P.K. SINGHversusM/S. S.N. KANUNGO AND OTHERS

                        [2010] 2 S.C.R. 1040


A                            P.K. SINGH
                                  v.
                M/S. S.N. KANUNGO AND OTHERS
                  (Civil Appeal No. 6551 of 2002)
                        FEBRUARY 18, 2010
8
          [J.M. PANCHAL AND DR. B.S. CHAUHAN, JJ.]

          Contempt of Courts Act, 1971:
          s. 14 - Contempt petition alleging wilful and deliberate
C violation of judgment of High Court - In an appeal arising out
     of a contract, High Court directing the Department to pay ,
     decretal amount to the contractor, along with interest - Officer
     concerned writing to contractor for settlement as regart:Js
      .                                                            ,
   · interest component - High Court holding the officer concerned
D · guilty of contempt of court and while accepting unconditional
     apology, imposing cost on him - HELD: Order 21, r. 2 CPC
     relates to the payment of amount to a decree-holder out of .
     court - An agreement, which extinguishes· the decree as sucll
     in whole or in part and results in the satisfaction of the decree
E in respect of the particular relief or relieves granted by the
     decree, is an 'adjustment' within the meaning of r.2 - It is open
     to the parties to enter into a contract or compromise with
     reference to their rights under the decree - Adjustment is not
     the same as satisfaction of the decree but is some method
F of settling decree which is not provided for in the decree itself
     - ·The right of the judgment-debtor to make an attempt to
  . adjust the decree is independent and cannot be treated as
     contempt of court - Having regard to the interest of the
   . department, the officer concerned had addressed letters to the
G . contractor to adjust the award - The letters for adjustment of
     award could not have been treated as contempt of court within
     the meaning of the provisions of the Act - The tenor of letters
     do not indicate that there was any willful disobedience on the
   · part of the officer in not complying with the judgment of the
H                                1040
         P.K. SINGH v. S.N. KANUNGO AND ORS.                   1041


   High Court - The error of law committed by High Court is that        A
 · without answering the question whether violation of the
  judgment amounts to contempt of court, it presumed that
   violation of the judgment amounts to contempt of court, and
   proceeded to examine the question whether violation of the
  judgment was willful or deliberate - After reaching the               B
   conclusion that the violation is neither willful nor deliberate,
   the High Court should have at once dropped the contempt
   proceedings and could not have accepted the unconditional
   apology tendered by the officer nor could have imposed cost
   on him - Further, the High Court itself came to the conclusion       c
   that a Jetter being written by the officer would not amount to
   willful and deliberate disobedience of the decree of the court
   - In any view of the matter, the High Court, after accepting
   the unconditional apology tendered by the officer, should not
   have imposed cost on him - On the facts and in the                   D
. circumstances of the case, the judgment impugned cannot
   be sustained and is set aside - Code of Civil Procedure, 1908
   - Or. 21, r.2. [Para 7 and 10]
     CIVIL APPELLATE JURISDICTION : Civil Appeal No.
 6551 of 2002.                                                          E
     From the Judgment & Order dated 9.4.2001 of the High
 Court of Calcutta, Circuit Bench at Port Blair in contempt
 Application No. 1O of 2001.
     Jayasree Singh, Swati Sinha, Fox Mandal & Co., for the
                                                                        F
 Appellant.
      Jena Kalyan Das for the Respondents.
      The Order of the Court was delivered
                               ORDER                                    G
       The instant appeal is directed against the judgment dated
  April 9, 2001 rendered by the High Court at Calcutta in
  Contempt Application No. 010 of 2001 by which the appellant
  is held guilty of contempt of court and is directed to pay the cost
. of the application to the respondent which is assessed at 200         H
    1042    SUPREME COURT REPORTS                   [2010) 2 S.C.R.


A GMs.
         2. From the record of the case it is evident that a contract
    was entered into between the respondent-contractor and the
    Andaman and Nicobar Administration through Union of India
    for execution of the work of extension of runway by 1542 meters
B (5000 ft.) at Port Blair Airport on 29.12.1995. During the course
    of the execution of the said contract, dispute arose between
    the parties regarding payments of bills. The dispute was
    referred to sole arbitration of Mr. O.P. Goel. The arbitrator made
    his Award on March 22, 1999 and directed the Andaman and
C Nicobar Administration to pay to the respondent a sum of
  · Rs.2,81,83,305/- (Rupees two crores eighty one lacs, eighty
    three thousand, three hundred and five only) with 12% interest
    per annum from the date of withholding of the amount of
    Rs.41,42,000/- (Rupees forty one lacs forty two thousand only)
D till the date of payment.
        3. Feeling aggrieved, the Union of India, through the
  Exe·cutive Engineer, Andaman and Nicobar Public Works
  Department, filed an application under Section 34 of the
  Arbitration and Conciliation Act, 1996 on 17th June, 1999 for
E setting aside the Award. By judgment dated 29.9.2000 the
  learned District Judge, Andaman and Nicobar Island, Port Blair,
  dismissed the application with cost of Rs.500/-. Thereupon,
  Union of India, through the Executive Engineer, preferred an
  appeal, i.e., FAT No. 4220 of 2001, before the High Court at
F Calcutta. The Division Bench of the High Court dismissed the
  appeal by judgment dated 26.2.2001. However, the High Court
  clarified that the claim No. 4 of the Award dated 22.3.1999
  would stai1d modified and the respondent-contractor would be
  entitled to interest @ 12% per annum from the date of reference
G of the dispute to arbitration till the date of payment of the said
  amount.
        4. Thereafter, the appellant, who is Executive Engineer,
  Construction Division II, APWD, South Andaman, addressed
  a letter to the Superintending Engineer, Construction Circle No.
H 1, Andaman Public Works Departme,nt, on 5.3.2001 giving
                                             \
       P.K. SINGH v. S.N. KANUNGO AND ORS.                   1043


details of the financial implication of the Award dated               A
22.3.1999. The appellant received a letter dated March 30,
2001 from the Executive Engineer (PLG), CE's Office, APWD,
 Port Blair stating that the principal component of the Award
 might be released to the agency, i.e., the respondent herein,
 immediately. The appellant thereupon wrote a letter dated            B
 30.3.2001 to the Chief Engineer, APWD requesting that the
 acceptance of the Award should be communicated with details
 re~rding amount/principal component to be paid. It was also
 mentioned in the-said letter that for delay, if any, in payment of
the amount, he would not be responsible. The appellant                c. -
thereafter addressed another letter on the same day to the
 respondent requesting it to intimate its acceptance of the Award
 amount to Rs.2,81,83,305/- in full and final settlement of its
 claim. The respondent thereupon replied by a letter dated
 30.3.2001 to the appellant that it was not willing to accept the
                                                                      0
amount statPd in the aforesaid letter. The appellant, therefore,
wrote another letter on 30.3.2001 to the respondent informing
that the principal component of the Award of Rs.2,81,83,305/-
would be released on the same day and requested the
respondent to reconcile with the appellant for mutual
understanding about payment of interest. The respondent wrote         E
a letter to the appellant on March 31, 2001 mentioning that it
was willing to accept the principal amount of the Award "at
present" but the remaining amdunt of the interest etc. should
be released within a fortnight. Thereupon, the appellant
addressed a letter dated 2.4.2001 to the Chief Engineer,              F
APWD, Port Blair, forwarding a copy of the letter received by
him from the respondent and pointed out that the respondent
was unwilling to accept the amount of the Awa(d without
interest. The appellant addressed another letter dated 2.4.2001
to the Chief Engineer informing him about the changed stand           G
of the respondent regarding its willingness to accept the
principal component of the Award and requested him to
communicate the decision regarding payment of interest
without further delay.
     5. The respondent filed Contempt Application No. 010 of          H
     1044    SUPREME COURT REPORTS                   [2010] 2 S.C.R.


A    2001 in the month of April, 2001 under Section 14 of the
     Contempt of Courts Act, 1971 complaining about willful and
     deliberate violation of the judgment and decree dated February
     26, 2001 passed in First Appeal T. No. 4220 of 2001. The High
     Court issued notice to the respondent. On notice being served,
s    the appellant filed a reply denying that there was willful and
     deliberate breach of the decree passed by the court. By
     impugned judgment the Division Bench of the High Court at
     Calcutta, Circuit Bench at Port Blair, found the respondent guilty
     of contempt of court and while accepting the unconditional
,c   apology of the appellant, imposed cost of 200 GMs upc:in him
     to be paid within a week. This judgment has given rise to the
     instant appeal.
       6. This Court has heard the learned counsel for the
  appellant and considered the documents forming part of the
D instant appeal.
          7. From the facts mentioned above, it is evident that, after
     Award of the arbitrator was confirmed by Division Bench of the
     Calcutta High Court, the appellant had made an attempt to
     adjust the decree in terms of Order XX.I Rule 2 of Code of Civil
E    Procedure by requesting the respondent to accept the principal
     amount and waive the interest awarded thereon. The contents
     of the two letters written by the appellant to the respondent do
     not show that any attempt was made by the appellant to sit in
     appeal over the judgment of the High Court. Those two letters
F    do not indicate that the appellant had criticized the High Court
     for awarding interest in favour of the respondent. The record
     would indicate that within the framework of law, the appellant
     had mctde an attempt to persuade the respondent to forego
     claim relating to interest. Order XXI Rule 2 of Code of Civil
G    Procedure relates to the payment of amount to a decree holder
     out of court and inter alia provides that when any wrong
     payment under a decree of any other kind is paid out of court
     to the decree holder, the decree holder has to certify payment ·
     made as required by the said Rule. An agreement, which
H    extinguishes the decree as such in whole or in part and re;:,u:ts
         P.K. SINGH v. S.N. KANUNGO AND ORS.                   1045


   in the satisfaction of the decree in respect of the particular relief A
   or reliefs granted by the decree, is an 'adjustment' within the·
   meaning of this Rule. It is open to the parties to enter into a
   contract or compromise with reference to their rights under the
   decree. If the contract or the compromise amounts to an
   'adjustment' of the decree, it must be recorded under this Rule B
   and unless so recorded cannot be recognized by the executing
   court. Adjustment is not the same as satisfaction of the decree
   but is some method of settling decree which is not provided
   for in the decree itself. The right of the judgment debtor to make
  an attempt to adjust the decree is independent and cannot be c
  treated as contempt of court. Having regard to the interest of
  the department concerned, the appellant had addressed letters
  to the ;,respondent to adjust the Award. The letters for
 ·~djustment of Award could not have been treated as contempt
  of cou~f within the meaning of the provisions of the Contempt D
   of Courts Act, 1971. The tenor letters do not indicate that there
   was any willful disobedience on the part of the appellant ih not
  ;bomplying with the judgment of the High Court.
 ,      8. Even if it is assumed for. the sake of argument that
 1
  writing of the letter dated 30.3.2001 amounts to contempt, this       E
  Court finds that the two letters dated 30.3.2001 and 2.4:2001
1 addressed by the appellant to the Chief Engineer, APWD, Port
  Blair, indicate that the appellant had taken all possible steps
  to comply with the Award confirmed by the High Court.
  According to the High Court, asking the respondent to accept          F
  only the principal amount vide letter dated 30.3.2001 amounts
  to violation of the judgment of the High Court. Having held so,
  the High Court prpceeded to examine the question whether the
  violation of judgment of the High Court would amount to the
  con1empt of court. The High Court also considered the question        G
  whether violation of judgment by the appellant was willful and
  deliberate. The High Court noticed that after addressing letter
  dated 30:3.2001, another letter on the same day was
  addressed by ·th.e appellant inviting the respondent for
  negotiation with reference to the rate of interest payable to the
                                                                        H

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    1046     SUPREME COURT REPORTS                   (2010] 2 S.C.R.

A respondent and concluded that even if previous letter amounted
  to violation of the judgment of the court, the appellant did not
  do so willfully and deliberately. Though the High Court ostensibly
  proceeded to examine the question whether violation of the
  judgment of the High Court would amount to contempt of court,
B the said question is neither determined nor answered one way
  or the other. The error of law committed by the High Court is
  that without answering the question whether the violation of the
  judgment amounts to the contempt of court, the High Court
  presumed that the violation of the judgment amounts to
c contempt of court and proceeded to examine the question
  whether the violation of judgment was willful or deliberate. After
  reaching the conclusion that the violation is neither willful nor
  deliberate, the High Court should have at once dropped the
  contempt proceedings and could not have accepted the
  unconditional apology tendered by the appellant nor could have /
0
  imposed cost on the appellant. In any view of the matter, the
  High Court, after accepting the unconditional apology tendered
  by the appellant, should not have imposed cost on the appellant
  for negligence and reckless manner in which it had allegedly
  acted in the instant case.
E
       9. Further, the High Court itself came to the conclusion that
  a letter being written by the Executive Engineer would not
  amount to willful and deliberate disobedience of the decree of
  the court.
F         10. On the facts and in the circumstances of the case, this
    Court is of the opinion that the judgment impugned cannot be
    sustained and is liable to be set aside.
          11. For the foregoing reasons, the appeal succeeds. The
G impugned judgment is set aside. The cost, if any, recovered
  from the appellant be refunded to him. The appeal stands,
  accordingly, disposed of.
          12. There shall be no order as to costs.

H   RP.                                        Appeal disposed of.