COLLECTOR OF CENTRAL EXCISE Vs. GTC INDUSTRIES LIMITED

JUDGEMENT

(1.) IN THIS CONTEMPT PETITION FILED BY THE COLLECTORS OF CENTRAL EXCISE AT MUMBAIAND VADODRA, IT IS PRAYED THAT APPROPRIATE ACTION UNDER THE CONTEMPT OF COURTS ACT, 1971 BE INITIATED AND TAKEN BY THIS COURT IN VIEW OF THE " ALLEGED BREACH OF UNDERTAKING DATED 21.2.1995 AND THE ALLEGED WILFUL DISOBEDIENCE OF THE ORDER OF THIS COURT DATED 26.5.1997 ON THE PART OF THE RESPONDENT NOS. 1 TO 4 (ALLEGED CONTEMNERS). THE RESPONDENT NO. 5 WHO WAS EARLIER ARRAYED AS A PARTY WAS DELETED BY VIRTUE OF THE ORDER DATED 10.3.1998.

(2.) IT IS ALLEGED THAT THE RESPONDENTS WILFULLY DISOBEYED THE ORDER OF THIS COURT DATED 26.5.1997 AS WELL AS WILFULLY BREACHED THE UNDERTAKING GIVEN TO THE COURT ON 21.2.1995 INASMUCH AS A BANK GUARANTEE TO THE TUNE OF RS. 7 CRORES (BEING BANK GUARANTEE NO. 7/1995 ISSUED BY PUNJAB AND SIND BANK) WAS NOT KEPT ALIVE AND, THEREFORE, COULD NOT BE ENCASHED. IT IS FURTHER ALLEGED THAT EVEN THE DIRECTION OF THE COURT FOR DEPOSIT OF THE AMOUNT OF RS. 7 CRORES GIVEN IN THE ORDER DATED 26.5.1997 HAS NOT BEEN COMPLIED WITH BY THE RESPONDENTS. ACCORDING TO THE PETITIONERS A CLEAR CASE OF CIVIL CONTEMPT UNDER SECTION 2(B) OF THE CONTEMPT OF COURTS ACT, 1971 HAS BEEN MADE OUT AND, ACCORDINGLY, THE RESPONDENTS ARE LIABLE TO BE PUNISHED UNDER SECTION 12 OF THE SAID ACT.

(3.) ON THE OTHER HAND, THE RESPONDENTS CONTEND THAT THE UNDERTAKING DATED 21.2.1995 AND THE ORDER DATED 25.4.1997 STOOD MODIFIED BY THE SUBSEQUENT ORDER OF THIS COURT DATED 26.5.1997 AND, THEREFORE, INSOFAR AS THE QUESTION OF BREACH OF UNDERTAKING DATED 21.2.1995 IS CONCERNED THAT ISSUE IS NO LONGER ALIVE AND HAS BEEN WASHED AWAY BY THE SUBSEQUENT ORDER OF THIS COURT PASSED ON 26.5.1997. INSOFAR AS THE COMPLIANCE WITH THE DIRECTIONS CONTAINED IN THE ORDER DATED 26.5.1997 IS CONCERNED THE RESPONDENTS CONTEND THAT THE DIRECTION TO DEPOSIT THE AMOUNT OF RS. 7 CRORES COULD NOT BE COMPLIED WITH DESPITE THEIR BEST EFFORTS AS, IN THE MEANWHILE, THE RESPONDENT NO. 1 COMPANY HAD BECOME A SICK COMPANY AND PROCEEDINGS IN RESPECT THEREOF UNDER THE SICK INDUSTRIAL COMPANIES (SPECIAL PROVISIONS) ACT, 1985 (HEREINAFTER REFERRED TO AS "SICA" WERE PENDING BEFORE THE BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION (HEREINAFTER REFERRED TO AS "BIFR") AND THAT THE BIFR HAD EVEN PASSED AN ORDER ON 3.4.1997 WHEREBY THE RESPONDENT NO. 1 WAS DECLARED TO BE A SICK COMPANY AND A DIRECTION WAS MADE THAT THE RESPONDENT NO. 1 SHALL NOT ALIENATE ANY ASSETS IN TERMS OF SECTION 22A OF SICA. THUS, ACCORDING TO THE RESPONDENTS, THERE WAS NO WILFUL DISOBEDIENCE OF ANY ORDER OF THIS COURT AND PARTICULARLY THE ORDER DATED 26.5.1997 AND SUBSEQUENT ORDERS. AS SUCH, IT WAS CONTENDED THAT NO CASE FOR CIVIL CONTEMPT WAS MADE OUT AND THE PETITION OUGHT TO BE DISMISSED AND THE RESPONDENTS OUGHT TO BE DISCHARGED. THIS, IN SHORT, IS THE ENTIRE SCOPE OF THE PRESENT CONTEMPT PETITION.