors for the amounts defrauded and whether they may retain any of the proceeds.
The question of whether the DDA can be held liable to reimburse the defrauded purchasers.
The appropriate quantum and mechanism for reimbursement, including attachment and sale of specific property.

Legislation cited

Constitution of Indias. Article 129, s. Article 136, s. Article 142
Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976s. Section 3(1)(c)

Subjects

Article 142Corporate veilContempt of courtRestitutionAuction fraudDelhi Development AuthoritySkipper ConstructionEquitable jurisdictionAttachment of propertyOne‑man commission

Judgment

DELHI DEVELOPMENT AUTHORITY A
v.
SKIPPER CONSTRUCTION COMPANY (P) LTD.

MAY 6, 1996
......

(B.P. JEEVAN REDDY, K.S. PARIPOORNAN, JJ.] B

Constitution of India, Article 142-Power to do complete justice be-
tween pmties-Sale of space in proposed building by defrauding the people
and in violation of court orders-Court finding that persons defrauded should
be restored to the position before the fraud took place-Held, in order to do c
complete justice, the court can make appropriate orders without being in-
hibited by the absence of any statutory provision-Court of Equity.

Company Law-:Lifting the corporate veil-S, an auction purchaser of
plot of land defrauding investors by selling space in proposed building even
while defaulting in payment for land-S diverting monies to front companies D
of which its chaimian TS, his wife and sons were directors-Held, where
corporate device is a n1ere cloak for comn1itting illegalities, the veil- would be
pierced and all members of the family would be treated as one entity; held
fwther, the property of front company would be attached to realise monies
owing to the people defrauded-Constitution of India, Article 142. E
Constitution of India Articles 129, 142-contempt of court-S, an
auction purchaser ofplot of land duping.investors by selling space in proposed
building even while defaulting in payment for land-S wilfully and repeatedly
disobeying court orders-S issuing advertisements and continuing to sell space
even after express prohibitory orders of Supreme Court-Held, principle that F
contemner should not be allowed to enjoy or retain fruits of contempt would
be given effect to; held further, Article 129 is a cmistiutional power which
when used in tandem with Article 142 would override technical and proce-
dural objections to such use.

Constitution of India Articles 136, 142-Finality of orders-in earlier G
proceedings Supreme Court directing Delhi Development Authority to bring
to sale of plot of land after auction purchaser repeatedly failed to make
balance payments-Property sold and sale proceeds realised by DDA-Ques-
tion of repayment of those defrauded by auction-purchase1-Auction pur-
chaser contending that 111onies for repaynient should con1e fronz sale proceeds H
295
296 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A with DDA-Held, earlier ordei:< under which sale monies vested absolutely in
DDA became final and were not to be disturbed in pwported exercise of
power under A1ticle 142; held fwther, ways and means of doing complete
justice should yet be devised.

In an auction ofa plot of land in New Delhi by the Delhi Development
B Authority (DDA) in 1980, the highest bid was offered by the respondent S.
While it deposited twenty-five percent of the sum immediately, S defaulted
on the payment of the balance. S asked for and was granted by DDA seven
extensions of time for making payment between January 1981 and April
1982. As S still did not pay the balance, proceedings were taken for
c cancelling the bid. S went to court and on May 29, 1982 obtained stay of
cancellation.

On the recommendations of a committee constituted by the DDA, S
was asked in 1984 to execute a revised agreement. S raised all sorts of
objections and finally executed the revised agreement in 1987.
D
Even before S was given permission to enter upon the land and start
construction, it began selling place in the proposed building to various
persons and in the process collected Rs. 14 crores from purchasers. In a
writ petition by S questioning DDA's move to cancel its bid, the High Court
made an order on December 21, 1990 directing S to pay DDA a sum of Rs.
E
8.12 crores and stop all further construction with effect from January 9,
1991 till the date payment was made. S failed to deposit the amount as
directed. In a Special Leave Petition filed by it, this court granted S an
interim order on January 29, 1991 subject to it depositing Rs. 2.5 crores
within one month and another sum of Rs. 2.5 crores before April 8, 1991.
F S was expressly prohibited from inducting any person in the building and
from creating any rights in favour of third parties.

Even after January 29, 1991, S repeatedly invited offers from the
public for purchase of space in the proposed building. In this process it
G collected a sum of Rs. 11 crores. After the Special Leave Petition was
dismissed on January 25, 1993 by this court, DDA re-entered the plot and
took possession of the property with the building free from all encumbran-
ces. DDA also forfeited the amounts paid till then by S.

S filed another suit in the Delhi High Court and obtained interim
H orders staying the re-auction of the plot by DDA. In a Special Leave
D.D.A. v. SKIPPER CONTN. CO. (P) LTD. 297

Petition by DDA, this court took notice of !he conduct of TS and his wife A
SK, the directors .of S, and initiated sou motzt contempt proceedings
against them. It found them_ guilty and sentenced TS to six month's simple
imprisonment, SK to one month and each of them to pay a fine of Rs.
50,000. The sentences were deferred by this court upon the contemners
offering to furnish bank guarantee in the sum of Rs. 11 crores to the B
Registrar General of this court before March 31, 1995 and also deposit in
this court the entire sum of Rs. 11 crores by a bank draft before November
30, 1995.

The contemners deposited a sum of Rs. 2 crores but failed to deposit
the balance. They also failed to furnish the bank guarantee. They were C
committed to prison and they served out their sentence.

In the re-auction of the plot M/s. Bi's bid of Rs. 70 crores was
accepted and the property transferred in its favour by the DDA. This court
directed DDA to set apart a sum of Rs. 16 crores from the said sum to
reimburse the pre - January 29, 1991 purchasers. On the receipt of the D
report of the Commission appointed by it to prepare a list of persons
entitled to be reimbursed, this court directed payment of the principal
amount to each of the said purchasers.

The post January 29, 1991 purchasers approached this court with
E
applications seeking directions for sale of the property of TS, his wife and
children which were attached by this court by order dated February 8, 1995
in the suo motu contempt proceedings. They prayed that the proceeds be
used to reimburse them along with interest and damages.

Before this court the applicants and the DDA submitted that the F
undergoing of sentences of imprisonment by TS and SK did not relieve
them of their obligation to pay back the claimants whom they had
deliberately and fraudulently induced to part with monies in violation of
' this court's orders. The properties attached should be sold for meeting
these claims as well as the interest amounts due to the pre-January 29, G
1~91 purchasers. On behalf of TS and SK it was contended that the monies
for reimbursing the claimants should come out of Rs. 85 crores collected
by DDA so far from the initial and subsequent sale of the plot. The two
sons of TS and SK submitted that their businesses were independent of
their parents' and that none of the n1onies received by their parents from
the purchasers had been diverted to the sons or to the companies of which H
298 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A the sons were directors. DOA informed this court that on October 1, 1993,
TPP, a company, through its Chairman TS had, in relation to its property
at 3, Aurangzeb Road, New Delhi, executed a lease agreement in favour of
a company in Ireland for a period of live years at a rent of Rs. 1 lakh per
month. On the same day the Irish company executed a lease deed in favour
of the Embassy of Israel, New Delhi for a period of nine years at a rent of
B
Rs. 8,78,360. One of the sons of TS was also a director of TPP. DDA
submitted that this property alone was sufficient to realise the monies
owing to the persons defrauded by the contemners.

Disposing of the applications, this court
c HELD: 1.1. Although while acting under Article 142 of the Constitu-
tion this Court would respect a statute, the absence of a statute or
statutory provisions would not inhibit this court from making appropriate
orders necessary for doing complete justice between the parties. (320-H)

D 1.2. Even if a fiduciary relationship might not exist in the present
case and it was not a case of a holder of public office, yet if it was found
that someone had acquired properties by defrauding the people and if it
is found that the persons defrauded should be restored to the position in
which they would have been but for the said fraud, the court could make
E all necessary orders. This was what equity meant and in India the courts
were not only courts of law but also courts of equity. [320-E]

Attomey General for India v. Amratla/ Prajivandas, [1994) 5 SCC 54,
relied on.

F Attomey General for Hong Kong v. Reid, (1993) 3 WLR 1143, referred
to.

1.3. The following directions are issue :

(i) The property at No. 3, Aurangzeb Road, New Delhi would be
G attached, if not already attached. If already attached, it would continue to
be under attachment; [323-B)

(ii) The Embassy of Israel in India, New Delhi, the lessee of the said
property, to deposit the monthly rent payable in respect of the said
H building in this Court with effect from the date of receipt of a copy of the
D.D.A. v. SKIPPER CONTN. CO. (P) LTD. 299

order and continue to deposit the same until further orders. Such deposit A
in Court shall discharge the Embassy of ils obligation to pay rent to
'Maple Lear its landlord. [323-C]

(iii) TS and his wife, SK, to deposit in this Court a sum of rupees
ten crores within two months from the date of the order. In default, steps
would be taken to sell the property at No. 3, Aurangzeb Road, New Delhi
B
by inviting tenders from the public. An amount of Rupees ten crores is
tentatively arrived at as the amount rer1uired to reimburse the pre January
29, 1991 purchasers in full and also to reimburse the post-January 29, 1991
purchasers in full. This would not be treated as the final figure required
in this behalf. [323-D-E] C

(iv) The attachment of properties belonging to TS, his wife and
children, already effected, including the properties mentioned in the ap-
plication (I.A. No. 29 of 1996) filed by the D.D.A would continue to be in
•. force pending further orders. It would be, however, open to any to them to D
come forward with a proposal to sell any of those properties and if this
Court was satisfied about the honafides of the deal, the attachment would
be lifted on condition that the consideration so received was deposited into
this Court. [323-F)

(v) Since it was necessary fo ascertain the persons who had paid E
amounts to S after January 29, 1991 for purchasing the space in the said
building, and to exclude the claims of non-genuine persons, Sri O. Chin-
nappa Reddy, a former Judge of this Conrt, would be a one-man Commis-
sion to ascertain the number and identity of the persons who had
purchased the space in the building being raised by S after January 29, F
1991 and also to determine the amounts paid by each of them.
[323-H, 324-A-B]
2.1. The rule that a contemnor ought not to be permitted to enjoy or
retain the fruits of his contempt has to be applied overruling any technical
. or procedural objections. [313-D] G
2.2. Article 129 is a consti.tutional power and when exercis~d in
tandem with Article 142, all such objections should give way. [313-D].

Mohd. Idris v. RJ. Babuji, [1985] 1 SCR 598; Clarke v. Chadbum,
(1985) 1 All. E.R. 211; Century Flour Mills Limited v. S. Suppiah, AIR (1975) H
3llll SUPRF'>lF. COURT Rl'PURIS I lll%j SUPP. 2 S.C.R.

A Madras 270 and Sujit Pal v. Prabir Kumar Sun, AIR (1986) Calcutta 220,
referred to.

3.1. The fact that TS and his family had created several companies
\\
1
ould not prevent this court from treating all of them as one entity belong-
ing to and controlled by TS and family if it was found that these corporate
B bodies \\'ere nu~rely cloaks behind \\'hich lurked TS and/or 1nembers of his
fan1ily and that the device of incorporation \\'Us really a ploy adopted for
committing illegalities and/or to defraud people. [316-E-F]

Aron Salomon \', Sulunwn & Company Limited, (1897) AC 22; Tata
Enginee1ing und Locon1otive Cun1puny Lin1ited v. State of Bihu1~ I 1964] 6
c SCR 885 and DHN Food Disflibl//01:1· Ltd. v. London Borough of Tower
Hamlets, [1976] 3 AIL E.R. 462.

Gower: Modern Company Law, 4th Edn. (1979) at p.137; Pennington,
c·onipany Law, 5th Edn. 1985, at p.153; Palnier's C'on1pany Luw, \'ol. I,
D Part-II; Profe.uor S. Ottolenghi, "Frum Peeping Behind the Cu1porate Veil, to
Ixn01ing it Completely" in (1990) 53 Modern Law Review 338; L. Mawice
TVonnser, 1'Piercing the veil of Cotporatc entity·• in (1912) XII Columbia Law
Review 496, referred to,

3.2. It would suffice for the above purpose if the property, viz,, No,
.•·
E
3, Aurangzeb Road, New Delhi, which appeared to belong wholly and
exclusively to TS and his wife is proceeded against. The corporate veil
would be ignored and so would the fact that at present their son PS and
his wife are the directors, [322-B]

F 33, It is clear that the property belonged to TS and the corporate
wil and the change of directorship are all mere devices to screen the said
property and its income from their creditors including the purchasers
aforesaid. Tej Properties Private Limited was nothing but a fig-leaf to
cover up the reality that it was TS, the contemnor, who was the author or
G all these deals and devices. The transfer of share-holding, if any, between
the father and the son (and their respective "ives) would also be treated
as a sham transaction, [322-E-F]

4.1. The contention that the monies required for pa)ing the persons
defrauded must come from DDA could not be accepted, Even while acting
H under Article 142, it is not open for this court to go behind the orders of
D.D.A. v. SKIPPER CONTN. CO. (P) LTD. [B.P . .IEEVAN REDDY, J.] 301

the High Court as allirmed by this court under which the plot, the A
construction thereon and the monies already paid towards sale considera-
tion had all vested absolutely in the DDA. (311-B-D]

In re : Vinay Chandra Mishra, [1995] 2 SCC 584, referred to.

4.2. It is factually incorrect to say that DDA stood by and allowed S B
to defraud the people by issuing advertisements. Secondly, even if there
was any collusion between the ollicials of the DDA and S, the question still
would arise whether DDA could be held bound by such actions of its
officials acting beyond their authority and acting adverse to the interests
of DDA intentionally. Where the acts and deeds of the officials were not C
only beyond their authority but done with a malafide intent, it may not be
just and fair to bind DDA with such malafide acts and deeds. [321-C-D]

CIVIL APPELLATE JURISDICTION: Interlocutory Applications
Nos. 23, 27 and 29.
D
In

Special Leave Petition (C) No. 21000 of 1993.

From the Judgment and Order dated 9.12.93 of the Delhi High Court
in Suit No. 770 of 1993. E
Arun Jaitley, Dushyant Dave, H.N. Salve, Rajiv Dhawan, K. Madhava
Reddy, V.A. Bobde, Arvind Nigam, Ms. K. Jaiswal, K.J. John, Ms. Indra
Sawhney, Deepak Dhawan, A. Singh, V.K. Mehta, J.K. Das, P.N. Misra, S.
Misra, Ms. Rachna Joshi Issar, Din Dayal Sharma and Jaswant Singh for
the appearing parties. F

The Judgment of the Court was delivered by

B.P. JEEVAN REDDY, J. A plot of land was put to auction by the
Delhi Development Authority (D.D.A.) in October 1980. Skipper Con-
struction Company (Skipper) offered the highest bid in a sum of Rs. 9.82 G
crores. It was supposed to be a record bid at that time. According to the
conditions of auction, twenty five percent of the amount was payable
immediately and the rest within ninety days. Skipper deposited the twenty
five percent but did not deposit the balance. It asked for extension
repeatedly and it was granted repeatedly. As many as seven extensions H
302 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A were granted spread over the period January, 1981 to April, 1982. Since
Skipper failed to deposit the balance consideration even within the last
extended period, proceedings were taken for cancelling the bid. Skipper
went to CouH and on May 29, 1982 obtained stay of cancellation*. D.D.A.
applied for vacating the stay. Nothing happened but usual adjournments.
Skipper was simultaneously making representations to D.D.A. to give him
B further time. In January 1983, D.D.A. constituted a committee to consider
the request of Skipper and other similar requests and to devise a formula
for ensuring timely payments by such purchasers. The committee reported
that cancellation of bids in such matters usually land D.D.A. in protracted
litigation and suggested that to enable them to pay the monies due to
c D .D .A., the purchasers be given permission to commence develop-
ment/construction on the plot (though possession as such be not delivered)
subject to the condition that the property in the land would remain with
the D.D.A. until the entire consideration is paid; if the entire consideration
is not paid according to the revised schedule, the D.D.A. should be entitled
to re-enter the plot and take it over along with the construction, if any,
D
made thereon. (The idea was to enable the purchasers to undertake
development and go on with the construction which would make it easy for
them to sell the space in the building being constructed and thus raise
funds for paying lo D.D.A.) The committee reconilliended further that a
revised agreement be obtained from such purchasers incorporating the
E above terms. When called upon to execute the revised agreement, in 1984,
Skipper raised all sorts of objections and executed it only in the year 1987.
Even before permission to enter upon the plot and to make construction
thereon was granted under the revised agrement, Skipper appears to have
been selling the place in the proposed building to various persons and
F receiving monies. Once il got the permission to enter upon the plot and to
make construction thereon, it became all the more easy for it to sell the
space in the proposed building. It did not pay the first instalment under
the revised agreement in time but only after some delay. It did not pay the
second instalment. Bank guarantees furnished by it in terms of revised
agreement were also found to be defective. Every time the D.D.A. thought
G of cancelling the agreement on account of the >aid defaults, an argument
was put forward that it would cause great hardship to hundred' of persons

* We are unable to see what jurisdiction or justification the court could have for passing
such an order in an ordinary case of sale and purchase of property, more so when
Skipper had failed to pay the balance consideration not only \vithin the time stipulated
H but despite several extensions.
D.D.A. v. SKIPPER CONTN. CO. (P) LID. [B.P. JEEVAN REDDY,J.] 303

who have purchased space in the proposed building and that they would A
be deprived of their hard-earned monies. Skipper has been making some
small token payments from time lo time meanwhile. While the endless
correspondence and discussions were going on between Skipper and
D.D.A., Skipper went to Delhi High Court by way of a writ petition, C.W.
No. 2371 of 1989, asking for writ of mandamus to the D.D.A. to sanction B
the building plans or in the alternative to grant permission to him to start
construction at his risk. On March 19, 1990, the High Court passed an
order permitting Skipper to commence construction in accordance with the
sanctioned plans subject to deposit of a sum of Rupees twenty lakhs in two
instalments and Rs. 1,94,40,000 within one month. Against the said order,
D.D.A. came to this Court by way of Special Leave Petitions (C) Nos. 6338 C
and 6339 of 1990. Meanwhile, Writ Petition (C) No. 2371of1989 came up
for final hearing on December 21, 1990. The Delhi High Court made an
order on that day directing Skipper to pay to D.D.A. a sum of Rs.
8,12,88,798 within thirty days and to stop all further construction with effect
from January 9, 1991 till the said payment was made. It was provided that D
in default of such payment, the licence (revised agreement dated August
11, 1987) would stand determined and D .D .A. would be entitled to re-enter
the plot. Reasons for the order were given on January 14, 1991. Skipper
failed to deposit the amount as per the direction of the High Court. It
approached this Court by way of Special Leave Petition (C) No. 186 of
1991. On January 29, 1991, this Court granted an interim order subject to E
Skipper depositing Rs. 2.5 crores within one month and another sum of
Rs. 2.5. crores before April 8, 1991. Skipper was expressly prohibited from
inducting any person in the building and from creating any rights in favour
of third parties. Inspite of the said prohibitory orders from this Court,
Skipper issued an advertisement on February 4, 1991 in the leading F
newspapers of Delhi inviting persons to purchase the space in the proposed
building. It published such advertisements repeatedly. Special Leave Peti-
tion (C) No. 186 of the 1991 was ultimately dismissed on January 25, 1993,
whereafter, D.D.A. re-entered the plot and took physical possession of
property on February 10, 1993 along with lhe building thereon free from
all encumbrances in terms of the revised agreement/licence and as G
provided in the orders of the Delhi High Court dated December 21,
1990/January 14, 1991. It also forfeited the amounts paid till then by
Skipper in terms of the revised agreement and the said Judgment.

January 29, 1991 marks the watershed in these proceedings. Before H
304 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A the said date, Skipper had collected about Rupees fourteen crores from
various parties agreeing to sell the space in the propo,,ed building. Even
after January 29, 1991, Skipper issued several advertisements and collected
substantial amounts - Rupees eleven crores, according to its own version -
from various parties agreeing to sell the space in the said building. ft
appears that same space was sold to more than one person and monies
B collected. Not only did Skipper brazenly violate the orders of this Court
dated January 29, 1991 bx issuing advertisements, it also filed a suit in the
Delhi High Court being Suit No. 770 of 1993 seeking an injunction restrain-
ing the D.D.A. from interfering with its alleged title and possession over
the plot and for a declaration that the re-entry by D.D.A. was illegal and
void! It also sought for a declaration that it has discharged all the amounts
c due to D.D.A. and that nothing was due from it. It obtained interim orders
staying re-auction of the plot.

Against the interim order of the High Court staying the re-auction
of the plot, D.D.A. approached this Court by way of Special Leave Petition
D (C) No. 21000of1993. Noticing the conduct of Skipper, this Court initiated
sou n1otz1 contempt proceedings against Tejwant Singh and his wife,
Surinder Kaur, directors of Skipper. They were asked to explain (1) why
did they institute Suit No. 770 of 1993 in respect of the very same subject-
matter which was already adjudicated by this Court on January 23, 1993,
i.e., by afllrming the orders of the High Court dated December 21, 1990
E and January 14, 1991 and (2) why did they ente1 into agreements for sale
and create interest in the third parties in defiance of the orders of this
Court dated January 29, 1991. After hearing the contemnors, this Court
found them guilty of contempt of this Court in the follO\ving words :

F "We, therefore, invoke our power under Article 129 read with
Article 142 of the Constitution and order as follows : We sentence
contemner-Respondent 1, Tejwant Singh lo undergo simple im-
prisonment for six months and to pay a fine of Rs. 50,000 (Rupees
fifty thousand only). We further sentence contemner-Rcspondent
2, Surinder Kaur to undergo simple imprisonment for a period of
G one month and to pay a fine of Rs. 50,000 (Rupees fifty thousand
only). In default of payment of fine, the contemners shall further
undergo simple imprisonment for one month. The payment of fine
shall be made within one month from today.

H All the properties and the bank accounts standing in the names
D.D.A. v. SKIPPER CONTN. CO. (P) LTD. [B.P. JEEVAN REDDY, J.] 305

of the contemners and the Directors of M/s. Skipper Construction A
Co. (Pvt.) Ltd. and their wives, sons and unmarried daughters will
stand attached."

At that stage, Sri G. Ramaswamy, learned counsel appearing for the
contemnors, requested for deferment of the sentence of imprisonment
subject to conditions indicated by him. On the basis of the said offer, this B
Court deferred the sentence of imprisonment subject to the following
conditions.:

"(1) The contemners shall furnish bank guarantee in favour of the
Registrar General of this Court in the amount of Rs. 11 crores C
(Rupees eleven crores only) on or before 31.3.1995. The guarantee
will be of a nationalised bank or any foreign bank operating in
India. The bank guarantee will be given for a period of one year
from the date of furnishing the bank guarantee.

(2) The contemners shall deposit the entire amount of Rs. 11 D
crores by a bank draft in the Registry of this Court on or before
30.11.1995. If they fail to do so, the bank guarantee will become
encashable and will be encashed forthwith after 30.11..1995.

(3) If the contemners fail to give the bank guarantee by 31.3.1995
as aforesaid, the sentence of imprisonment wi1l become enforce- E
able at once.

(4) No application for extension of time either to furnish the bank
guarantee or to make the payment as aforesaid, will be entertained
by this Court.
F
(5) The contemners shall not leave the country without the express
permission of this Court.

(6) List of properties given by the contemners is taken on record.
The contemners will also file a list of properties held by their sons G
and unmarried daughters within one week from today.

(7) If and when any property that is attached under this order is
sought to be alienated or encumbered to raise money to pay the
liability of Rs. 11. crores stated above, the contemners \Vill he at
liberty to approach the Court for permission to do so. H
306 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A (8) The attachment of the properties and the bank accounts shall
stand raised on the contemners furnishing the bank guarantee as
aforesaid.

(9) The order with regard to the disbursal of the amount deposited
will be passed after the amounts are deposited as aforesaid."
B
The contemnors deposited a sum of Rupees two crores but failed to
deposit the balance. They also failed to furnish the Bank guarantee. As a
result of the said failure, they were committed to prison. Both the contem-
nors have served out their sentence.
c
Meanwhile, D.D.A. invited tenders for the sale of the said plot of
land along with the construction raised thereupon. The highest offer
received was in the sum of Rupees seventy crores from M/s. Banganga
Investments. It was accepted with the permission of this Court. The con-
D sideration has been deposited with the D.D.A. and the property transferred
in favour of the said purchaser. At this stage, the question arose as to what
should be done with the hundreds of persons who have been duped and
defrauded by Skipper and who had parted with substantial amount on the
basis of the fraudulent and false representations made by Skipper. This
Court made a distinction between persons who purchased the space before
E January 29, 1991 and the persons who purchased the space thereafter. The
first concern of this Court was to reimburse the persons who purchased
space in the said building prior to January 29, 1991. Their claims were said
to be in the region of Rupees fourteen crores. Accordingly, this Court
directed D.D.A. to set apart a sum of Rupees sixteen crores (out of the
F said amount of Rupees seventy crores) and to make it available to such
purchasers in accordance with the orders of this Court. This Court also
requested Justice R.C. Lahoti of the Delhi High Court to act as a one-man
Commission to prepare a list of persons \Vho had paid the amounts prior
to January 29, 1991 and to determine the amount paid by each of them.
After an elaborate enquiry, Justice Lahoti Commission submitted a Report
G dated February 2, 1996 according to which a sum of Rupees 13,27,37,561.59
crores was paid by more than seven hundred persons. The Commission
asked for directions of this Court whether the said persons should also be
paid the interest in addition to the principal, as claimed by them. When
the report of the Commission came up for order before this Court we
H directed that for the time being only principal amount shall be paid to the
D.D.A v. SKIPPER CONTN. CO. (P) LTD. (B.P. JEEVAN REDDY, J.] 307

said purchasers and that the balance amount along with interest accruing A
thereon shall be kept apart. This was done keeping in view the interests of
post-January 29, 1991 purchasers. It is true that these persons did purchase
nohvithstanding the warning notice of D.D.A. but it is equally possible that
many of them may have seen only the subsequent advertise;nents of Skip-
per and not the warning notice of D.D.A. published on February 13, 1991. B

We may clarify that our order dated February 12, 1996 does not mean
that the pre-January 29, 1991 are not entitled to interest on the amounts
paid by them for which they have a legitimate claim. We have only kept
that claim under consideration pending further developments in the matter.
c
We may also mention that this Court had appointed another Com-
mission headed by Justice 0. Chinnappa Reddy, a former Judge of this
Court, to enquire into the role played by the officials of the D.D.A. in the
matter and to recommend appropriate action against them. Justice Chin-
nappa Reddy Commission submitted a Report promptly on July 7, 1995,
after conducting a painstaking and elaborate enquiry, on the basis of which D
this Court had directed disciplinary action to be taken against certain
officers of the D.D.A.

At this stage, several applications have been filed by the post- January
29, 1991 purchasers to sell the properties of Tejwant Singh, his wife and E
children, which were attached by this Court under its Order dated February
8, 1995 (in suo motu contempt proceedings) and utilise the proceeds so
realised to reimburse them along with interest and damages. Notice of the
said applications was given to Tejwant Singh and Surinder Kaur and to the
sons of the said persons whose properties were attached under the
. aforesaid orders. We have heard the parties at length on April 18, 1994. F

S/Sri V.A. Bobde and Dushyant Dave, appearing for the claimants
(post-January 29, 1991 purchasers) and Shri Arun Jaitley for the D.D.A.
submitted that undergoing the sentence uf imprisonment by Tej\vant Singh
and his wife Surinder Kaur does not erase their obligation to pay back the
amounts to the said claimants whom they had deliberately and fraudulently G
induced into parting with substantial amounts in clear and direct violation
of the orders of this Court. They submitted that the order of attachment
of the properties of Tejwant Singh and his wife and children was an order
independent from the order of punishment imposing sentence of imprison-
ment and that the attachment was meant for realising amounts necessary H
308 SUPREME COURT REl'ORTS [1996[ SUPP. 2 S.C.R.

A for reimbursing the persons defrauded. The attached properties should
now be sold and the proceedings therefrom utilised for paying the post-
January 29, 1991 claimants, it is submitted. Sri Arun Jaitley further sub-
mitted that the claim of the pre-January 29, 1991 purchasers for interest
on the amounts paid by them is still there and has to be kept in mind while
passing orders in these applications. It is submitted that the contemnors
B
should not be allowed to keep or enjoy the fruits of their contempt and
that until all the persons defrauded by Skipper are fully re-compensated,
the contemnor's liability does not cease.

S/Sri Harish Salve and Rajeev Dhavan, appearing for Tejwant Singh
c and Surindcr Kaur respectively, took the stand that while all the pur-
chasers, whither pre- or post-January 29, 1991 should undoubtedly be duly
reimbursed, the monies for that purpose should come out of the monies
collected by the D.D.A. on account of the said plot. Interests of justice and
considerations of equity, which are the guiding factors fur this Court while
D acting under Article 142 of the Constitution call for such a direction. They
submitted that as against Rs. 9.82 crorcs payable to D.D.A., Skipper has
paid more than Rupees fifteen crores in all to D.D.A. The amounts
received from the purchasers has actually been utilised for raising the
construction which has now vested in the D.D.A. in terms of the orders of
the Delhi High Court dated December 21, 1990/.lanuary 14, 1991. D.D.A.
E thus not only got back the plot of the land but also the construction made
by Skipper tree of any encumbrances. They have realised a sum of Rupees
seventy crores by selling the same. In other words, D.D.A. has realised a
total of Rupees eighty five crores on account of the said plot. It is true that
have set apart Rupees sixteen crores out of that but yet they are in
F possession of about Rupees sixty nine crures of the said money. The claim
of post-January 29, 1991 purchasers is in a sum of about Rupees eleven
crores. An amount of Rupees five crores is lying with the Court. Whatever
balance amount is required to pay interest to pre-January 29, 1991 pur-
chasers and to pay off the post-January 29, 1991 purchasers should come
out of the said amount of Rupees sixty nine crores now with D.D.A.
G Learned counsel suhmitted that on account of various proceedings taken
against Skipper and their directors and the attachment of their properties
and the adverse publicity in that behalf, it has become impossible for them
to generate any monies for depositing in this Court. They requested that a
Commission be appointed to determine the value of the structure raised
H by Skipper on the said plot and also to determine the amount received by
D.D.A. v. SKIPPER CONTN. CO. (P) LTD. [B.P. JEEVAN REDDY. J.] 309

Skipper from post-January 29, 1991 purchasers and to direct that the A
amount required to pay them should come out of the funds with the D.D.A.

Sri K. Madhava Reddy, learned counsel appearing for the two sons
of Tejwant Singh and Surinder Kaur (Prabhjol Singh and Prnbhjit Singh),
submitted that the businesses of the sons are independent and distinct from
B
their parents and that none of the monies received by their parents from
the aforesaid purchasers has been diverted to them or to the companies of
which they are directors. In fact, the case of the third respondent, Prabhjot
Singh, is that he has separated from his father and that the company,
Technological Park (P) Limited, at NO IDA (of which he and his wife arc
directors) has nothing to do with the funds or activities of their parents. c
The fourth respondent, Prabhjit Singh, also submitted that he and his wife
are the directors of Tej Properties Private Limited, of which his parents
were directors earlier but that the affairs of Tcj Properties are in no way
connected with the affairs and funds of his parents. He is a director of Tcj
Properties as well as Skipper Properties Private Limited.
D
D.D.A. has filed a list of properties held by Tejwant Singh, his wife,
Surinder Kaur, and their sons and daughters which according to them
really belong to and are the properties of Tejwant Singh and his wife. They
submitted that the various companies created by Tejwant Singh, his wife
and his children are merely fronts and devices to defraud and defeat the E
claims of the purchasers and that for doing complete justice between the
parties, the corporate veil should be lifted and all the said properties, which
have already been attached, should be proceeded with to realise the
amounts necessary for paying the pre-January 29, 1991 purchasers in full
(i.e., interest) and also the post-January 29, 1991 purchasers. In particular, F
Sri Jaitley has pointed out the transaction of lease relating to the property
at No. 3, Aurangzeb Road, New Delhi. The facts brought to our notice are
the following : on October 1, 1993, Tej Properties (P) Limited through its
Chairman and Managing Director, Tejwant Singh, executed a lease agree-
ment in favour of "Maple Leaf Trading Company Limited, a company
having its office at 111, Claremont Road, Dublin, Ireland" for a period of G
five years (with an option to the lessee to have it extended for another four
years) at a rent of Rupees one lakh per month. The lease agreement was
to take effect from October 8, 1993. On October 8, 1993, Maple Leaf
executed a lease deed in respect of the said property in favour of the
Embassy of Israel in India, New Delhi for a period of nine years at the rate H
310 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A of Rs. 8, 78,360 per month. It is pointed out that Tejwant Singh and his
wife, Surinder Kaur, were the only two directors of Tej Properties and that
in 1988 and 1991, one H.S. Sarna and Prabhjit Singh (one of the sons of
Tejwant Singh) were brought in as its directors. It is submitted that this
property really belongs to the contemnors and that this property alone is
sufficient to realise all the monies due to the persons defrauded by the said
B
contemn ors.

The issues arising from the contentions of the parties are considei ed
hereinafter topic-wise.

c 17ie nature and ambit of this Cozut's power under Article 142 of the
Constitution.

Article 142(1) of the Constitution of India reads:

''142. Enforcement of decrees and orders of Supreme Court and
D orders as to discovery, etc. - (1) The Supreme Court in the exercise
of its jurisdiction may pass such decree or make such order as is
necessary fur doing complete justice in any cause or matter pend-
ing before it, and any decree so passed or order so made shall be
enforceable throughout the territory of lndia in such manner as
may be prescribed by or under any law made by Parliament and,
E until provision in that behalf is so made, in such manner as the
President may by order prescribed."

In re: Vinay Chandra Mishra, [1995] 2 SCC 584, this Court dealt with
the scope and width of the power of this Court under Article 142. After
p referring to the earlier decisions of the Court in extenso, it is held that
11
statuto~y provisions cannot override the constitutional provisions and Ar-
ticle 142(1) being a constitutional power it cannot be limited or conditioned
by any statutory provision. (Para 48)". It is also held that "the jurisdiction
and powers of this Court under Article 142 arc supple111entary in nature
and are provided to do complete justice in any matter.. .... ". In other words,
G the power under Article 142 is meant to supplement the existing legal
framework - to do complete justice between the parties - and not to
supplant it. It is conceived to meet situations which cannot be effectively
and appropriately tackled by the existing provisions of law. As a matter of
fact, we think it advisable to leave this power undefined and uncatalogued
H so that it remains elastic enough to be moulded to suit the given situation.
D.D.A. v. SKIPPER CONTN. CO. (P) I:ID. [B.P. JEEVAN REDDY, J.] 311

The very fact that this power is conferred only upon this Court, and on no A
one else, is itself an assurance that it will be used with due restraint and
circumspection, keeping in view the ultimate object of doing complete
justice between the parties. Now, coming to the facts of the case before us,
the question is not what can be done, but what should be done ? We are
'of the opinion that even while acting under Article 142 of the Constitution
B
of India, we ought not to re-open the orders and decisions of the Courts
which have become final. We do not think that for doing complete justice
between the parties before us, it is necessary to resort to this extra-ordinary
step. We are saying this in view of the contention urged by S/Sri Salve and
Dhavan that since the D.D.A. has taken over not only the plot but also the
construction raised by Skipper thereon (free from all encumbrances) in C
addition to the sum of Rs. 15.89 crores (said to have paid by Skipper
towards the sale consideration of the said plot), the monies required for
paying the persons defrauded should come out of the kitty of D.D.A. It
must be remembered that the plot, the construction raised thereon and the
monies already paid towards the sale consideration of the said plot have D
all vested absolutely in the D.D.A. free from all encumbrances under and
by virtue of the decision of the Delhi High Court dated December 21,
1990/January 14, 1991 which decision has indeed been affirmed by this
Court by dismissing the Special Leave Petition preferred against it. It may
not be open to us to ignore the said decisions and orders, including the
orders of this Court, and/or to go behind those decisions/orders and say E
that the amount received by D.D.A. towards sal~ consideration from
Skipper or the value of the. construction raised by Skipper on the saicfplot
·slrOuld"be'made available for paying out the persons defrauded by Skipper.
We must treat those decisions and orders as final and yet devise ways and
means of doing complete justice between the parties before us. . F

"The contemnor should not be allowed to enjoy or retain the frnits
of his contempt" :

The principle that a contemnor ought not to be permitted to enjoy G
and/or keep the fruits of his contempt is well-settled. In Mohd. Idris v. R.J.
Bqhuj~ [1985] 1 S.C.R. 598, this Court held clearly that undergoing the
punishment for contempt does not mean that the Court is not entitle to
give appropriate directions for remedying and rectifying the things done in
-violation of its Orders. The petitioners therein had given an undertaking
to the Bombay High Court. They acted in breach of it. A learned Single H
312 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A Judge held them guilty of contempt and imposed a sentence of one month's
imprisonment. In addition thereto, the learned Single Judge made ap-
propriate directions to remedy the breach of undertaking. It was contended
before this Court that the learned Judge was not justified in giving the
aforesaid directions in addition to punishing the petitioners for contempt
of court. The argument was rejected holding that "the Single Judge was
B quite right in giving appropriate directions to close the breach (of under-
taking)".

The above principle has been applied even in the case of violation
of orders of injunction issued by Civil Courts. In Clarke v. Chadbum [1985)
1 All. E.R. 211, Sir Robert Mcgarry V-C observed:
c
"! need not cite authority for the proposition that it is of high
importance that orders of the court should be obeyed. Willful
disobedience to an order of the court is punishable as a contempt
of court, and I feel no doubt that such disobedience may properly
D be described as being illegal. If by such disobedience the persons
enjoined claim that they have validly effected some charge in the
rights and liabilities of others, I cannot see why it should be said
that although they are liable to penalties for contempt of court for
doing what they did, nevertheless those acts were validly done. Of
course, if an act is done, it is not undone merely by pointing out
E that it was done in breach in law. If a meeting is held in breach of
an injunction, it cannot be said that the meeting has not been held.
But the leg;U consequences of what has been done in breach of.
the law may plainly be very much affected by the illegality. It seems
to me on principle that those who defy a prohibition ought not to
F be able to claim that the fruits of their defiance are good, and not
tainted by the illegality that produced them."

To the same effect are the decisions of the Madras and Calcutta High
Courts in Century Flour Mills Limited v. S. Suppiah & Ors., Al.R. (1975)
Madras 270 and Sujit Pal v. Prabir Kumar Sun, A.LR. (1986) Calcutta 220.
G In Century Flour Mills Limited, it was held by a Full Bench of the Madras
High Court that where an act is done in violation of an order of stay or
injunction, it is the duty of the Court, as a policy, to set the wrong right
and not allow the perpetuation of the wrong-doing. The inherent power of
the Court, it was held, is not only available in such a case, but it is bound
H to be exercise it to undo the wrong in the interest of justice. That was a
D.D.A v. SKIPPER CONTN. CO. (P) LID. [B.P. JEEVAN REDDY, J.] 313

case where a meeting was held contrary to an order of injunction. The A
-r Court refused to recognise that the holding of the meeting is a legal one.
It put back the parties in the same position as they stood immediately prior
to the service of the interim order.

In Suraj Pal, a Division Bench of the Calcutta High Court has taken B
the same view. There, the defendant forcibly dispossessed the plaintiff in
violation of the order of injunction and took possession of the property.
The Court directed the restoration of possession to the plaintiff with the
aid of police. The Court observed that no technicality can prevent the
Court from doing justice in exercise of its inherent powers. It held that the
object of Rule 2-A of Order 39 will be fulfilled only were such mandatory C
direction is given for restoration of possession to the aggrieved party. This
was necessary, it observed, to prevent the abuse of process of law.

There is no doubt that this salutory rule has to be applied and given
effect to by this Court, if necessary, by over-ruling any procedural or other D
technical objections. Article 129 is a constitutional power and when exer-
cised in tandem with Article 142, all such objection should give away. The
C0urt must ensure full justice between the parties before it.

Claims of Prabhjot Singh and Prabhjit Singh (Sons of Tejwant
Singh): E

Prabhjot Singh Sabharwal, third respondent, stated in his counter-af-
fidavit filed in Interlocutory Application No. 29 of 1996 that he is in no way
concerned with the several companies pointed out by the D.DA. (as
belonging to Tejwant Singh and members of his family) and that he is F
interested only in one company, Technological Park Private Limited,
NOIDA. He stated that he and his wife are the directors of this company
and that it does not deal in any manner with Delhi Development Authority.
He stated that his parents are in no way concerned with Technological Park
Private Lin1ited. He stated "I have separated from my father and I have no
dealings with the Delhi Development Authority". It is significant to notice G
that this respondent does not say when was he separated from his father,
whether the said 'separation' is evidenced by writing, nor has he stated that
the said separation - or partition, as it may be called - was reported to the
Income Tax Authorities and was accepted and recorded by them. The
affidavit is quite -vague in this respect. H
314 SUPREME COURT REPORTS [1996] SUPP. 2S.C.R.

A Prabhjit Singh, fourth respondent, (another son of Tejwant Singh)
has filed a separate counter-affidavit stating that he and his wife are the
directors in two companies, Tej Properties Private Limited and Skipper
Properties Private Limited. Tej Properties is said to be an investment
company which is not carrying on any activity at present. Skipper proper-
ties is said to be running in a loss. He stated that he has no connection
B
with the other companies pointed out by the D.D.A. He admitted the
transaction relating to the property at No. 3, Aurangzeb Road, New Delhi
but submitted that he is in no way connected with the affairs of his father
or with Skipper Construction Private Limited. It is significant to notice that
this respondent does not say that he is separated or divided from his father
c nor does he explain how he and his wife became directors of Tej Properties
of which his parents were the sole directors at the time of grant of afore-
mentioned lease.

Lifting the corporate veil :
D
In Aron Salomon v. Salomon & Company Limited, (1897) Appeal
Cases 22, the House of Lords had observed, "the company is at law a
different person altogether from the subscriber .... ; and though it may be
that after incorporation the business is precisely the same as it was before
and the. same persons are managers and the same hands received the
E profits, the company is not in law the agent of the subscribers or trustee
for them. Nor are the subscribers as members liable, in any shape or form,
except to the extent and in the manner provided by that Act'. Since then,
however, the Courts have come to recognise several exceptions to the said
rule. While it is not necessary to refer to all of them, the one relevant to
F us is "when the corporate personality is being blatantly used as a cloak for
fraud or iruproper conduct". (Gower : Modern Company Law - 4th Edn.
(1979) at P. 137). Pennington (Company Law - 5th Edn. 1985 at P. 53) also
states that "where the protection of public interests is of paramount impor-
tance or where the company has been formed to evade obligations iruposed
by the law", the court will disregard the corporate veil. A Professor of Law,
G S. Ottolenghi in his article ".From Peeping Behind the Corporate Veil, to
Ignoring it Completely' says "the concept of 'piercing the veil' in the United
States is much more developed than in the UK. The motto, which was laid
down by Sanborn, J. and cited since then as the law, is that 'when the notion
of legal entity is used to defeat public convenience, justify wrong, protect
H fraud, or defend crime, the law will regard the corporation as an associa-
DD.A. v. SKIPPER CONTN. CO. (P) LIB. [B.P. JEEVAN REDDY,J_J 315

tion of persons. The same can be seen in various European jurisdictions''. A
[(1990) 53 Modern Law Review 338]. Indeed, as far back 1912, another
American Professor L. Maurice Wormser examined the American
decisions on the subject in a brilliantly written article "Piercing the veil of
corporate entity" (published in (1912) XII Columbia Law Review 496) and
summarised their central holding in the following words : B
"The various classes of cases where the concept of corporate entity
should be ignored and and veil drawn aside have now been briefly
reviewed. What general rule, if any, can be laid down ? The nearest
approximation to generalization which the present state of the
authorities would warrant is this : When the conception of cor, C
porate entity is employed to defraud creditors, to evade an existing
obligation, to circumvent a statute, to achieve or perpetuate
monopoly, or to protect knavery or crime, the courts will draw
aside the web of entity, will regard the corporate company as an
association of live, up-and-doing, men and women shareholders,
and will do justice between real persons." D

In Palmer's Company Law, this topic is discussed in Part-II of Vol-I.
Several situations where the court will disregard the corporate veil are set
out. It would be sufficient for our purposes to quote the eighth exception.
It runs : "The courts have further shown themselves willing to 'lifting the
E
veil' where the device of incorporation is used for some illegal or improper
purpose .....Where a vendor of land sought to avoid the action for specific
performance by transferring the land in breach of contract to a company
he had formed for the purpose, the court treated the company as a mere
'sham' and made an order for specific performance against both the vendor
and the company". Similar views have been expressed by all the commen- F
tators on the Company Law which we do not think it necessary to refer.

The law as stated by Palmer and Gower has been approved by this
Court in Tata Engineering and Locomotive Company Limited v. State of
Bihar, [1964] 6 S.C.R. 885. The following passage from the decision is G
apposite:

"Gower has classified seven categories of cases where the veil of
a corporate body has been lifted. But, it would not be possible to
evolve a rational consistent and inflexible principle which can be
invoked in determining the question as to whether the veil of the H
316 SUPREME COURT REPORTS [1996J SUPP. 2 S.C.R.

A corporation should be lifted or not. Broadly, where fraud is in-
tended to be prevented, or trading with enemy is sought to !Je
defeated, the veil of corporation is lifted by judicial decisions and
the shareholders are held to be 'persons who actually work for the
corporation."
B In DHN Food Dist1ibutors Ltd. & Ors. v. London Borough of Tower
Hamlets, (1976) 3 All. E.R. 462, the Court of Appeal dealt with a group of
companies. Lord Denning quoted with approval the statement in Gower's
Company Law that "there is evidence of a general tendency to ignore the
separate legal entities of various companies within a group, and to look
c instead at the economic entity of the whole group". The learned Master of
Rolls observed that "this group is virtually the same as a partnership in
which all the three companies are partners''. He called it a case of "three-
11 11
in-one" - and, alternatively, as one- in-three •

The concept of corporate entity was evolved to enconrage and
D promote trade and commerce but not to commit illegalities or to defraud
people. Where, therefore, the corporate character is employed for the
purpose of committing illegality or for defrauding others, the court would
ignore the corporate character and will look at the reality behind the
corporate veil so as to enable it to pass appropriate orders to do justice
between the parties concerned. The fact that Tejwant Singh and members
E '
of his familx have created several corporate bodies does not prevent this
Court from treating all of them as one entity belonging to and controlled
by Tejwant Singh and Family if it is found that these corporate bodies are
merely cloaks behind which lurks Tejwant Singh and/or members of his
family and that the device of incorporation was really a ploy adopted for
F committing illegalities and/or to defraud people.

The concept of resulting trust and equity :

In Attomey General for India v. Amrat/al Prajivandas, [1994] 5 S.C.C.
54, a Constitution Bench of this Court comprising nine-Judges including
G one of us (B.P. Jeevan Reddy, J.) dealt with the challenge to the validity
of the definition of "illegally acquired properties" in clause (c) of Section
3(1) of Smugglers and Foreign Exchange Manipulators (Forfeiture of
Property) Act, 1976 (SAFEMA). The said Act provided that where a
person earned properties by smuggling or other illegal activities, all such
H properties, whether standing in his name or in the name of his relations or
D.D.A. v. SKIPPER CONTN. CO. (P) LTD. [B.P.JEEVAN REDDY,J.] 317

associates will be forfeited to the State. While dealing with the justification A
for such a radical provision, this Court held :

"So far as justification of such a provision is concerned; there is
enough and more. After all, all these illegally acquired properties
are earned and acquired in ways illegal and corrupt · at the .cost B
of the people and. the State. The State is deprived of its legitimate
revenue to that extent. These properties must justly go back where
they belong - to the State. What we are saying is nothing new or
heretical. Witness the facts and ratio of a recent decision of-the
Privy Council in Attorney General for Hong Kong v. Reid, (1993) 3
WLR 1143. The respondent, Reid, was a Crown-prosecutor in C
Hong Kong. He took bribes as an inducement to suppress certain
criminal prosecutions and with those monies, acquired properties
in New Zealand, two of which were held in the name of himself
and his wife and the third in the name of his solicitor. He was
found guilty of the offence of bribe-taking and sentenced by a D
criminal court. The Administration of Hong Kong claimed that the
said properties in New Zealand were held by the owners thereof
as constructive trustees for the Crown and must be made over to
the Crown. The Privy Council upheld this claim overruling the New
Zealand Court of Appeals. Lord Templeman, delivering the
opinion of the Judicial Committee, ·based his conclusion on the E
simple ground that any benefit obtained by a fiduciary through a
breach of duty belongs in equity to the beneficiary. It is held that
a gift accepted by a person in a fiduciary position as an incentive
for his breach of duty constituted a bribe and, although in law it
belonged to the fiduciary, in equity he not only became a debtor F
for the amount of the bribe to the person to whom the duty was
owed but he also held the bribe and any property acquired there-
with on constructive trust for that person. It is held further that if
the value of the property representing the bribe depreciated the
fiduciary had to pay to the injured person the difference between
that value and the initial amount of the bribe, and if the property G
increased in value the fiduciary was not entitled to retain the excess
since equity would not allow him to make any profit from his
breach of duty. Accordingiy, it is held that to the extent that they
represented bribes received by the first respondent, the New
Zealand properties were held in trust for the Crown, and the H
318 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A Crown had an equitable interest therein. The :earned Law Lord
observed further that if the theory of constructive trust is r.ot
applied and properties interdicted when available, the properties
'can be sold and the proceeds whisked away to some Shangri La
which hides bribes and other corrupt moneys in numbered bank
accounts; - to which we are tempted to add - one can understand
B the immorality of the Bankers who maintained numbered accounts
but it is difficult to understand the amorality of the Governments
and their laws which sanction such practices - in effect encouraging
them. The ratio of this decision applies equally where a person
acquires properties by violating the law and al the expense uf and
c tu the detriment of the State and its revenues where an enactment
provides for such a course, even if the fiduciary relationship
referred to in Reid is not present. It may be seen 'hat the concept
employt!d in Reid was a common law concept, wh1,..1t!as hert:: is d
case of an express statutory provision providing for such torioiture.
May we say in conclusion that 'the intersts of society are paramount
D
to individual interests and the two must be brn•1ght 'nto jw;t 'nd
harmonious relation. A mere property career is not the final
destiny of mankind, if progress is to be the law of the future as it
has been of the past'. (Lewis Henry \1organ : Ancient Society)"

E In Reid, the Privy Council made the following observations which we
find of crucial relevance to our present-da) society :

"A bribe is a gilt accepted by a fiduciary as an inducement to him
to betray his trust. A secret benefit, which may or may nut
F constitute a bribe is a benefit which the fiduciary daives from trust
property or obtains from knowledge which he acquires in ihe
course of acting as a fiduciary ...... Bribery is an evil prac.;tice which
threalens the foundations of any civili-;ed society........Wh...-::re bribe~
are accepted by a trustee, servant, agent or othe 1· fiducta)y, lu~~
and damage are caused to the bentficiaries, master ot principal
G whose interests have been betrayed ... When a bribe is ottered and
accepted in money or in kind, the mr1n~y or property t:t1nstitut.ing
the bribe belongs in law to the recipient. Money paid lo the false
fiduciary belongs to him. The legal estate in freehold property
conveyed to the false fiduciary by way or bribe vests in him. Equity
H however \vhich acts in personam insists that it is unconscionable
D.D.A v. SKIPPER CONTN. CO. (P) LTD. [B.P. JEEV AN REDDY, J.] 319

for a fiduciary to obtain and retain a benefit in breach of duty. The A
provider of a bribe cannot recover it because he committed a
criminal offence when he paid the bribe. The false fiduciary who
received the bribe in breach of duty must pay and account for the
bribe to the person lo whom that duty was owed. In the present
case, as soon as Mr. Reid received a bribe in breach of the duties
B
he owed to the Government of Hong Kong, he became a debtor
in equity to the Crown for the amount of that bribe ......As soon as
the bribe was received, whether in cash or in kind, the false
fiduciary held the bribe on a constructive trust for the person
injured ....If the property representing the bribe exceeds the original
bribe in value, the fiduciary cannot retain the benefit of the c
increase in value which he obtained solely as a result of his breach
of duty .......When a bribe is accepted by a fiduciary in breach of
his duty then he holds that bribe in trust for the person to whom
the duty was owed. If the property representing the bribe decreases
in value the fiduciary must pay the difference between that value D
and the initial amount of the bribe because he should not have
accepted the bribe or incurred the risk of loss. If the property
increases in value, the fiduciary is not entitled to any surplus in
excess of the initial value of the bribe because he is not allowed
by any means to make a profit out of a breach of duty."
E
We respectfully agree with each and every statement contained in the
above extract. MAY WE SAY JN PARANTHESIS that a law providing for
foifeitw'e of properties acquired by holders of 'public office" (including the
offices/posts in the public sector corporations) by indulging in comtpt and
illegal acts and deals, is a crying necessity in the present state of our society. F
The law must extend not only to - as does SAFEMA · prope1ties acquired in
the name of the holder of such office but also to prope1ties held in the names
of his spouse, children or other relatives and associates. Once it is proved that
the holder of such office has indulged in conupt acts, all such prope1ties
should be attached forthwith. The law should place the burden of proving that G
the attached properties were not acquired with the aid of monies/properties
received in the course of conupt deals upon the holder of that prope1ty as
does SAFEMA whose validity has already been upheld by this Cowt in the
aforesaid decision of the larger Constitution Bench. Such a law has becon1e
an absolute necessity, if the canker of conuption is not to prove the death:...
knell of this nation. According to several perceptive obse1vers, indeed, it has H
320 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A already reached 11ear-fatal dimensions. It is for the Parliament to act i11 this
matter, if they really mea11 business. It may be recalled that in this very case,
Justice Chinnappa Reddy Commission (appointed to investigate into the
conduct of the officials of the D.D.A. in handing over the possession of the
plot to Skipper without receiving the full consideration and also in conniv-
ing at the construction thereon) has reported that several top officials of
B
the D.D.A. have indeed connived at and acted hand in glove with Skipper
to confer illegitimate gain upon the latter. On the basis of the said Report,
disciplinary enquiries have been ordered against certain officials which are
now pending. For the reason that the inquires are pending, we desist from
referring to the findings of the Commission except to broadly mention its
c conclusion.
We are of the opinion that the holding in Amrat/a/ Prajiva11das and
in Reid should guide us while exercising the extra-ordinary powers of this
Court under Article 142 of the Constitution. The absence of a statutory
provision will not inhibit this Court while acting under the said Article from
D
making appropriate orders for doing complete justice between the parties.*
The fiduciary relationship may not exist in the present case nor is it a case
of a holder of public office, yet if it is found that someone has acquired
properties by defrauding the people and if it is found that the persons
defrauded should be restored to the position in which they would have
E been but for the said fraud, the court can make all necessary orders. This
is what equity means and in India the courts are not only courts of law but
also courts of equity.

D.DA 's responsibility to reimburse the purchasers :
F
S/Sri Bobde and Dave, learned counsel for the put chasers, con-
tended that inasmuch as several top officials of the D.D.A. had colluded
with Skipper and connived at their wrong doing, the D.D.A. must be held
equally liable to reimburse the purchasers. Indeed, their submission is that
D.D.A. stood by and took no action whatsoever while Skipper was issuing
G repeated advertisements (even after January 29, 1991, in open and brazen
defiance of this Court's Orders) and, therefore, it must be made equally
liable to reimburse the said purchasers in full. We find it difficult to agree.

* In other words, while acting under Article 142 of the Constitution, this Court will
respect a statute, the absence of a statute or statutory provision will not inhibit her to
H n1ake orders necessary for doing con1plete justice between the parties.
D.D.A. v. SKIPPER CONTN. CO. (P) LTD. [B.P.JEEVAN REDDY, J.] 321

Firstly, the said contention is not factually correct. As bas been pointed out A
hereinabove, soon after the publication of an advertisement by Skipper in
the newspapers inviting the citizens at large to come and purchase the
space in the proposed building on February 4, 1991, the DD.A. came
forward with a warning notice published in all leading national dailies
advising citizens not to purchase space in the building in view of the orders
B
of this Court. It is true that even thereafter Skipper has been issuing similar
advertisements but it cannot be said with any reasonableness that D.D.A.
should have responded to each such advertisement by publishing a warning.
It could have done that but it cannot be faulted for not doing it. It is,
therefore, factually incorrect to say that D.D.A. stood by and allowed
Skipper to defraud the people by issuing advertisements. Secondly, even if C
there is any collusion between the officials of the D.D.A. and Skipper as
alleged by the learned counsel, the question still arises whether D.D.A. can
be held bound by such actions of its officials acting beyond their authority, ·
indeed, acting adverse to the interests of D.D.A. intentionally. We are not
suggesting nor are we laying down the proposition that the D.D.A. is not D
bound by the acts and deeds of its officials but are only saying that where
the act< and deeds of the officials are not only beyond their authority but
are done with a malafide intent, it may not be just and fair to bind D.D.A.
with such malafide acts and deeds. Be that as it may, it is not necessary
for the purpose of this case to pursue this line of enquiry further or to
express any definite opinion thereon. E

What are the directions called for in this matter ?

In the light of the factual and legal position adumbrated hereinabove,
the question arises what are the appropriate directions to be made in the F
matter ? In other words, the question is what directions and orders are
called for by this Court acting under its contempt jurisdiction under Article
129 and its extra-ordinary jurisdiction under Article 142 to do complete
justice between the parties before us ? On one hand, the position is that
the pre-January 29, 1991 purchasers have to be reimbursed in full which G
means that they should also be paid interest at the appropriate rate on the
amounts advanced by them to Skipper. (They have only been paid the
principal amount in the sum of Rs. 13,27,37,56l.59p pursuant to the Report
of Justice Lahoti Commission.) Secondly, the post-January 29, 1991 pur-
chasers have also to be reimbursed in full. According to Skipper, the
amounts collected from post-January 29, 1991 purchasers is in the region H
322 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A of Rupees eleven crores. The counsel for the petitioners, however, say that
some of them are bogus purchasers set up by Skipper itself to defeat
genuine claims. As against these claims, only an amount of about Rupees
six crores is now available which is kept in fixed deposits in nationalised
banks. The balance has to be realised. In our opinion, as at present advised,
it would be enough for the above purpose if we proceed against one
B
property, viz., No. 3, Aurangzeb Road, New Delhi, which appears to us, on
the facts and material placed before us, to belong wholly and exclusively
to Tejwant Singh and his wife. We ignore the corporate veil and we ignore
the fact that as present their son, Prabhjit Singh, and his wife are the
directors. (We have already held that Prabhjit Singh has not explained in
c his affidavit how did he and his wife became directors in the place of his
parents.) Tej Properties Private Limited, which is said to own the said
property, was intialJy having only two directors, viz., Tejwant Singh and his
wife, Surinder Kaur. It is Tejwant Singh who executed the lease deed in
respect of the said property in favour of 'Maple Leaf of October 1, 1993
D effective from October 8, 1993. On October 8, 1993 itself, Maple Leaf
executed a lease deed in respect of the said property in favour of an
Embassy of Israel in India, New Delhi for a period of nine years at a rent
of Rs. 8,38,360 per month. It is crystal clear that the property belongs to
Tejwant Singh and the corporate veil and the change of directorships are
E alJ mere devices to screen the said property and its income from their
creditors including the purchasers aforesaid. Tej Properties Private
Limited is nothing but a fig-leaf - and that too an inadequate one - to cover
up the reality. The reality is Tejwant Singh, the contemnor, who is the
author of alJ these deal' and devices. The transfer of share-holding, if any,
between the father and the son (and their respective wives) must also be
F treated as a sham transaction. The above course appears justified and
necessary looked at from any angle, viz., (a) that the contemnors should
not be allowed to enjoy or retain the fruits of their contempt; (b) the
interests of justice, which calJ for the lifting of the corporate veil - the said
property is in truth and effect the property of Tejwant Singh and members
G of his family and must be available to satisfy the claims of the persons
defrauded by him; (c) that while acting under Article 142 of the Constitu-
tion, this Court must do complete justice between the parties and for that
purpose, it is necessary to ensure that a person who has defrauded a large
number of persons by issuing advertisements in the leading newspapers
H published from the capital inviting people to come and purchase space in
D.D.A. v. SKIPPER CONTN. CO. (P) LID. (B.P. JEEVAN REDDY, J.] 323

the said building in open and brazen violation of clear and specific orders A
of this Court should not be allowed to benefit from his fraud ancVor
contemptuous acts.

Accordingly, it is directed that :

B
(1) the property at No. 3, Aurangzeb Road, New Delhi, shall be
attached, if not already attached - and if it has already been attached, it •
shall continue to be under attachment;

(2) the Embassy of Israel in India, New Delhi, the lessee of the said
property, is requested to deposit the monthly rent payable in respect of the c
said building in this Court with effect from the date of receipt of a copy of
this order and continue to deposit the same until further orders. Such
deposit in Court shall discharge the Embassy of its obligation to pay rent
to 'Maple Leaf, its landlord.
D
(3) Tejwanl Singh and his wife, Surinder Kaur, are directed to
deposit in this Court a sum of Rupees ten crores within two months from
today. In default, steps will be taken to sell the property at No. 3,
Aurangzeb Road, New Delhi by inviting tenders from the public. The said
amount of Rupees ten crores is tentatively arrived at as the amount
required to reimburse the pre-January 29, 1991 purchasers in full, as E
explained hereinabove, and also to reimburse the post-January 29, 1991
purchasers in full. (This shall not be treated as the final fif,'llre required in
this behalf.) While fixing this amount, we have taken into account the fact
that about Rupees six crores is now available with this Court as stated
supra; F
(4) the attachment of properties belonging to Tejwant Singh, his wife
and children, already effected, including the properties mentioned in the
application, I.A. No. 29 of 1996, filed by the D.D.A. shall continue to be
in force pending fUrther orders. It is, however) open to any of them to come
forward with a proposal to sell any of those properties and if this Court is G
satisfied about the bonajides of the deal, the attachment will be lifted on
condition that the consideration so received is deposited into this Court. It
is obvious that any such deposit 'vill be treated as a deposit towards the
direction regarding deposit of Rupees ten crores contained in Direction
No. 3 above; H
324 SUPREME COURT REPORTS [1996] SUPP. 2 S.C.R.

A (5) since it is necessary to ascertain the persons who have paid
amounts to Skipper after January 29, 1991 for purchasing the space in the
sa;d building, and to exclude the claims of non-genuine persons, we appoint
Sri 0. Chinnappa Reddy, a former Judge of this Court, as the one-man
Commission to ascertain the number and identity of the persons who have
purchased the space in the building being raised by Skipper after .I anuary
B 29, 1991 and also to determine the amounts paid by each of them. The
Commission is requested to submit its Report within a period of six
months, as far as possible. The remuneration and the expenses of Sri
Justice 0. Chinnappa Reddy will be borne entirely by the D.D.A. out of
the funds now lying with it, as per his terms.
c
Ordered accordingly.

Before parting with this case, we feel impelled to make a few obser-
vations. What happened in this case is illustrative of what is happening in
our country on a fairly wide scale in diverse forms. Some Persons in the
D
upper strate (which means the rich and the inl1uential class of the society)
have made the 'properly career' the sole aim of their life. The means have
become irrelevant - in a land where its greatest son born in this century
said "means are more important than the endsn. A sense of bravado
prevails; everything can be managed; every authority and every institution
E can be managed. All it takes is to tackle or manage it in an appropriate
11 11 11 11

manner. They have developed an utter disregard for law - nay, a contempt
for it; the feeling that law is meant for lesser mortals and not for them. The
courts in the country have been trying to combat this trend, with some
success as the recent events sho\V. But ho\v many matters can we handle.
F How many more of such matters are still there ? The real question is huw
to swing the polity into action, a polity which has become indolent and soft
in its vitals ? Can the courts alone do it ? Even so, to what extent, in the
prevailing stale of affairs ? Nol that we wish to launch upon a diatribe
against anyone in particular but Judges of this· Court are also permitted,
we presume, to ask in anguish, 11 what have we made of our country in less
G than fifty years" ? Where has the respect and regard for law gone ? And
who is responsible for it ?

On this occasion, we must refer to the mechanical manner in which
some of the courts have been granting interim orders - injunction and stay
H orders without realising the harm such mechanical orders cause to the
D.DA v. SKIPPER CONTN. CO. (P) l:!D. [B.P. JP.EVAN REDDY, J.] 325

other side and in some cases to public interest. It is no answer to say that A
"let us make the order and if the other side is aggrieved, let it come and
apply for vacating it". With respect, this is not a correct attitude. Before
making the order, the court must be satisfied that it is a case which calls
for such an order. This obligation cannot be .iettisoned and the onus placed
upon the respondents/defendants to apply for vacating it. Take this very
B
case : a person purchases a property in auction. He does not pay as per
the stipulated terms. He obtains a series of extensions. Still he doesn't
deposit and when the vendor proposes lo cancel the allotment, the court
is approached and it stays the cancellation. The vendor (D.D.A.) applies
for vacating it but nothing happens except repeated adjournments. This has
happened more than once. We find that as and when Skipper was not able c
to manage the D.D.A., he approached the court and it provided him a
breather. He then gets time to manage the D.D.A. This went on uplo the
end of 1990 when fortunately the Delhi High Court came with a tonne of
bricks upon Skipper and which order was affirmed two years' later by this
Court. Ultimately, no doubt, Skipper has met its nemesis but meanwhile
D
hundreds of persons are cheated out of their head earned monies; their
dreams of owning a flat are shattered rudely.

All this means that each of us in this land should wake up to his duly
and try to live up lo it. We do not think we need say more.
E
List the matter for further orders on July 16 1996.

S.M.