REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELALTE JURISDICTION

CIVIL APPEAL NOS. _7129-7130  OF 2008 (Arising out of SLP (C) Nos. 19378 – 19379 of 2008)

Tamilnad Mercantile Bank Share Holders Welfare Association …. Appellant

Versus

S.C. Sekar and others …. Respondents

J U D G M E N T

S.B. SINHA, J.

1. Leave granted.

2. Tamilnad  Mercantile  Bank  Ltd.  (for  short,  “the  Company”)  was

established  by  the  Nadar  Community.   It  is  incorporated  and  registered

under the Indian Companies Act, 1956.  It carries on banking business inter

alia in the State of Tamil Nadu.   

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Members of the Appellant-Association hold a large number of shares

in the company.  For one reason or the other its Annual General Meetings

could not be held for a number of years.  By reason of an order dated 14th

October,  2003,  the  Company  Law  Board  directed  that  Annual  General

Meetings for the years 1996 to 2003 be held.   Pursuant thereto meetings

were held and some Directors were elected.    

3. 24th December, 2004 was the date fixed for holding of 82nd Annual

General Meeting.  Appellant, however, filed a suit which was registered as

C.S.  No.981  of  2004  in  the  High  Court  of  Judicature  at  Madras  in  its

ordinary original civil jurisdiction.  Indisputably proceedings in contempt in

respect of an order relating to the said suit came up for consideration before

this Court in Civil Appeal No.3034 of 2006 and by an order dated 12th July,

2006 the matter was remitted to the High Court for consideration thereof

afresh, observing:-  

“In this view of the matter, we are of the opinion that  the  High  Court  cannot  be  said  to  have committed an error in holding that if a proceeding for  contempt  was  not  maintainable,  no  direction could have been issued therein.  We are, however, of the opinion that in view of the order passed by the Division Bench and also for the views we have taken, it is necessary to pass a consequential order, namely,  directing  the  learned  Single  Judge  to consider the matter afresh.  Learned Single Judge of  the  High  Court  is,  therefore,  requested  to

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consider  the  application  for  grant  of  injunction filed by the appellants  afresh on merits.   All the contentions  raised  by  the  parties  shall  remain open.  We may place on record the statement made before  us  by  Mr.  Salve,  learned  senior  counsel appearing on behalf of the appellants that the Bank and its Directors shall be impleaded as parties in the  Suit.   We  may  further  notice  that  learned counsel for the Bank and learned counsel for some of its Directors have been appearing in the matter throughout.  It may also be stated that some of the Directors  have  also  preferred  appeals  before  the Division  Bench.   Learned  counsel  appearing  on behalf of the Bank states that the Bank shall enter formal  appearance  in  the  Suit  and  file  written statement within two weeks.

Learned  Single  Judge  is  also  requested  to consider the desirability of disposing of the Suit as expeditiously as possible.  It would be open to the learned Single Judge to issue such direction(s) as may be found to be necessary as regards holding of  83rd Annual  General  Meeting  for  the  said purpose extend the time therefor. We may further place on record that by our order dated 11.5.2006 the time for holding 83rd Annual General Meeting was extended upto 30.7.2006.

In view of the order aforementioned, the said order need not be complied with.”

4. A notice convening 83rd Annual General Meeting on 27th July, 2006

was issued on 14th June, 2006.  

5. Before the  High Court  applications  being  OA Nos.  597 to  599 of

2006, praying for grant of injunction were filed in the said suit and by an

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order dated 26th July, 2006 a learned Single Judge of the High Court passed

an order of injunction, directing:--

" Till  such  time,  without  postponing  the meeting,  there  can  be  a  better  arrangement  to conduct the Annual General Meeting as scheduled on 27.7.2006 so far as the subject matters 1, 2 and 6  found  in  the  agenda  (by  show  of  hands)  are concerned and regarding the other subject matter Nos.3 to 5 found in the agenda, the General Body Meeting may be adjourned until further orders of the Court and to which meeting, fresh proxies may be  allowed  in  accordance  with  the  result  of  the enquiry  to  be  made  in  these  applications. Suppose,  the  proxies  of  GPA  holders  were  not allowed to participate in the election, then no fresh proxies  need be made.   There is  also no serious objection by anyone concerned (counsel).”

6. Pursuant to or in furtherance of the said direction a meeting was held

on 27th July, 2006.  However, three items of Agenda, being item Nos. 3, 4

and 5 stood adjourned.  Indisputably the said items of the Agenda read as

under:-

“3. To appoint a director in the place of Thiru P.H. Arvindh Pandian who retires by rotation and being eligible offers himself for reappointment.   4. To appoint a director in the place of Thiru A. Rajagopalan who retires by rotation..  

5. To appoint a director in the place of Thiru P. Prem Vetty who retires by rotation.”  

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7. Standard  Chartered  Bank,  Mumbai,  acting  as  an  agent  of  some of

their clients/investors filed applications for transfer of 95,418 (Ninety five

thousand  four  hundred  and eighteen)  shares.   A letter  dated  30th March,

2007 issued by the Reserve Bank of India relating thereto was also placed in

the meeting.  A Resolution was passed by the Board of Directors on 13th

May, 2007 resolving to transfer the said shares.    

8. In the meantime 85th Annual General Meeting also fell due.   

9. The  Bank  filed  OA No.23  of  2007  seeking  suitable  directions  as

regards  holding  of  the  84th Annual  General  Meeting.   It  was  inter  alia

averred that 84th Annual General Meeting cannot  be convened unless the

83rd Annual General Meeting is held in accordance with law.   

Referring  to  Sections  166  and  210  of  the  Companies  Act  it  was

contended that 84th Annual General Meeting of the Bank for the year 2006

should have been held on or before 20th September, 2006.  

The application (OA No.23 /2007) came up for consideration before a

learned Single of the High Court and by an order dated 27th March, 2008, it

was directed :-

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“1. That the Hon’ble Mr. Justice R. Balasubramaniam, Judge  (Retd)  High  Court,  Madras  residing  at No.157/17, Greenways Road, Chennai – 600 028 be and is hereby appointed to chair the 83rd, 84th and  85th Annual  General  Meetings  of  Tamilnad Merchantile Bank Ltd., Tuticorin.   

2. That  the  time  for  convening  83rd,  84th and  85th Annual General meeting shall stand extended upto 6th June, 2008.”

10. In the meantime another suit,  marked as C.S. No. 481 of 2008 was

filed  by the  appellant  questioning  the  transfer  of  aforementioned  shares.

One of the reliefs prayed for therein reads as under :-

“granting  permanent  injunction  restraining  the 10th-31st Defendants,  their  men,  agents,  servants and the nominees from exercising  any right as a shareholders of the 2nd Defendant in relation to the abovesaid shares.”

11. The question as to whether the said meeting could be postponed or

not came up for consideration before the learned Single Judge on 29th April,

2008, when it was directed :-

“2. In  the  meantime,  it  is  submitted  that  the Annual  General  Meeting is  scheduled to be held on 5.6.2008.  Taking into account the past history of  the  litigation,  I  do  not  propose  to  stall  the meeting.  Therefore, the Annual General Meeting shall go on.  However, any resolution passed in the

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Annual General Meeting shall not be implemented until further orders of this Court.

3. Registry is  directed to  list  the applications alongwith  C.S.  No.981  of  2004  on  9.6.2008 immediately after motion list.

4. It is  made clear that any matter relating to the  dispute  pertaining  to  the  convening  of  the Annual  General  Meeting  of  the  Bank,  shall  be dealt with only by this Court and not by ay other court.  The applicants shall take private notice to all the other respondents returnable by 9.6.2008”

12. Indisputably a meeting was held under the Chairmanship of Justice R.

Balasubramaniam  on  5th June,  2008.   Theretobefore,  he  met  all  the

shareholders who desired to make representations on the mode and manner

for conducting the Annual General Meeting on 1st June, 2008.  Appellant

did not submit any petition on that date.  It did so, however, at a later stage.   

13. Appellant  filed  an  O.A.  No.621 of  2008 in  C.S.  No.  481 of  2008

seeking  for  an  order  of  injunction  restraining  holding  of  election  of  the

Directors alone.  The matter was placed before the Court on 3rd June, 2008

when an adjournment was taken and the application was posted for 9th June,

2008.  In the meantime Annual General Meeting was held on 5th June, 2008.

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14. Appellant preferred an intra court appeal against the order dated 29th

April, 2008.  The Division Bench while observing that the order dated 29th

April, 2009 sufficiently protected the interest of the appellant, dismissed the

same.  

15. Some other  proceedings  were also initiated with  which we are not

concerned.

16. On or about 10th June, 2008 Contempt Petition, being C.P. No.508 of

2008 was filed.  Managing Director of the Bank, Shri G. Narayanamurthy,

was  alone  made  a  party-contemnor.   The  petition  was  filed  for  alleged

disobedience of the order of the learned Single Judge dated 26th July, 2006

passed in O.A. No. 597 to 599 of 2006.  In the said petition the following

prayer was made:-  

“to  punish the respondent  for the disobeying the orders  of  this  Hon’ble  Court  dated  26.7.2006  in O.A. No. 597 to  599 of 2006 in C.S. No.981 of 2004.”

An interim injunction  was also  prayed  for  therein,  which  reads  as

under:-

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“to declare the election of directors held at the 83rd, 84th and 85th Annual  General  Meeting as  null  and void  as  the  same is  contrary to  the orders  of  this Hon’ble Court dated 26th July, 2006 in O.A. No.597 of 2005 in C.S. No.981 of 2004”  

17. The contempt matter came up before another learned Single Judge of

the High Court.  As would be noticed hereinafter no disclosure was made in

the said proceeding as regards the orders passed by the learned Single Judge

in the applications filed from time to time as also other proceedings taken

by the parties.  However, the learned Single Judge passed an ad interim ex

parte injunction on 12th June, 2008 restraining the Managing Director of the

Company  Shri  G.  Narayanamurthy  from implementing  the  resolution  or

item of business in relation to the election of Directors passed at the Annual

General  Meetings  held  on  5th June,  2008  till  the  disposal  of  contempt

petition.   The matter was directed to be posted on 21st July, 2008.   

18. What is the nature of that order would be considered a little later as

there exists a dispute as to whether such an order can be said to be a final

order satisfying the definition of a ‘judgment’ or not.

19. Several proceedings were initiated by the respondents herein.  On or

about  24th June,  2008,  the   1st respondent  Shri  T.  Rajakumar  filed  an

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application in Civil Appeal arising out of SLP (C) No. 19379 of 2008 for

impleading himself as a party and for vacating the ex-parte interim order

dated 12th June, 2008 passed in the said contempt proceedings before the

learned Single Judge.  Shri G. Narayanamurthy, Managing Director of the

Bank, also filed an affidavit praying for vacation of ex-parte interim order.

On or about 26th June, 2008, Judges Summons in terms of Order XIV Rule 8

of the Original Side Rules of the High Court were also taken out by him for

vacating the ex-parte ad interim order dated 20th June, 2008.

20. It is stated that the matter was fixed for hearing on 21st July, 2008.

21. However,  Shri  T.  Rajakumar  withdrew  the  said  application  and

preferred an intra court appeal.  Shri S.C. Sekhar, who is also said to have

been elected in the said Annual General Meetings dated 5th June, 2008 also

preferred an intra court appeal.    

Both the appeals were preferred under Section 19(1) of the Contempt

of Courts Act, 1971.  A question as regards maintainability of said appeal

was raised.   

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A Division Bench of the High Court by reason of the impugned order

answered the same in the affirmative, stating:-

“ We have  gone  through  the said  provision. Prima facie  we  are  of  the  considered  view that only  when  some  orders  adversely  affecting  any person, who makes a claim that he is intending to prefer  an  appeal,  this  court  in  exercise  of  the power under the provisions to sub section (3) of Section 19 of the CC Act, 1971 may suspend such an  order.   We  have  found  that  the  contempt appellants are the persons aggrieved by the order of the learned Single Judge of this court and this court  has only on prima facie consideration held that the contempt appeals are maintainable and the rights of the respondents to canvas their arguments either in the contempt petition or in the contempt appeals are still open.  We therefore find that the order  holding  that  the  contempt  appeals  are maintainable does not in any way adversely affect the right of the second respondent.  Accordingly, the  submission  made by the  ld.  Counsel  for  the second  respondent  is  not  acceptable  and  the permission sought for is consequently rejected.”  

It is this order which is in question before us.

22. At the outset,  we may place on record that in the meantime in the

O.As. filed in C.S. 481 of 2006,  Ramasubramanian, J., passed an order on

23rd June, 2008, wherein it has been noticed:-

“8. Today, when the applications were taken up for hearing, Mr. V. Ramakrishnan, learned counsel

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for the plaintiffs, fairly submitted that without his knowledge  and  without  the  knowledge  of  the learned Senior Counsel leading him in the matter, the  plaintiffs  moved  a  Contempt  Petition  in Contempt Petition No. 508 of 2006.  In the said Contempt  Petition,  it  appears  that  notice  was ordered to the Managing Directors on 20.6.2008. Pending  Contempt  Petition,  an  interim  order  of injunction has also been passed in Sub Application No.163  of  2008,  on  20.6.2008,  restraining  the Managing  Director  from  implementing  the resolution  or  item  of  business  relation  to  the Election of the Directors of the Bank at the 83rd, 84th and  85th Annual  General  Meetings,  held  on 5.6.2008.  Mr. V. Ramakrishnan, learned counsel appearing  for  the  plaintiffs  himself  produced  a copy  of  the  interim  order  passed  in  the  Sub Application  in  the  Contempt  Petition  and submitted that this has happened behind his back and he felt  embarrassed and very sorry about  it. Therefore the learned counsel wanted to withdraw his appearance, since he did not wish to appear for such a party any more.”  

23. Despite  the  same the  learned  Judge  refused  to  adjourn  the  matter

stating :-

“ Under normal circumstances, I would have simply  adjourned  the  mater  to  another  date,  to enable the plaintiffs to engage a different counsel to make submission.  But my attention was dawn to the fact that Mr. R. Mathuselvam, President of the first plaintiff Association, who has verified the pleadings,  is  present  in  Court.   Therefore,  I questioned  him,  as  to  the  circumstances  under which a Contempt Petition was moved, contrary to the statement made at the Bar on 16.6.2008.  He

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submitted that the Contempt Petition was moved, on  the  basis  that  the  convening  of  the  Annual General  Meeting  was  in  violation  of  the  order passed on 26.7.2006, in O.A. Nos.  597, 598 and 599 of 2006 in C.S. No. 981 of 2004.”  

24. Taking notice of the earlier order of the court dated 26th July, 2006 in

terms whereof the erstwhile Directors were directed to continue in the office

and to maintain status quo until further orders of the court and furthermore

taking notice of the fact that in the meantime Annual General Meetings had

already been held wherein resolution had been passed electing the Directors

and that the appellants having failed to obtain any interim order either in the

present suit or in the previous suit  C.S. No.981 of 2004 and after having

allowed  the meetings  to  go  on,  the  first  plaintiff  has  adopted  a  dubious

method  of  moving  a  Contempt  Petition  and  getting  an  interim order  of

injunction on 20.6.2008 contrary to the statement made across the Bar on

16.6.2008 amounted to an abuse of the process of the Court, observed:-

“The  interim  injunction  which  the  first  plaintiff has now obtained on 20.6.2008 in the Contempt Petition  is  the  very  same  injunction  which  the plaintiffs have prayed for in the present suit  and failed  to  get.   Their  attempt  to  get  a  similar injunction  before  the  Division  Bench  and  the Surpeme Court have also failed.  It appears from the answer given by Mr. P. Muthuslevam that all these orders were not brought to the notice of the learned Judge hearing the Contempt Petition was

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suppressed  before  this  Court.   Thus  the  first plaintiff  has  clearly  taken  both  the  Courts  for  a ride.  Such a person is not entitled to the equitable relief of injunction.

14. The  plaintiffs  are  guilty  of  abuse  of  the process  of  law  and  guilty  of  Forum  Shopping. After  having failed to obtain an interim order of the  very  same  nature  from this  Court  and  after trying their luck before the Division Bench and the Supreme Court,  they  had  gone  before  the  other Court and obtained an interim order in a Contempt Petition.   In  the  Contempt  Petition,  the  first plaintiff herein does not appear to have mentioned anything about the new suit C.S. No. 481 of 2008 and  the  orders  passed  in  the  injunction applications.  Thus the first plaintiff is also guilty of  suppression  of  material  facts.   Under  such circumstances,  I  have  no  alternative,  except  to dismiss  all  these  applications  for  injunction. Hence  O.A.  Nos.  534,  536  and  621  are dismissed..”

25. It  was,  however,  made  clear  that  the  same  arrangement,  as  was

directed to be maintained by the court prior to 5th June, 2008 shall continue

till the sub-application in the contempt petition is disposed of.  

26. Indisputably intra  court  appeals  were  preferred  thereagainst  by the

appellant which were marked as O.S.A. Nos. 274 to 277 of 2008.    

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By an order dated 4th September,  2008, Prabha Sridevan, J. speaking

for the Division Bench dismissed the appeals upon noticing the proceedings

taken by the appellant, stating:-

“The  facts  extracted  above would  show that  the appellants  have  with  impunity  been  filing applications after applications for almost the same relief,  though  in  each,  the  prayer  is  somewhat differently  worded,  in  order  to  disguise  it  as  a different prayer.  More than one suit has been filed in this Court  and we are given to understand, in Courts elsewhere.  The appellants have not made out  a  prima  facie  case  for  grant  of  injunction. More than that, the conduct of the appellants, the suppression  of  facts  and  the  devious  methods adopted by them leave us without any doubt that the  appellants  are  not  entitled  to  the  grant  of injunction.  To grant an order of injunction merely because only one of the appellants had moved the contempt petition and not the other and therefore, the other appellant was entitled to a fair hearing is something that deserves to be rejected.  In fact, it may not be by chance but by design that only one of  the  appellants  chose  to  file  the  contempt petition and therefore, to grant any indulgence on this  score  would  be  indirectly  rewarding  the persons  who  have  come  to  court  with  unclean hands.  In the result, we hold that on the ground of prima  facie  case  and  on  grounds  of  equity,  the appellants  are  not  entitled  to  injunction  and therefore, the dismissal of the applications by the learned single Judge deserves to be confirmed.”   

27. Mr. T.R. Andhyarujina, learned senior counsel appearing on behalf of

the appellant has raised the following three principal contentions before us.  

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(i) An appeal under Section 19(1) of the Contempt of Courts Act,

1977  was  not  maintainable  against  an  ad  interim  order  of

injunction.

(ii) The ad interim order of injunction dated 20th June, 2008 does

not  satisfy the  test  of  a ‘judgment’  as  has been held by this

Court in  Shah Babulal Khimji  v.  Jayaben D. Kania, [ (1981) 4

SCC 8  ]  and  thus  the  Division  Bench  even  could  not  have

entertained an intra court appeal.

(iii) One  of  the  respondents  T.  Rajakumar  as  also  G.

Narayanamurthy, Managing Director of the Bank having filed

applications  for  vacation  of  the  order  dated  20th June,  2008

could  have  waited  for  the  outcome  thereof  and  intra  court

appeals preferred by respondents amounted to an abuse of the

process of the court.      

28. Mr. C.A. Sundaram,  Mr. Dushsyant Dave and Mr. L.N. Rao, learned

senior counsel appearing on behalf of S/Shri S.C. Sekar, T. Rajkumar and

G. Narayanamurthy, on the other hand, contended:-

(i) As  an  interim  order  of  injunction  was  obtained  upon

suppression of facts and as even the applications for vacating

the stay was not  being taken up for hearing immediately, an

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intra court appeal was maintainable both under Section 19(1) of

the Contempt of Courts Act, 1977 as also under Clause 15 of

the Letters Patent of the Madras High Court.

(ii) In view of the observations made by the learned Single Judge

also  the  Division  Bench  of  the  High  Court  in  the  main

proceedings, this Court should not interfere with the impugned

judgment  as  the  appellant  had  taken  recourse  to  Forum

Shopping.  

(iii) A direction  can be issued by a contempt court  only in three

situations, namely –  

a) to  stop  continuance  of  disobedience  of  the  orders  of  the

court ;  

b) some order to maintain status quo ; and

c) an order by way of restitution after arriving at a finding that

the alleged contemnor is guilty of contempt.

(iv) In any event,  the  appellant  being  guilty  of  the  abuse  of  the

process of the court, is not entitled to any equitable relief.

29. Appellant is an Association of shareholders of the Bank.  The first

suit filed by it involved the question as to whether the power of attorneys

executed by the share-holders were required to be registered or not.   

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The  suit  was  filed  at  a  point  of  time  when  83rd Annual  General

Meeting of the Bank was to be held.  In view of the orders of injunction

passed  by  the  learned  Single  of  the  Madras  High  Court,  admittedly  the

Annual General Meeting could not be held.  It is now not in dispute that in

terms of the order dated 26th July, 2006 the Annual General Meeting was

permitted to be held in respect of Item Nos. 1, 2 and 6 of the agenda.  Item

Nos.  3 to  5  of  the agenda related to  filling up of  the posts  of  Directors

caused as the Directors were to vacate their office.   

30. Indisputably  the  Annual  General  Meetings  could  not  be  held

continuously for three years for one reason or the other.   

Pursuant  to  the  order  of  the  learned  Single  Judge  dated  26th July,

2006, 83rd Annual General Meeting was held in respect of item Nos. 1, 2

and 6 and the same was adjourned in respect of agenda items i.e.  Nos. 3 to

5.  

31. Indisputably when an adjourned meeting was to be conducted, it must

be  for  the  adjourned  agenda,  i.e.,  item  Nos.  3  to  5.   Appellant  knew

thereabout.   It not only filed an application for injunction but also raised

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objections before the Chairman appointed by the Court in terms of the order

dated 27th March, 2008.  Reports of the Chairman show that consultative

process had been taken recourse to.   

32. Appellant  had  participated  in  the  election.   The  three  reports

submitted by the Chairman in sealed covers were read over and opened by

the learned Judge, copies whereof were also handed over to the parties.  It is

in that situation a limited order of injunction, namely that no effect to the

said Resolution be given, was passed on 29th April, 2008.

33. Although at one point of time contentions had been raised before us

that  election  had  not  been  held  as  the  adjourned  agenda  items were  not

taken  up  or  even  could  not  have  been  taken  up  in  83rd Annual  General

Meeting as it  was held simultaneously with 84th and 85th Annual General

Meetings, it is now clear from the records that election of the Directors had

in fact been held.  

34. Appellant sought for an injunction.  It moved an application before

the Vacation Bench but  the same was not  pressed.   However,  before the

matter  could  be  taken  up  for  hearing  on  9th June,  2008  a  petition  for

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initiation of proceedings for contempt of court for alleged disobedience of

the order of the learned Single Judge dated 26th July, 2006 was filed.   

35. The  chain  of  events  noticed  by  us  heretobefore  clearly  show  that

although in the subsequent orders it  was not expressly stated that it  is in

continuation of the earlier order dated 26th July, 2006, there cannot be any

doubt whatsoever that agenda item nos. 3 to 5 were allowed to be taken up

in the 83rd Annual General Meeting resulting in the election of the Directors.

36. The High Court evidently appointed Mr. Justice R. Balasubramaniam

to chair the meeting with a view to see that elections for the years 2004-

2005, 2005-2006 and 2006-2007 are conducted in accordance with law and

in a peaceful  manner.   Strangely enough the contempt petition was filed

against the Managing Director alone who had no role to play in the matter

of holding of the meeting.   

Allegations were, however, made against the Managing Director in

the said contempt petition in the following terms:-

“14. I state that in spite of receipt of the above said written intimation requesting the Chairman to conduct  the  Annual  General  Meeting  as  per  the directions of this  Hon’ble Court  dated 26.7.2006

20

the  election  of  Directors  was  conducted  at  the Annual General Meeting.

15. I state that the conduct of the Chairman of the bank to proceed with the election of Directors is contrary to the specific directions given in the order dated 26.7.08, since the above applications O.A. No. 597 – 599 of 2006 in C.S. No. 981 of 2004  are  pending  till  date  before  this  Hon’ble Court and the agendas referred to and adjourned in the  above  cited  order  cannot  be  taken  for considerations  at  the  Annual  General  Meeting without deciding the said pending.  

16. I state that in the above circumstances, the Chairman of the Bank has committed contempt of court  by  disobeying  the  orders  of  this  Hon’ble Court dated 2.6.7.2006 in O.A. No. 597 – 599 of 2006 in C.S. No. 081 of 2004 and is liable to be punished or contempt.”

The  prayer  made in  the  said  application  contained  in  the  affidavit

reads :-

“It is therefore prayed that this Hon’ble Court may be pleased to declare the election of directors held at the 83rd , 8th and 85th Annual General Meeting as null and void as the sasme is contrary to the orders of this Hon’ble Court dated 26.7.2006 in O.A. No. 597 of 2006 in C.S. No. 981 of 2004 and pass any orders or further orders as this Hon’ble Court may deem fit and proper in the facts and circumstances of the case and thus render justice.”

21

37. Action  of  the  court  was  not  sought  for  against  Mr.  Justice  R.

Balasubramaniam who  acted  as  an  officer  of  the  court.   The  Directors

representing  the  Reserve  Bank  of  India  were  not  made  parties  in  the

contempt petition.  Full  disclosure as regards the subsequent  proceedings

was not made therein.  The contempt petition was taken up by a learned

Judge who was not acquainted with the fact of the matter.   

The question is  as  to whether  in  such a situation the  purported ad

interim order passed by the learned Single Judge in contempt proceeding

should have been interfered with or not by the Division Bench.

38. Mr.  Andhyarujina  would  submit  that  T.  Rajkumar  and  S.C.  Sekar

being not a party to the contempt proceeding could not have maintained an

appeal.   This  argument,  if  accepted,  shall  lead  to  a  strange  situation.

Admittedly they were not parties to the suit.  They were elected during the

pendency  of  the  suit,  whether  legally  or  otherwise.   The  order  granting

injunction against the Managing Director had affected their valuable right.

They  were  elected  for  a  limited  period.   The  principle  of  corporate

democracy demands that the Bank functions through its elected Directors.

The endeavour on the part of the appellant had been to see that old Directors

22

may continue despite the expiry of their tenure.  When, however, day to day

affairs of the Bank were left at the hands of the Managing Director and the

two representatives of the Reserve Bank of India, an attempt was made to

see  that  the newly elected  Directors  do not  assume their  office.   In  this

attempt  the  appellant  has  succeeded  so  far  by  adopting  measures  which

amount to an abuse of the process of the Court.   

In V.R. Dalal and others  v.  Yougendra Naranji Thakkar and another,

[ 2008 (8) SCALE 156 ]  this Court held  :-  

“16. When a proceeding is found to be an abuse of the process of court, this Court in exercise of its jurisdiction under Article 142 of the Constitution of India may not allow it to continue. For the said purpose, the fact of the matter can be looked into.”

Forum Shopping, it is well settled, is not encouraged by the Court.

{See  Udyami Evam Khadi Gramodyog Welfare Sanstha vs.  State of Uttar

Pradesh, [(2008) 1 S.C.C. 560]}

39. Apart from the fact that the appellant did not approach the Court with

clean  hands  and  was  thus  not  entitled  to  any  equitable  relief,  we  are

23

surprised to see the manner in which the interim order was passed by the

learned Single Judge in the contempt proceedings, which reads :-.  

“1. That  G.  Narayanamurthy,  the  respondent herein,  be  and  is  hereby  restrained  by  an  ad- interim injunction till 21.07.2008 not to implement the resolution of item of business  relating to the election of Directors of the respondent bank at the 83rd , 84th and 85th Annual General Meeting held on  05.06.2008  till  disposal  of  the  contempt application.

2. That  the  notice  of  this  Sub  Application No.163  of  2008  returnable  by  21.07.2008  be served on the respondents herein; and

3. That the Sub Application No. 163 of 2008 be posed on 21.07.2008.”  

40. The  suit  related  to  83rd Annual  General  Meeting.   The  contempt

application related to election of Directors of the Bank at the 83rd, 84th and

85th Annual General Meetings.  Although the sub-application was directed

to be posted for 23rd July, 2008 the order of injunction was not limited to

that  date.   It  was  directed  to  continue  till  disposal  of  the  contempt

application; though it was stated earlier that the ad interim injunction was

till 21.7.2008.

24

It  does  not  contain  any  reason.   There  is  no  finding  as  regards

existence of a prima facie case.  There is no finding that G. Narayanmoorthy

had prima facie committed the contempt.   

The order is  not  a speaking one.   Ordinarily a direction cannot be

issued in contempt proceedings without arriving at a finding as to how the

Managing Director of the Bank can be said to have flouted the order.   

In Municipal Corpn., Jabalpur v. Om Prakash Dubey, [(2007) 1 SCC

373 ], this Court held:-

“21.  We  are  in  this  case  not  called  upon  to consider  the  implication  of  the  awards,  which might have been passed in favour of the workmen. The Division  Bench,  by reason of  the impugned judgment had issued directions  in exercise of its jurisdiction under Section 12 of the Contempt of Courts Act, 1971, without arriving at a finding as to  how the Corporation has violated  its  order.  It issued  directions  which  are  contrary  to  or inconsistent with the directions issued by a learned Single Judge by an order dated 27-2-2003.

22. The judgment of the Division Bench is, thus, subject  to  correction  by  this  Court  both  under Article  136  of  the  Constitution  of  India  as  also under Section 19 of the Contempt of Courts Act.”

The said decision applies in all force to the fact of the present case.  

25

41. Indisputably  in  view  of  the  interim  order  dated  20th June,  2008

respondents of were prejudiced.  They were, thus, ‘persons aggrieved’.  As

persons aggrieved they could move the higher court.  If an interim order was

passed wholly without jurisdiction, an appeal would lie thereagainst.   

In  Purshotam Dass Goel  v.  B.S. Dhillon, [(1978) 2 SCC 370 ], this

Court held:     

“He submitted that initiation of the proceeding by the High Court will be without jurisdiction if it is in violation of Section 20. It may be so. If the alleged  contemner  in  response  to  the  notice appears before the High Court and asks it to drop the proceeding on the ground of its being barred under Section 20 of  the Act  but  the High Court holds that the proceeding is not barred, it may well be  that  an  appeal  would  lie  to  this  Court  under Section  19  from  such  an  order  although  the proceeding  has  remained  pending  in  the  High Court. We are not called upon to express our final opinion in regard to such an order, but we merely mention this type of order by way of an example to show that even orders made at some intermediate stage in the proceeding may be appealable under Section 19...”

42. Mr. Andhyarujina submitted that such observation was made by this

Court having regard to a situation where the contempt proceedings had been

entertained by a court beyond the period of limitation as prescribed under

Section 20 of the Act.   

26

43. We may repeat  that it  may be a different  matter  if  the court  while

passing an order decided some disputes raised before it by the contemnor

asking it to drop the proceedings on one ground or the other.  Thus, in a

given situation, an appeal would be maintainable even against a notice to

show cause.   Here  even such  a  notice  has  not  been issued  and thus  the

question  of  satisfying  the  court  by  showing  cause  that  the

contemnors/respondents  had  not  committed  any  contempt  did  not  arise.

Allegations had not been made against the Chairman of the meeting.  The

contempt proceedings had been initiated only against the Managing Director

of the Bank.   

44. Although we need not go into the larger question of maintainability of

the appeal in view of the fact that the matter has been referred to the Three

Judge Bench in Dharam Singh  v.  Gulzari Lal and others (SLP (Civil) No.

18852 of 2005), but prima facie, in view of the decision of this Court in

Purshottam Das (supra) there cannot be any doubt that in a situation where

order has been passed adverse to the interest of the alleged contemnor an

appeal  would  be  maintainable  particularly  where  a  judgment  has  been

passed by a court which is beyond its jurisdiction.  

27

45. This  aspect  of the matter  has also been considered in  R.N. Dey v.

Bhagyabati Pramanik,  [ (2000) 4 SCC 400 ] wherein it was opined :-

“In  our  view  the  aforesaid  contention  for  the learned counsel for the respondents requires to be rejected  on  the  ground  that  after  receipt  of  the notice, officers concerned tendered unconditional apology  and  after  accepting  the  same,  the  High Court rejected the prayer for discharge of the rule issued for contempt action.  When the court either suo motu or on a motion or a reference, decides to take action and initiate proceedings for contempt, it assumes jurisdiction to punish for contempt. The exercise  of  jurisdiction  to  punish  for  contempt commences with the initiation of a proceeding for contempt and if the order is passed not discharging the rule issued in contempt proceedings, it would be  an  order  or  decision  in  exercise  of  its jurisdiction to punish for contempt.  Against such order, appeal would be maintainable.”

46. But  we  do  not  find  it  necessary  to  express  our  opinion  on  the

correctness thereof in one way or the other.  

47. We may, however, notice that according to Mr. Andhyarujina, in view

of the Three Judge Bench decision of this Court in D.N. Taneja  v. Bhajan

Lal,  [ (1988) 3 SCC 26 ], the appeal was not maintainable.  

28

We may place on record that a Division Bench of the Calcutta High

Court in Ashoke Kumar Rai  v.  Ashoke Arora and another, [ 96 CWN 278 ]

opined :-

“The right of appeal will be available under Sub- section (1) of Section 19 only against any decision or order of a High Court passed in the exercise of its  jurisdiction  to  punish  for  contempt.  In  this connection, it is pertinent to refer to the provision of Article 215 of the Constitution which provides that every High Court shall be a Court of record and  shall  have  all  the  powers  of  such  a  Court including  the  power  to  punish  for  contempt  of itself.  Article 215 confers on the High Court the power  to  punish  for  contempt  of  itself.  In  other words,  the High Court  derives  its  jurisdiction  to punish  for  contempt  from  Article  215  of  the Constitution.  As  has  been  noticed  earlier,  an appeal will lie under Section 19(1) of the Act only when the High Court makes an order or decision in  exercise  of  its  jurisdiction  to  punish  for contempt.  It  is  submitted  on  behalf  of  the respondent  and,  in  our  opinion  rightly,  that  the High Court exercises its  jurisdiction or power as conferred on it by Article 215 of the Constitution when it imposes a punishment for contempt. When the High Court  does not  impose any punishment on the alleged contemner, the High Court does not exercise  its  jurisdiction  or  power  to  punish  for contempt. The jurisdiction of the High Court is to punish.  When  no  punishment  is  imposed  by the High  Court,  it  is  difficult  to  say  that  the  High Court  has  exercised  its  jurisdiction  or  power  as conferred on it by Article 215 of the Constitution.  

Punishment  in  our opinion is  not  confined only to detention of a person or imposition of fine. A direction to do a particular thing in a particular way would come within  the  purview of  the  said

29

terminology. A statute has to be read reasonably. Effort must be made to give effect to every word employed  therein.  In  any event  curtailment  of  a right of appeal cannot be presumed.”

48. A similar view had been taken in  Ashis Chakraborty and others  v.

Hindustan Lever Sramik Karamchari Congress and others, [ 96 CWN 673 ],

by the Calcutta High Court, stating :-

“ We are, however, not oblivious of the fact that  Section  19(1)  does  not  merely  speak  of  an appeal lying only against punishment for contempt but  uses  the expression  that  an  appeal  lies  from any 'order  or  decision'  passed  in  exercise  of  the jurisdiction to punish for contempt. As regards the meaning of the expression "any order or decision" we understand  a  variety  of  orders  and decisions that  may be passed  by a court  in  exercise  of  its jurisdiction to punish for contempt. Our own High Court in 1981 (2) CHN page 97 Ranjit Chatterjee v.  Rambadan  Choubey  held  that  if  the  order  or decision  prejudicially  affects  a  party,  he  has indeed a right of appeal. If no other order except punishment  would  have  been  appealable,  there would have ' been no necessity of using the words "any  order  or  decision'1  in  the  expression  "the execution  of  the  punishment  or  order  appeal against" as used in Section 19(2)(a) of the Act. If the scope of appeal Under Section 19 is restricted only to punishment imposed Under Section 12 and nothing  beyond,  then  a  person  who  is  ex  facie found guilty of contempt Under Section 14 and is detained  in  custody  pending  the  hearing  on  the charge of contempt and is refused bail, would have no  right  of  appeal  against  such  refusal  of  bail pending  the  decision  on  the  charge  of  contempt

30

which  will  amount  to  deprive  the  alleged contemner  of  the  right  of  appeal  in  such circumstances.  If  in  case  of  such  an  exigency, where he is directed to be released on a particular bond  which  is  found  to  be  much  excessive,  his right  is  to  be  defeated  to  a large  extent  and the very  purpose  of  making  provision  for  appeal  to give relief in appropriate cases will be lost. We are of  the  clear  view  that  while  the  contemner  is detained  in  custody  Under  Section  14  pending determination  of  the  charge,  there  is  no punishment imposed on him as yet Under Section 12.  The contention of  Mr. Mukherjee is  that  the detention  in such circumstances  would also be a form  of  punishment  Under  Section  12  is  really untenable. The legislature in its wisdom does not use surplus words but obviously uses such words which would advance its object and would remove the mischief  of ambiguity.  We have exhaustiibly dealt with all the contingencies in this regard over appealability or otherwise of an order or decision in Ashoke Kumar Rai v. Ashoke Arora, F.M.A.T. No. 2146 of  1991 decided by us on 17.12.91 to hold that even though it was Stated in D.N. Taneja v.  Bhajanlal,  (1988)  3  SCC  26  that  unless  a punishment is imposed, no appeal lies against it, at best  relates  to  a  case  of  criminal  contempt  and nothing  beyond  and  if  any  order  or  decision  is arrived at deciding any bone of contention or any issue in the controversy, an appeal lies.”

49. It is  also relevant  to notice that  a Division Bench of this Court in

Midnapore Peoples'  Coop. Bank Ltd. v.  Chunilal Nanda, [(2006) 5 SCC

399], opined as under :

31

“If the High Court, for whatsoever reason, decides an  issue  or  makes  any  direction,  relating  to  the merits  of  the  dispute  between  the  parties,  in  a contempt proceedings, the aggrieved person is not without  remedy.   Such  an  order  is  open  to challenge in an intra-court appeal (if the order was of a learned Single Judge and there is a provision for  an  intra-court  appeal),  or  by  seeking  special leave  to  appeal  under  Article  136  of  the Constitution of India (in other cases).

XXX XXX XXX

15. Interim  orders/interlocutory  orders  passed during the pendency of a case, fall  under one or the other of the following categories :

(i) to (iii) …

(iv) Routine orders which are passed to facilitate the progress of the case till  its culmination in the final judgment.

(v) Orders  which  may  cause  some inconvenience or some prejudice to a party, but which do not finally determine the rights and obligations of the parties.”

50. Assuming  that  an  appeal  under  Section  19  was  technically  not

maintainable,  having  regard  to  the  fact  that  the  interim  injunction  was

granted till  disposal  of the contempt application, in our opinion, it  was a

judgment  within  the  meaning  of  Clause  15  of  the  Letters  Patent  of  the

Madras High Court.  

32

51. We will,  however,  proceed  on  the  assumption  that  no  appeal  was

maintainable.   

An aggrieved  person  cannot  be  left  without  a  remedy.   Access  to

justice is a human right.  In certain situations it may also be considered to be

a fundamental right.  (See  Tashi Delek Gaming Solutions Ltd. v.  State of

Karnataka, [ (2006) 1 SCC 442 ] and  Arunima Baruah v.  Union of India,

[(2007) 6 SCC 120].  

52. Concededly this Court has the jurisdiction to entertain a special leave

petition.  When the entire matter is before us this Court in exercise of its

jurisdiction under Article 136 read with Article 142 of the Constitution of

India may pass such orders which would do complete justice to the parties.

[See - T. Vijendradas  v.  M. Subramanian, (2007) 8 SCC 751 ].   

53. The orders of the High Court speak in two voices.  Doctrine of amity

or comity requires that different courts exercising separate jurisdiction pass

similar orders.   

In Lewis & Spelling’s - “The Law of Injunctions” at page 10 it  is

stated:-

33

“Where  a  court  having  general  jurisdiction  and having acquired jurisdiction of the subject-matter has  issued  an  injunction,  a  court  of  concurrent jurisdiction  will  usually  refuse  to  interfere  by issuance of a second injunction.”   

It is also  well settled that even an irregular order can be set aside by

the same court or by a higher court.   

In Isaacs v. Robertson, [(1984) 3 All. E.R. 140], it has been held:

“Their  Lordships  would,  however,  take  this opportunity to point out that in relation to orders of a court of unlimited jurisdiction it is misleading to  seek  to  draw distinctions  between  orders  that are  ‘void’  in  the sense  that  they can  be  ignored with impunity by those persons to whom they are addressed, and orders that are ‘voidable’ and may be  enforced  unless  and  until  they  are  set  aside. Dicta  that  refer  to  the  possibility  of  there  being such  a  distinction  between  orders  to  which  the descriptions  ‘void’  and  ‘voidable’  respectively have  been applied  can  be  found  in  the  opinions given  by  the  Judicial  Committee  of  the  Privy Council in Marsh v. marsh [1945] AC 271 at 284 and MacFoy v.  United  Africa  Co.  Ltd.  [1961] 3 ALL ER 1169, [1962] AC 152; but in neither of those  appeals  nor  in  any  other  case  to  whch counsel has been able to refer their Lordships has any order of a court of unlimited jurisdiction been held to fall in a category of court orders that can simply be ignored because they are void ipso facto without  there  being  any  need  for  proceeding  to have them set aside.  The case that are referred to in these dicta do not support the proposition that

34

there  is  any  category  of  orders  of  a  court  of unlimited jurisdiction  of  this  kind:  what  they do support is the quite different proposition that there is  a  category  of  orders  of  such  a  court  which  a person affected by the order is entitled to apply to have set aside ex debito justitiae in the exercise of the inherent  jurisdiction of  the court  without  his needing  to  have  recourse  to  the  rules  that  deal expressly with proceedings to set aside orders for irregularity and give to the judge a discretion as to the order he will  make.  The judges in the cases that  have drawn the distinction  between the two types  of  orders  have  cautiously  refrained  from seeking to lay down a comprehensive definition of defects that bring an order into the category that attracts ex debito justitiae the right to have it set aside, save that specifically it includes orders that have been obtained in  breach of rules  of natural justice.

The contrasting legal  concepts  of voidness and  voidability  form part  of  the  English  law of contract.  They are inapplicable to orders made by a court  of unlimited jurisdiction in the course of contentions  litigation.   Such  an  order  is  either irregular or regular.  If it is irregular it can be set aside by the court  that made it  on application to that court; if it is regular it can only be set aside by an  appellate  court  on  appeal  if  there  is  one  to which an appeal lies.”

54. If this Court while deciding a matter of this nature may, in exercise of

its special jurisdiction under Article 142 of the Constitution of India, not

only quash the order appealed against but also in the event it is found that

quashing  of  an  illegal  order  gives  rise  to  another  illegality,  it  may also

35

refuse to exercise its jurisdiction or quash both the orders.  Apart from the

fact that the order passed by the learned Single Judge dated 20th June, 2008

is found to be illegal and without jurisdiction having been passed without

any application of mind and furthermore as the same was obtained by the

appellant  by suppressing  material  facts  and  the  proceedings  between  the

parties, it is eminently a fit case where this Court should refuse to interfere

with the impugned order of the High Court.   

55. The  superior  courts  of  this  country  must  discourage  the  forum

shopping.  A person seeking equity must do equity.  A party cannot take

recourse to a machination which amounts to abuse of  the process of  the

court.   

56. If two views are possible, as held by this Court, a contempt petition

would not lie.   

In  Sushila Raje Holkar v.  Anil Kak (Retd.) [2008 (7) SCALE 484],

relying upon the decision in The State of Bihar  v.  Rani Sonabati Kumari,

[ AIR 1961 SC 221 ], this Court held :-  

“19.  It  may be true that  this Court  upon hearing the parties, by the order dated 1.5.2007 granted the respondent 15 days' time to deposit all arrears of rent at the rate of Rs.50,000/- per month including

36

the rent for the month of April 2007. We are not concerned  with  the  implementation  of  the  said order as violation thereof is not the subject matter of the contempt proceedings pending before us.  

The order of this Court properly construed, therefore,  would  mean  that  the  admitted  lease would  cover  only  16,000  square  feet  of  land. Different  phraseologies  like  "entire"  and "admitted"  have  been  used  by  this  Court. Construction of the said order, therefore, must be resorted to upon reading the same in its entirety. It is  a  well  settled  principle  of  law  that  if  two interpretations are possible  of the order which is ambiguous,  a contempt proceeding would not  be maintainable.

57. It  is  furthermore  well  settled  that  this  Court  does  not  exercise  its

jurisdiction only because it  is lawful to do so.  (See  Tanna and Modi  v.

C.I.T. Mum,bai XXV, [ 2007 (8) SCALE 51 ] and C.K. Prahalad and others

v.  State of Karnataka and others, [ 2008 (8) SCALE 600 ].    

58. For the reasons aforementioned we are of the considered opinion that

it is not a fit case wherein we should exercise our jurisdiction under Article

136 of  the Constitution  of  India.   The appeals  are  dismissed with  costs.

Counsel fee assessed at Rs.50,000/- in each case.

……………………………J.               [ S.B. Sinha ]

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……………………………J.               [ Cyriac Joseph  ]

New Delhi December 05, 2008   

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