RAMA NARANG versus RAMESH NARANG AND ANOTHER

Citation: [2007] 3 S.C.R. 1099 · Decided: 15-03-2007 · Supreme Court of India · Bench: B.N. AGRAWAL · Disposal: Disposed off

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

Judgment (excerpt)

) 
RAMA NARANG 
v. 
RAMESH NARANG AND ANOTHER 
MARCH 15, 2007 
[B.N. AGRAWAL, DALVEER BHANDARI AND 
LOKESHWAR SINGH PANTA, JJ.] 
A 
B 
Contempt of Courts Act, 1971-Section 2(b)-Dispute between father 
and his two sons regarding control and management of a company-To ensure C 
that company was run with participation of all, consent terms entered into and 
incorporated in Supreme Court order-Father and one of the sons were to be 
in joint management and control of company, while the other son was to be 
in charge of day-to-day operations; no decision was to be taken concerning 
the Company without consent of father and either of his two sons; amount of 
any transaction exceeding ten lakhs rupees was to be undertaken through D 
cheque signed jointly by father and either of two sons-Violation of these 
terms-Contempt of Court-Held-Under guise of day-to-day operation, all 
decisions affecting the company were taken by one son-On amount of 
transaction exceeding rupees ten lakhs, payment made by splitting the amount 
in two or more cheques; explanations given regarding this by sons found E 
untenable; in case of genuine difficulty or confusion, the sons ought to have 
approached Court for directions-Sons found guilty and convicted for contempt 
of court for deliberate and willful disobedience of their undertaking to Supreme 
Court-Sentence of simple imprisonment for a period of two months, and a 
fine imposed-However, keeping in view interests of company and its employees, 
sentence of imprisonment kept in abeyance, to be revived in future on similar F 
violations. 
Words and phrases-Undertaking-In context of Section 2(b) of the 
Contempt of Courts Act, 1971 
Petitioner is father (R-1) and respondents (R-2 and R-3) and his two G 
sons. Disputes between them were subject-matter of diverse court 
proceedings with regard to shareholdings and control and management 
of a company, NIHL. To ensure peace in the family and all groups run 
the company harmoniously with the active participation of all as a family 
.1099 
H 
1100 
SUPREME COURT REPORTS 
[2007] 3 S.C.R. 
A business, consent terms were entered into, accepted and incorporated by 
this Court while finally disposing of all the disputes between the parties. 
These terms inter alia included that R-1 and R-2 were to be in joint 
management and control of NIHL; R-3 was to be the 'Permanent Whole 
Time Director' thereof in charge of day to day operations/management; 
B no decision concerning the Company was to be taken without the consent 
of R-1, R-2 (or R-3) in writing; all bank accounts of the Company were 
to operated jointly by any two out of the three viz. R-1, R-2 and R-3 and/ 
or as may be agreed to between them; if the amount of any transaction 
exceeds ten lakhs rupees, it was to be undertaken through a cheque signed 
jointly by R-1 and R-2/R-3. 
c 
D 
Present contempt petition has been filed on the allegation that the 
respondents had violated the terms of the consent order. Petitioner gave 
numerous instances of violation and contended that they amounted to a 
willful disobedience of the order of this Court, punishable under its power 
of contempt. 
Respondents contended that it was never the intention of the parties 
that the petitioner should enjoy a veto power over the company 
transactions whose value exceeds ten lakhs rupees, and clause regarding 
same was meant purely for operation of bank accounts. 
E 
Disposing of the Contempt Application, the Court 
HELD: 1. All the management decisions and other decisions affecting 
the company were taken by the respondent Rajesh Narang, the whole time 
Director under the guise of the day to day operation/management in clear 
violation of clause 3(c) of the consent terms which clearly state that Rama 
F Narang and Ramesh Narang shall continue to be in joint management and 
control. The parties gave undertaking to the court regarding the consent 
terms. (Para 321 (1116-B] 
2.1. In order to keep the petitioner out of the management and 
G control of the company where the amount of transaction exceeded Rs.ID 
lakhs, the payment was made by splitting the amount in two or more 
cheques. This subterfuge was adopted to keep the petitioner out of the 
control of the management and company. (Para 511 ( 1121-C) 
2.2. The explanations given by the respondents for splitting up the 
H cheques are wholly untenable. In case of genuine difficulty or confusion, 
RAMA NARANG v. RAMESH NARANG 
1101 
) 
the respondents ought to have approach

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