E. BAPANAIAHversusSRI K.S. RAJU ETC.

                   [2014] 13 S.C.R. 1413


                       E. BAPANAIAH                             A
                              v.
                    SRI K.S. RAJU ETC.
           (Criminal Appeal Nos. 2357-65 of2014)
                    NOVEMBER 07, 2014                           B
    [VIKRAMAJIT SEN AND PRAFULLA C. PANT, JJ.]
        Contempt of Court - Civil contempt - Breach of
  undertaking given to Company Law Board (CLB) by ·
  Respondent - Contempt Case - Conviction and sentence, C
  recorded against Respondent by Single Judge of High
  Court - Contempt appeal - Division Bench of High Court
  setting aside the conviction and sentence- Propriety- Held:
  Normally, the general provisions made under the Contempt
  of Courts Act are not invoked by the High Courts for forcing a
                                                                 0
  party to obey orders passed by its subordinate courts for the
  simple reason that there are provisions contained in Code
  of Civil Procedure, 1908 to get executed its orders and
  decrees- It is not the object of the Contempt of Courts Act to
· make decree holders rush to the High Courts simply for the E
  reason that the decree passed by the subordinate court is
  not obeyed- However, there is no such procedure prescribed
  to execute order of CLB particularly after proviso is added to
  Section 634A of the Companies Act, 1956, vide Companies
  (Second Amendment) Act, 2002 - Respondent wilfully
  disobeyed the order of CLB and breached the undertaking F
  given to CLB, and thereby committed Contempt of Court
  subordinate to High Court - Accordingly, order passed by
  Single Judge in Contempt Case, to the extent of conviction
  and sentence recorded against respondent stands
  restored- However, in exercise of powers under Article 142 G
  of the Constitution of India, to do complete justice between
  the parties, sixty days time allowed to respondent, to repay
  the entire amount to the depositor/appellant as directed by
  CLB - If within sixty days payment is not made to the
                                                                 H
                               1413
1414         SUPREMECOURTREPORTS               . [2014)138.C.R.


 A depositor/appellant, respondent be taken into custody to
   serve out sentence as recorded against him by the Single
   Judge in Contempt Case - If, as directed, payment is made
   to the appellant within sixty days, the sentence be reduced
   to the extent of fine only- Companies Act, 1956 - Companies
 B (Second Amendment) Act, 2002 - Constitution of India -
   Arts. 136 and 142.
        Canara Bank v. Nuclear Power Corporation of India Ltd.
   and other 1975 Supp (3) SCC 81: Sk. Mohammedbhikhan
   Hussainbhai v. The Manager Chandrabhanu Cinema AIR
 C 1986 Guj 209; and N. Venkata Swamy Naidu v. Sri Surya
   Teja Constructions Pvt. Ltd. and others 2008 CriLJ 227 -
       referred to.
                        CASE LAW REFERENCE
 D 1975 Supp (3) SCC 81          referred to             Para 26
       AIR 1986 Guj 209          referred to             Para 26
       2008 CriLJ 227            referred to             Para 26
       CRIMINAL APPELLATE JURISDICTION : Criminal
 E Appeal Nos. 2357-2365 of 2009.
            From the Judgment and Order dated 22.08.2008 of the
       High Court of Andhra Pradesh at Hyderabad in Contempt
       Appeal No. 3of11of2007.
        B. Kant Rao, Kashyap, Mrs. K. Sarada Devi, Advs. for
 F theAppellant.
        C. A. Sundaram, Sr. Adv., Annam D. N. Rao,
   A Venkatesh,A. Subba Rao, Advs. for the Respondent.
            The Judgment of the Court was delivered by
 G          PRAFULLA C. PANT, J. 1. Leave granted.
        2. These appeals are directed against judgment and
   order dated 22.8.2008 passed by the High Court of Judicature,
   Andhra Pradesh, in ContemptAppeal Nos. 3, 4, 5, 6, 7, 8, 9,
   1O and 11 of 2007 whereby said Court has allowed all the
 H Contempt Appeals setting aside the order dated 3.8.2007
          E. BAPANAIAHv. SRI K.s. RAJU ETC.                    1415
                [PRAFULLAC. PANT, J.]

passed in Contempt Case No. 915 of2002 wherein K.S. Raju, A
Promoter Director of Mis. Nagarjuna Finance Limited,
Hyderabad, and its other directors were convicted under
Section 12 of Contempt of Courts Act, 1971, and each one of
them was sentenced to suffer simple imprisonment for a
period of six months and were further directed to pay fine of B
Rs.2,0001- each.
       3. At the outset, we have no hesitation to observe that
the impugned order does not require interference to the extent
the same is passed in Contempt Appeal No. 4 of 2007 filed
by Minoo R. Shroof, Contempt Appeal No. 5 of 2007 filed by C
Nimesh N. Kampani, Contempt Appeal No. 6of2007 filed by
C.D. Menon, Contempt Appeal No. 7 of 2007 filed by A.P.
Kurian, Contempt Appeal No. 8 of 2007 filed by Sridhar Chary,
ContemptAppeal No. 9 of 2007 filed by G.S. Raju, Contempt
Appeal No. 10 of 2007 filed by P. K. Madhav, and Contempt D
Appeal No. 11 of 2007 filed by L.V.V. lyyer, which were allowed
for the reason that in the Contempt Case No. 915 of 2002 they
were not the respondents against whom contempt case was
filed. There were only three respondents, namely, K.S. Raju,
 N. Selvaraj and Mis. Nagarjuna Finance Limited through its E
 Managing Director, against whom contempt petition was filed
 under Section 12 read with Section 10 of Contempt of Courts
Act, 1971 by E. Bapanaiah (present appellant) before the High
 Court. Other eight directors had no opportunity to defend
 themselves before the conviction was recorded by the learned F
 Single Judge in its concluding paragraph 134 of the judgment
 in the aforementioned Contempt Case No. 915 of 2002.
      4. It is only in respect of conviction of K.S. Raju, Promoter
Director of Nagarjuna Finance Limited (for short "NFL") which
requires in-depth examination as to whether the Division Bench G
of the High Court has rightly allowed the ContemptAppeal (No.
3 of 2007) arising out of Contempt Case No. 915 of 2002, or
not.

                                                                 H
1416       SUPREME COURT REPORTS                  [2014] 13 S.C.R.


 A         5. Brief facts of the case are that the present appellant,
    E. Bapanaiah, (one of the depositors who made deposits with
    NFL) filed the contempt petition under Section 12 read with
    Section 10 of the Contempt of Courts Act, 1971 for the alleged
    wilful disobedience of order dated 29.2.2000 and one dated
B 21.8.2001 passed by Company Law Board, Southern Region
    Bench, and for breach of undertakings/affidavits, including one
   filed by K.S. Raju (Promoter Director of NFL) before CLB and
    one given in Company Appeal No. 7 of 2001. It is stated by
   the present appellant that the respondent, K.S. Raju, was
c Promoter Director of Mis. Nagarjuna Finance Limited,
    Hyderabad (in short "NP:L"). The said company, through its
   Directors, issued advertisement inviting deposits promising
   good returns on the deposits with attractive interest thereon,
   and collected the huge sum from the public. The present
D appellant deposited 1 .40,00,000/- (1 forty lakhs) hoping that
   the same would multiply to double within 45 months as projected
   in the advertisement. The sajd amount was deposited in eight
   fixed deposits of 1 .5,00,000/- (1 five lakhs) each for a period
   of 45 months on 20. 7.1997 and was due for repayment on
E maturity on 28.4.2001. However, when the NFL failed to re-
   pay the sum to the depositors, an application (CP No. 35 of
   2000) was filed under Section 58-A of the Companies Act,
   1956 before the Company Law Board, Southern Region
 . Bench, for framing the scheme of repayment of deposits in
F instalments within a period of 48 months. The Company Law
   Board (CLB), exercising its suo motu powers, allowed the time
   to NFL on the request of its directors to approve the scheme
   of repayment. During the pendency of such application the
   CLB ordered the Directors, including the Promoter Director
G K.S. Raju, to file affidavits giving undertaking to the CLB that
   they would abide by the scheme and pay off the amount due to
   depositors. On the assurance as given in the undertakings/
   affidavits filed by K.S. Raju, Promoter Director, and other
   Directors separately, the CLB passed order dated 29.2.2000.
H But the Promoter Director and its group companies filed
          E. BAPANAIAH v. SRI K.S. RAJU ETC.                     1417
                [PRAFULLA C. PANT, J.]

Company Appeal Nos. 9 of 2001 and 7 of 2001 against the A
said order dated 29.2.2000 passed in CP No. 35 of 2000. In
said appeals, on behalf of the Company an undertaking was
given to pay half of first year's entitlement of the present
appellant by 20.4.2002. However, no amount was paid. As
such, the contempt petition was filed by the present appellant B
before the High Court for violation of the orders of the Company
Law Board.
     6. According to the appellant, after the scheme was
approved, K.S. Raju, Promoter Director of NFL, started
pleading that there _was change in the management of NFL, C
and sought to be relieved from his liability as the Promoter
Director of NFL, its group companies and from the undertaking
given by him to the CLB. The CLB declined to relieve the
Promoter Director K.S. Raju from the undertaking given. by
him and it was directed that he should make the repayment as D
per the repayment scheme. The Company Appeals were
dismissed by the High Court on 3.1.2002. NFL and its
Promoter Director failed to comply with the order of the
Company Law Board even after dismissal of the Company
Appeals. K.S. Raju, the then Promoter Director, was E
responsible for issuance of the advertisement inviting deposits
from the public and failed to repay the deposits as per the
undertaking given by him on behalf of the Company. It is further
alleged by the present appellant in the Contempt Petition
before the High Court that K.S. Raju kept on evading his liability, F
and attempted to shirk the responsibility by taking plea that he
had resigned from the directorship.
     7. A counter affidavit was filed on behalf of K.S. Raju,
Promoter Director of NFL, in February, 2003 before the High
Court which discloses that the said respondent disputed and G
denied the averments made in the Contempt Petition. He
pleaded that he had all respect for the Court and had no
intention to commit the contempt of the court. He further
pleaded that long back he had left to function as Managing
                                                              H
1418        SUPREME COURT REPORTS                  [2014] 13 S.C.R.


A Director of NFL. It is further stated by him that he is neither in
   a position to exercise any control over the Company nor
   responsible to make repayment of the deposits made in favour
   of NFL. It was further submitted by him before the learned
   single Judge of the High Court that in the order dated 29.2.2000
B passed by the CLB, the Board did not rely on the assurance
   or undertaking given by the parties. Only the Managing
   Director was directed to file the undertaking, as such the
   undertaking/affidavit given by the respondent K.S. Raju was
  not the basis of the order dated 29.2.2000. As such it was
C contended that there was no contempt of CLB or the Court. It
  was further pleaded that an agreement was entered into
  between one M/s. Mahalakshmi Factorial Services Limited
  (for short "MFSL") and NFL whereby the control of NFL was
  handed over to MFSL, and N. Selvaraj (respondent No. 2 in
D the Contempt Petition) was nominated as the Chief Executive
  Officer to look after the affairs of NFL. Lastly, it was pleaded
  by respondent K.S. Raju that assuming that he had given
  undertaking/affidavit on which CLB passed the order said to
  have been disobeyed, there is no personal liability on said
E respondent to r~pay the amount in question.
         8. In the counter affidavits filed on behalf of NFL (through
  G. Venkatapathi, Executive Director) and N. Selvaraj
  (respondent No. 2 in the Contempt Petition) it was disclosed
  that Sridhar Chary, Managing Director, functioning for over a
F decade of NFL, was none else than the nominee of K.S. Raju,
  Promoter Director. It was also pleaded on behalf of NFL that
  out of Paid-up Capital of 1 .26.32 crores group companies
  were holding 1 .16.16 crores, i.e., approximately61%. It was
  also stated by NFL in its counter affidavit before the High Court
G that under Articles 104 and 140 of the Articles of Association
  K.S. Raju had power to appoint the Managing Director and
  other three Directors as his nominees. N. Selvaraj (respondent
  No. 2 in the Contempt petition) denied that he was nominee of
  MFSL. He further pleaded that there was no change in the
H management of NFL during his tenure as Managing Director,
           E. BAPANAIAH v. SRI K.S. RAJU ETC.                    1419
                  [PRAFULLAC. PANT, J.]

and he further told that entire control remained with K.S. Raju A
and his nominees. The Executive.Director, G Venkatapathi of
NFL, filed additional counter affidavit in which it is clearly stated
that the CLB passed the order on the basis of the undertakings
and affidavits filed by the Promoter Director and the group
companies. The counter affidavits further revealed that on B
special audit made in April, 2002, several irregularities were
found to have been committed by the Management resulting
 in failure of recoveries in respect of loans advanced to various
 companies who were not traceable on the addresses given.
     9. An additional counter affidavit was filed by K.S. Raju, C
Promoter Director, who was contesting the contempt petition
with other two respondents, in which he alleged that the
representatives of MFSL have enginee'red and secured the
audit report to save the Directors of said company.
        10. Learned Single Judge, after hearing the parties at D
 length, came to the conclusion that NFL and its Promoter
 Director, K.S. Raju, are guilty of contempt of court. Paragraphs
 134 and 135 of the judgment and order dated 3.8.2007 passed
 by the learned Single Judge read as under: -
                                                                   E
        "134. The 1st and 3rd respondents/contemn ors are
        found guilty and liable to be convicted under Section
        12 of the Contempt of Courts Act. Accordingly, the 1st
        respondent as well as the other directors of the 3rd
        respondent company are convicted and sentenced to F
        suffer simple imprisonment for a period of six months,
        together with imposition of fine of Rs. 2, 0001- (Rupees
        two thousand only). The 1st respondent as well as other
        directors of the 3rd respondent shall be detained in Civil
        Prison for the period of imprisonment as ordered above. G
         135. Accordingly, C. C. is allowed."
         11. Aggrieved by the order dated 3.8.2007 passed by
  the learned single Judge in Contempt Case No. 915 of 2002
  respondent K.S. Raju, Promoter Director, appears to have filed
                                                                   H
1420       SUPREME COURT REPORTS                  [2014] 13 S.C.R.


 A Contempt Appeal No. 3 of 2007 before the Division Bench of
   the High Court. His appeal was taken up along with the appeals
   of the other Directors and disposed of vide impugned order
   dated 22.8.2008 whereby the appeals of all the Directors,
   including that of K.S. Raju, were allowed. Hence these appeals
 B before us by the depositor E. Bapanaiah.
          (We have already observed in the begin_ning of this
   judgment that since the 'other Directors' were neither impleaded
   by name nor had an opportunity to defend themselves, as such
  ·setting aside of their conviction and sentence by the Division
C Bench of the High Court in their appeals, requires no
   interference. As such further discussion is confined to the issue
   of allowing of K.S. Raju by the Division Bench of the High
   Court.)
        12. We have heard learned counsel for the parties at
D length and perused the papers on record.
        13. It is not disputed that E. Bapanaiah made deposit of
  Rs. 40,00,000/- (Rs. forty lakhs) in eight FDRs each of
  Rs. 5,00,000/- (Rs. five lakhs) with NFL in response to the
E advertisement made by the said Company. It is also not
  disputed that respondent K.S. Raju was the Promoter Director
  of NFL, Hyderabad. Not only this, the filing of the undertaking/
  affidavit dated 14.2.2000 before the Company Law Board,
  Southern Region Bench is not denied by the respondent K.S.
F Raju. The said undertaking/affidavit reads as under: -
               "BEFORE THE COMPANY LAW BOARD
                 SOUTHERN BENCH AT CHENNAI
             Company Petition No.NAG6-33/45QAISRB/99
         In the matter of the Companies Act, 1956 Section 58A(9)
G
         In the matter of the Reserve Bank of India Act, 1934,
         Section 45QA
                                   AND
         In the matter of Nagarjuna Finance Limited, Punjagutta,
H        Hyder~bad               ... Petitioner
          E. BAPANAIAH v. SRI K.S. RAJU ETC.                       1421
                 [PRAFULLAC. PANT, J.]

                           AFFIDAVIT                               A
    I, k.s. Raju, slo Late Shri K V K Raju, aged 50 years,
    residing at, 'Digvijayam', Plot No. 933A, Road No. 47,
    Jubilee Hills, Hyderabad-500033, do hereby solemnly
    affirm and state as follows:
                                                                    B
     I am the promoter director of Nagarjuna Finance
     Limited, the petitioner in the Company Petition No.
     NAG6-33!45 QAISRB/99.
     I as such hereby give assurance that Nagarjuna
     Finance Limited (NFL) ·shall. make repayment of c
     deposits as per the approved scheme by the Hon'ble
     Company Law Board in the above petition for deferment
     of repayment of deposits. It is further reiterated that all
     steps shall be taken to cause NFL to comply with
     aforesaid repayment schedule.                               D
     The statements made are true to my knowledge and I
     solemnly affirm that this declaration is true and that no
     part of it is false.


     Place: Hyderabad                                      Sdl-     E
     Date: February 14, 2000                       K.S. Raju
                                                   Deponent"
       14. Now we have to examine as to whether the defences
taken by·K.S. Raju, Promoter Director, that he committed no         F
wilful disobedience of the order of the Company Law Board
are acceptable or not. It is relevant to mention here that it is
not the defence of K.S. Raju that repayment has been made
by him or by NFL to the present appellant E. Bapanaiah
(depositor). That being so, we have to see whether there was        G
justification on the part of K.S. Raju, Promoter Director, and
his Company (NFL) in not making repayment as per the
scheme approved by the CLB, as directed by said authority.

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1422        SUPREME COURT REPORTS                  [2014J 13 S.C.R.


 A           15. Learned counsel for the respondent K.S. Raju argued
    that in the undertaking given by K.S. Raju, only this much has
    been stated that the Company will make the payment, as such
   it is not the personal liability of said respondent. But needless
   to say that Company functions through its directors, in its
B operations. Company is not such person which can be sent to
   jail. It is the director controlling the affairs of Company through
   whom it has committed the disobedience, if any, and as such,
   such director has to suffer the consequences of disobedience
   if it is wilful. We have already discussed above that from the
c affidavits filed before the High Court, it is· clear that K.S. Raju
   was not only the Promoter Director of NFL, but the Managing
   Director of said Company, working for a decade, was his
   nominee, and practically all the powers to run the NFL vested
   with K.S. Raju, the Promoter Director, and his nominees, whom
D he appointed under Articles 104 and 140 of Articles of
  Association.
            16. In our opinion, having considered the submissions
  of learned counsel for K.S. Raju, Promoter Director, and
  considering his role in the operation of the Company, as
E discussed above, the Division Bench of the High Court erred
  in law in holding that he was not guilty of wilful disobedience of
  the order of the CLB. It is pertinent to mention here that after
  giving undertaking dated 14.2.2000, respondent K.S. Raju
  submitted his resignation in September, 2000, which clearly
F reflects that the same was done in order to save himself and
  his company, from making the repayment directed to be made
  by the CLB, and thereby dishonestly made attempt in not
  making repayment to the depositor E. Bapanaiah.
         17. Sub-section (4) of Section 12 of the Contempt of
G Courts Act, 1971 provides that 'where the person found guilty
  of contempt of court in respect of any undertaking given to a
  court is a company, every person w~o, at the time the contempt
  was committed, was in charge of, and was responsible to, the
  company for the conduct of business of the company, as well
H
          E. BAPANAIAH v. SRI K.S. RAJU ETC.                   1423
                  [PRAFULLAC. PANT, J.]

as the company, shall be deemed to be guilty of the contempt A
and the punishment may be enforced, with the leave of the
court, by the detention in civil prison of each of such person'. It
further provides that 'nothing contained in this sub-section shall
render any such person liable to such punishment if he proves
that the contempt was committed without his knowledge or B
that he exercised all due diligence to prevent its commission'.
      18. It is not the case of respondent K.S. Raju, Promoter
Director, who gave undertaking that he had no knowledge of
the order of the CLB, or that he made any attempt to prevent
the disobedience of the order.                                 C
     19. Though it is contended by Mr. C.A. Sundaram, learned
senior counsel for K. S. Raju that liability to make repayment to
the depositors stood transferred to MFSL with whom NFL
entered into an agreement after the order dated 29.2.2000
passed, but copy of the order dated 19.9.2000 passed by the 0
CLB (Annexure P-4) on the record discloses that the liability
continued with K.S. Raju and group of his companies, as
 mentioned in direction No. 2 of the order which reads as
 under:-
                                                                  E
           "Heard Shri C.R. Murali, Practising Chartered
      Accountant and Authorized representative of the
      company as well as Shri L. \/. \/. Iyer; Director of the
      company. The company has made payment of Rs. 73
      lakhs to the depositors between 17. 7. 2000 and F
      19.9.2000. The company has considered all the 430
      hardship cases; attended to complaints to nine
      depositors received at the Bench Office and disposed
      of 1424 complaints received at his office. by taking
      appropriate action as per the Scheme approved by the G
      CLB. According to Shri Iyer; the company finds it difficult
      to make payment to the depositors in accordance with
      the scheme of account of the poor rate of recovery of
      receivables and for want of the required additional
       expertise and infrastructure for recovery of the monies . H
1424    SUPREME COURT REPORTS                 [2014) 13 S.C.R.

 A      due to the company Hence, the management of the
        company has entered into a strategic alliance with Mis.
        Mahalakshmi Factoring Services Limited, Bombay
        (MFSL), which would provide necessary infrastructure
       and skills to accelerate the process of realization of the
 B     receivables to make repayment to the depositors.
       Accordingly, additional professionals have been
       inducted into the Board of the Company to strengthen
       the recovery and disbursement mechanism. MFSL has
       agreed to resume the responsibility in realizing the dues
c      of the company MFSL is involved in the management
       of the company, Shri N. Selvaraju, President of the
       Company and Shri.C. Muthuswamy, Director of MFSL
       have filed affidavits undertaking to discharge the
       obligations towards the depositors in terms of the
D      scheme approved by the CLB;
                Taking into consideration the facts and
       circumstances of the case, submissions made on behalf
       of the company, it is ordered as under: -
            1. The Company sha/1-
E
               i.   make payment to the depositors in every
                    category as per the Scheme approved by
                    the CLB;
               ii. furnish additional particulars of the cases
F                   where payments are due to the depositors
                    and the actual payment made by the
                    company in such cases;
               iii. attend to the complaints of nine depositors
                    received at the bench office and report
G                   compliance;
            2. The affidavits filed by :
               a)    Shri K. S. Raju, Promoter Director of the
                     Company;
H
        E. BAPANAIAH v. SRI K.S. RAJU ETC.                    1425
                [PRAFULLAC. PANT, J,]

           b)    Mis. New India Finance Ltd.                  A
           c)    Mis. Chinnar Securities Pvt. Ltd.
           d)    Mis. Nagarjuna Housing Development
                 Finance Ltd.
           e)    Mis. Nagarjuna Engineering              & B
                 Construction Co. Pvt. Ltd.
           O     Mis. Nagarjuna Holdings Private Limited
           g) · Mis. Paschim Holdings Pvt. Ltd.
           h)    Mis. K. S. Raju Associates & Holdings Pvt.    C
                 Ltd.
           i)    Mis. Corporate Securities & Holdings Pvt.
                 Ltd.
           j)    Mis. K.S. Raju Associates and Estates
                 Pvt. Ltd.                             D
           k)    Mis. K.R.R. Holdings Pvt. Ltd; and
           I)    Shri Sridhar Chari, Managing Director of
                 the company assuring repayment of
                 deposits by the company as per the E
                 scheme approved by the CLB shat.I
                 remain in force till discharging the
                 obligations in terms of the order dated
                 29.2.2000ofthe CLB.
          3. The arrangements made between the company F
    and MFSL shall not be of any consequence in relation
    to the repayment schedule approved by the CLB. The
    company, its promoter Director and Group Holding
    Companies shall continue to be responsible for due
    compliance of the order stated supra.                G
          4. The progress made in implementation of the
    scheme will be reviewed on 14.11.2000at10.30p.m."
   20. When an application under Section 634A of the
Companies Act, 1956 was moved by the present appellant
                                                                H
1426         SUPREME COURT REPORTS                     (2014] 13 S.C.R.


 A before the CLB, the Board, by speaking order dated
       21.8.2001, after considering rival submissions, observed in
       paragraphs 6 and 7 as under: -
            "6. In regard to the plea of Shri Murali that the provisions
            of Section 634A cannot be invoked by the applicant, it
 B          may be observed that this Section is explicit which runs
            as follows:
                  Sec. 634A: Any order made by the Company Law
                  Board may be enforced by that Board in the same
                  manner as if it were a decree made by a Court in a
 c                suit pending therein, and it shall be lawful for that
                  Board to send, in the case of its inability to execute
                  such order, to the Cowt within the local limits of whose
                 jurisdiction, -

D                (a)   in the case of an order against a company, the
                       registered office of the company is situated, or
                 (b)   in the case of an order against any other
                       person, the person concerned voluntarily
                       resides, or carries on business or personally
E                      works for gain.
           Section 634A is clear that as in the case of a court, the
           orders of the Company Law Board can be enforced by
           it in the same manner as if it were a decree made by a
           court. This section further permits the CLB, in case of
F          its liability to execute the order, to seek the assistance
           of the court having competent jurisdiction for execution
           of its order. In view of this there is no force in the
           argument of Shri Murali.
            7. Taking into consideration the facts and
G          circumstances of the case, the opportunity afforded to
           the Company and the legal position stated hereinabove,
           I hereby order that the Company shall pay 30 per cent
           of the deposit amount together with interest at the
           contracted rate upto the date of maturity and thereafter
H
         E. BAPANAIAH v. SRI K.S. RAJU ETC.                   1427
               [PRAFULLAC. PANT, J.]

    till the date of payment at the rate of 14.5 percent within A
    30 days of receipt of this order, failing which the
    applicant is at liberty to move the Court, within whose
    jurisdiction the registered office of the Company is
     situated to execute the order of the CLB."
      21. The above order appears to have been challenged B
in Company Appeal Nos. 7 & 9 of 2001 by both the parties -
depositor E. Bapanaiah and NFL, respectively. Both these
company appeals were heard and disposed of by order dated
 3.1.2002 by the High Court. The concluding paragraphs of
 the common order passed by the High Court in the Company C
 Appeals, are quoted below: -
           "In the circumstances, the submission of the learned
     counsel for the respondent company that it is entitled to
     wait till the month of April 2002 cannot be accepted and D
     the respondent company is therefore bound to make the
     payments every month as per the clause 11 (f) read with
     clause 12 (iv) of the scheme.
             Coming to the second submission made by the
      learned counsel for the respondent company, though 1. E
      do not propose to go into the larger question whether
      the nature of the power exercised under Section 634A
      of the Companies Act is in the nature of the power
      exercised as an executing court, but I must say the
      impugned order is not in conformity with the original order F
       of the Company Law Board dated 29th February, 2000.
       But, a combined reading of clause 1(i) and 12(iv) of the
       scheme, the respondent company is bound to pay 30%
       of the amount due to the petitioner within 1 year from the
       date of the maturity (28.4.2001) spread over 12 equal G
       monthly instalments.
             Coming to the submission made by the learned
      counsel for the depositor, I do not see any reason why he
      should have any grievance against the impugned order.
      It is open for him as indicated by the Company Law Board      H
1428           SUPREME COURT REPORTS                 [2014] 13 S.C.R.


    A        in the impugned order to move the appropriate court for
             the execution of the order of the Company Law Board
             dated 29th February 2000.
                   In the circumstances, both the company appeals
             are dismissed."
B
             22. However, after above order was passed by the High
        Court, a proviso is added by Legislature to Section 634A of
        the Companies Act; 1956, which reads as under:-
             "Provided that the provision of this section shall not
c            apply on and after commencement of the Companies
             (Second Amendment) Act, 2002."
      · As such, on the date (3.8.2007) order passed by learned
  single Judge, the deposit9r had no option of getting executed
  the order of CLB as a decree passed in a suit, and present
O appellant could not have been asked to avail remedy under
  Section 634Aof the Companies Act.
        23. No doubt, a company which defaults in repayment of
  deposit can be dealt with as per provisions contained in sub-
  sections (9) and (10) of Section 58A of the Companies Act,
E 1956, which read as under:-.
            "(9) Where a company has failed to repay any deposit
            or part thereof in .accordance with the terms and
            conditions of such deposit the Tribunal may, if it is-
            satisfied, either on its own motion or on the application
F           of the depositor, that it is necessary so to do to
            safeguard the interests of the company, the depositors
            or in the public interest direct, by order, the company to
            make repayment of such deposit orpart thereof forthwith
            or within such time and subject to such conditions as
G           may be specified in the order:
                 Provided that the Tribunal may before making any
            order under this sub-section give a reasonable
            opportunity of being hf}ard to the company and the other
           ·persons interested in the matter.
H
          E. BAPANAIAH v. SRI K.S. RAJU ETC.                  1429
                [PRAFULLAC. PANT, J.]

     (10) Whoever fails to comply with any order made by A
     the Tribunal under sub-section (9) shall be punishable
     with imprisonment which may extend to three years and
     shall also be liable to a fine of not less than rupees five
     hundred for every day during which such non-
     compliance continues."                                      B
(Expression 'Tribunal" Wa$ substituted in the above mentioned .
provisions vide Act No. 11 of 2003 in place of words "Company
Law Board")
      24. During arguments it is stated before us by the learned
counsel for the parties that the prosecution was also launched C
against the respondent K.S. Raju but he was discharged.
However, Special Leave Petition is said to have been pending
in said matter. We are of the view that the depositors cannot
be left without remedy merely for the reason that prosecution
could have been launched against the company.                    D
      25. Powers of the High Courts to punish for contempt
including the powers to punish for contempt of itself flow from
Article 215 of the Constitution of India. Section 10 of the
Contempt of Courts Act, 1971 empowers the High Courts to E
punish contempts of its subordinate courts which reads as
under:-
      "10. Power of High Court to punish contempts of
      subordinate courts. - Every High Court shall have and
      exercise the same jurisdiction, powers and authority, in F
      accordance with the same procedure and practice, in
      respect of contempts of courts subordinate to it as it
      has and exercises in respect of contempts of itself:
            Provided that no High Court shall take cognizance
      of a contempt alleged to have been committed in G
      respect of a court subordinate to it where such contempt
      is an offence punishable under the Indian Penal Code
      (45of1860)."

                                                                  H
1430         SUPREME COURT REPORTS                 [2014] 13 S.C.R.


 A      26. As to the question whether CLB is a court subordinate
   to High Court or not, in Canara Bank v. Nuclear Power·
   Corporation of India Ltd. and others 1, this Court has held
  that CLB in·the proceedings before it under Section 111 of the
  Companies Act since performs curial functions, hence it is a
B "court" within the meaning of Section 9-Aof Special Court (Trial
  pf Offences Relating to Transactions in Securities) Act, 1992.
  In Sk. Mohammedbhikhan Hussainbhai v. The Manager
  Chandrabhanu Cinema 2 , the Gujarat High Court has taken
  the view that if the High Court is an appellate court of some
c authority under a statute, such authority can be deemed to be
  a subordinate court within the ambit of Contempt of Courts
  Act, 1971 and, therefore, the High Court can exercise powers
  of dealing with contempt of such authority provided the act of
  contempt was not punishable for offences under Indian. Penal
D Code. In N. Venkata Swamy Naidu v. Sri Surya Teja
  Constructions Pvt. Ltd. and others 3, High Court of Andhra
  Pradesh observed as under: -
            "28. Under Section 1OF of the Companies Act 1956,
           any person aggrieved by any decision or order of the
E          Company Law Board may file an appeal to the High
           Court, within sixty days from the date of communication
           of the decision or order of the Company Law Board, on
           any question of law arising out of such an order. The
           Company Law Board is thus judicially subordinate to
F          the High Court and, even if its administrative control is
           held not to vest in the High Court under Article 235 of
           the Constitution of India, it would nonetheless be a Court
           subordinate to the High Court under Section 1Oof the
           Contempt of Courts Act."
G         27. The present case relates to a civil contempt wherein
     an undertaking given to Company Law Board is breached.
     Normally, the general provisions made under the Contempt of
     1
       1975 Supp (3) sec 81
     2
       AIR 1986 Guj 209
H    3
       2008 CriLJ 227
            •


           E. BAPANAIAH v. SRI K.S. RAJU ETC.                       1431
                 [PRAFULLAC. PANT, J.]

Courts Act are not invoked by the High Courts for forcing a         A
party to obey orders passed by its subordinate courts for the
simple reason that there are provisions contained in Code of
Civil Procedure, 1908 to get executed its orders and decrees.
It is settled principle of law that vyhere there are special law
and general law, the provisions of special law would prevail         B
over general law. As such, in normal circumstances a decree
holder cannot take recourse of Contempt of Courts Act else it
is sure to throw open a floodgate of litigation under contempt
jurisdiction. It is not the object !Jf the Contempt of Courts Act
to make decree holders rush to the High Courts simply for the        C
reason that the decree passed by the subordinate court is not
obeyed. However, there is no such procedure prescribed to
execute order of CLB particularly after proviso is added to
 Section 634A of the Companies Act. 1956, vide Companies
 (SecondAmendment)Act, 2002.                                         D
       28. Therefore, having considered submissions of learned
counsel for the parties, and material on record, and further
considering the relevant provisions of law and the cases
referred above, and exercising powers under Article 136 read
with Article 142 of the Constitution, we think it just and proper    E
to interfere with the order passed by the Division Bench of the
High Court whereby the Division Bench erroneously set aside
the finding and sentence awarded by the learned single Judge
against K.S. Raju. In our opinion, respondent K.S. Raju wilfully
disobeyed the order of CLB and breached the undertaking              F
given to CLB, and thereby committed Contempt of Court
subordinate to High Court as such the Division Bench of the
High Court has erred in law in allowing the Contempt Appeal
No. 3 of 2007 filed by K.S. Raju and setting aside his conviction
and sentence, recorded against him by the learned Single             G
Judge in Contempt Case No. 915 of 2002.
       29. For the reasons, as discussed above, we allow the
present appeal filed against respondent K.S. Raju, and set
aside the impugned order of the Division Bench of High Court.
Accordingly, order dated 3.8.2007, passed in Contempt Case           H
                                                        •

1432          SUPREME COURT REPORTS              [2014] 13 S.C.R.


 A No. 915 of 2002, to the extent of conviction and sentence
   recorded against K.S. Raju (respondent) stands restored.
   However, exercising powers under Article 142 of the
   Constitution of India, to do complete justice between the
   parties, we allow sixty days ti[T1e to respondent K.S. Raju, with
 B effect from pronouncement of this judgment to repay the entire
   amount to the depositor/appellant as directed by CLB, and if
   within the said period of sixty days payment is not made to the
   depositor/appellant, respondent K.S. Raju shall be taken into
                                              '
   custody to serve out sentence .as recorded    against him by the
 c learned Single Judge vide order dated 3.8.2007 in Contempt
   Case No. 915 of 2002. If the amount is paid to the present
   appellant as directed by this Court within sixty days, the
   sentence shall be reduced to the extent of fine only. Rest of
   the appeals filed by the depositor in respect of all other
 D directors, who were not impleaded by name before the High
   Court in the contempt Case No. 915 of 2002, and acquitted
   by the impugned order passed by Division Bench of High
   Court, are dismissed.


       Bibhuti Bhushan Bose                       Appeals disposed of.