Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6551 OF 2002

P.K. Singh … Appellant

Versus

M/s. S.N. Kanungo and others …Respondents

O R D E R

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 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  

(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 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)  till  the  date  of  

payment.

3. Feeling aggrieved, the Union of India, through the  

Executive  Engineer,  Andaman and Nicobar  Public  

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Works  Department,  filed  an  application  under  

Section 34 of the Arbitration and Conciliation Act,  

1996  on  17th June,  1999  for  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  

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  stand  

modified  and  the  respondent-contractor  would  be  

entitled to interest @ 12% per annum from the date  

of reference 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  

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Andaman, addressed a letter to the Superintending  

Engineer,  Construction  Circle  No.  1,  Andaman  

Public  Works  Department,  on  5.3.2001  giving  

details  of  the  financial  implication  of  the  Award  

dated  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  30.3.2001  to  the  Chief  Engineer,  APWD  

requesting that the acceptance of the Award should  

be  communicated  with  details  regarding  

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  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  

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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 amount stated  

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 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 amount of the  

interest etc. should be released within a fortnight.  

Thereupon, the appellant addressed a letter dated  

2.4.2001 to the Chief Engineer, 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 Award  

without interest.  The appellant addressed another  

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letter  dated  2.4.2001  to  the  Chief  Engineer  

informing  him  about  the  changed  stand  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 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,  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  

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accepting  the  unconditional  apology  of  the  

appellant, imposed cost of Rs.200 GSM upon 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 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  XXI  Rule  2  of  Code  of  Civil  

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.  

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Those two letters 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  made  an  attempt  to  persuade  the  

respondent  to  forego  claim  relating  to  interest.  

Order XXI Rule 2 of Code of Civil 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 extinguishes the decree  

as  such  in  whole  or  in  part  and  results  in  the  

satisfaction of the decree in respect of the particular  

relief  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  

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to an ‘adjustment’ of the decree, it must be recorded  

under this Rule 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  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 adjustment of Award could  

not have been treated as contempt of court within  

the meaning of  the provisions of  the Contempt of  

Courts  Act,  1971.   The  tenor  of  letters  do  not  

indicate that there was any willful disobedience on  

the part of the appellant in not complying with the  

judgment of the High Court.

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8. Even if it is assumed for the sake of argument that  

writing  of  the  letter  dated  30.3.2001  amounts  to  

contempt, this Court finds that the two letters dated  

30.3.2001 and 2.4.2001 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 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  proceeded  to  examine  the  question  

whether the violation of judgment of the High Court  

would amount to the contempt of court.  The High  

Court  also  considered  the  question  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  the  appellant  

inviting  the  respondent  for  negotiation  with  

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reference  to  the  rate  of  interest  payable  to  the  

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, 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  

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  

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the unconditional apology tendered by the appellant  

nor could have 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.

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.

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  

impugned judgment is set aside.  The cost, if any,  

recovered from the  appellant  be refunded to  him.  

The appeal stands, accordingly, disposed of.

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12. There shall be no order as to costs.

………………………………J. [J.M. Panchal]

………………………………J. [Dr. B.S. Chauhan]

New Delhi; February 18, 2010.

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