MARUTI UDYOG LIMITED versus MAHINDER C. MEHTA AND ORS.

Citation: [2007] 10 S.C.R. 933 · Decided: 10-10-2007 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

Cited by 3 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

MARUTI UDYOG LIMITED 
A 
V. 
MAHINDER C. MEHTA AND ORS. 
OCTOBER 10, 2007 
[S.B. SINHA AND H.S. BEDI, JJ.] 
B 
,. 
Contempt of Courts Act, 1970/Arbitration and Conciliation Act, 
1996/Constitution of India, 1950; Article 129: 
Contempt-Advances obtained by respondents from customers c 
on behalf of petitioner-car manufacturer-Amount not paid to 
petitioner--lnvoking of arbitration agreement-Supreme Court 
referring the dispute to arbitrator-Arbitrator ordering respondents 
to furnish security-Non compliance-Contempt Petition-Held: D 
>-
Despite undertaking given before this Court, the alleged contemnors 
did not furnish any bank guarantee-Application for modification 
dismissed-Property in possession ofContemnor No.3 sold by them-
They not only suppressed material facts but also made wrong 
representation regarding the value of property allegedly possessed by 
E 
them-Thus, the alleged contemnors have misled this Court and have 
committed gross contempt of this Court-It is a fit case to invoke 
jurisdiction of this Court under Article 129 of the Constitution as also 
under provisions of 1970 Act-Contemnors directed to undergo 
~ 
imprisonment as indicated in the judgments except contemnor No.3 
who had resigned as director of the Company. 
F 
Respondents were Directors of a Company. The Company 
obtained various advances from the customers on behalf of the 
petitioner, a car manufacturer. It, however, did not pay the amount 
to the petitioner. The petitioner filed a suit for recovery thereof. The G 
f 
respondents filed an application purported to be under Section 8 of 
the Arbitration and Conciliation Act, 1996. Single Judge of the High 
Court rejected the application. An appeal preferred thereagainst by 
the respondents before a Division Bench of the High Court was also 
933 
H 
\ 
934 
SUPREME COURT REPORTS 
,r·t 
[2007] 10 S.C.R. \ 
A dismissed. A Special Leave Petition was filed before this Court. 
This Court vide its order dated 6.09.2002 referred the subject 
matter of the dispute to the arbitration of a former Chief Justice of 
this Court. The Arbitrator vide its order dated 25.03.2003 issued a 
direction upon the respondents to furnish certain amount of bank 
B guarantee. An award was made on 10.04.2005 as against the 
Company for a sum ofRs.7.63 crores with interest at the rate of 
8% in favour of the petitioner along with costs and expenses. In 
the meantime, the petitioner has flied the present Contempt Petition. 
Later, a proposal for settlement was made by Respondent No.1 
C before this Court relying on or on the basis of the said 
representation, a Division Bench of this Court formed an opinion 
that it is possible to settle the dues of the petitioner as also other 
creditors. By its order dated 9.02.2007, this Court directed that in 
terms of the proposal, the parties should find out ways and means 
D to sell the property belonging to the first respondent company to 
settle the dues and also directed the High Court to dispose of the 
Writ petition on the said issue pending before it. The writ petition 
having been dismissed by the High Court, the appeal of the 
respondents and the Company preferred thereagainst was also 
taken up for hearing along with the Contempt Petition. 
E 
Petitioner contended that by brazenly flouting the order of this 
Court dated 6.09.2002, the respondents have committed gross 
contempt of this Court; that the alleged contemnors were bound to 
comply with the orders passed by the Arbitrator in terms of this 
p Court's order dated 6.09.2002. As they had not furnished bank 
guarantee pursuant thereto or in furtherance thereof and in fact the 
alleged contemn ors have committed a contempt of this Court; and 
that that the contempt stands aggravated as even during pend ency 
of this proceeding as also the arbitration proceeding before the 
G Arbitrator, they have sold their flat situate at Bangalore. 
H 
On behalf ofrespondent-contemnors it was submitted thatvide 
additional affidavits filed by the alleged contemnors, unconditional 
apology has been tendered; that another affidavit filed by 
Respondent No. 3 stating that he had tendered his resignation as 
)--
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MARUTI UDYOG LIMITED v. MAHINDER C. MEHTA 
935 
Director in 1997 and the Company has accepted the same; that in A 
another counter affidavit filed by Respondent No. 2 stating that he 
was not a signatory to the original dealership agreement and was 
not involved in any of the day to day affairs of the Company; that in 

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