In a major relief to Industrial Finance Corporation of India Ltd (IFCI) and its top officials,the Delhi High Court has quashed its earlier order awarding one-month jail term,besides a fine of Rs five lakh,to the CEO of the PSU and two other officials for contempt of court. A bench of justices Sanjay Kishan Kaul and Rajiv Shakdher quashed the March 19 order of the single-judge bench saying once an unqualified apology was tendered by contemnors,there was no need "for the court to either proceed with the conviction or impose sentence and that too such a harsh one". "We are of the unequivocal view that all the three appeals are liable to be allowed. Orders of conviction of February 6,2012,and order on sentence of March 19,2012,are liable to be set aside with the acceptance of apology on the part of Assistant General Manager (Law) Shalini Soni and Recovery Officer of Debt Recovery Tribunal R K Bansal while CEO-cum-MD Atul Kumar Rai is held not to have any role in the matter in issue. "We may also notice another aspect of the matter arising from the quantum of fine imposed on the contemnors. The Contempt of Courts Act provides for a fine which may extend to Rs 2,000 but the fine imposed in the present case is running into lakhs. This is contrary to the statutory provisions," the bench said. The single judge bench had on March 19 imposed a fine of Rs five lakh on IFCI,while sentencing its Atul Kumar Rai and Shalini Soni and R K Bansal to a month in jail each after holding them guilty of having committed contempt of court. The bench,however,had kept its order "in abeyance" for four weeks,giving time to the contemnors to go in an appeal against its order. The single-judge bench of Justice P K Bhasin had said the impression needed to be "washed away" from the public mind that court would melt down with an apology and one could get away easily even after not complying with the court's orders. Disagreeing with the order,the larger bench referred to the provisions of the Contempt of Courts Act and held that "merely because a corporate entity is alleged to have committed contempt would not be a ground to make the CEO/ Managing Director or head of the organization liable for contempt if he had no knowledge of the same." "We find that there is no case whatsoever of contempt made out against Atul Kumar Rai while Shalini Soni ought to have been more careful in first assailing the order of October 8,2009,in appeal before filing an application before the Recovery Officer on which orders were passed on February 22,2010," the bench added. The HC's larger bench also took a similar view in the case of the Recovery Officer,who was also held in contempt of court,saying the unqualified apology tendered more than met the requirement as it was not a case of willful disobedience. The single-judge had passed the order after it came to know that IFCI and its two senior officials had violated its directions to remit the sale proceeds of Koshika Telecom Ltd to the telecom firm's official liquidator. The single judge had also taken strong exception to the DRT recovery officer's act of going against the court's orders and had said if no steps are taken,"subordinate authorities shall get emboldened and start obliging the litigants with impunity by giving them reliefs even though the high court had rejected the same." The IFCI had moved the DRT against Koshika Telecom Ltd for recovery of its loan of over Rs 200 crore and at the instance of the public sector organisation some of the assets of the telecom company was auctioned off by DRT. The IFCI had gone to the DRT amid the winding up proceeding of Koshika Telecom Ltd,going on under the supervision of an official liquidator,appointed by the Delhi High Court to oversee the sale of all the assets of the telecom firm. As the firm's official liquidator came to know of the debt recovery proceeding before the DRT,it brought it to the notice of the High Court which asked the IFCI to remit the firm's sale proceeds to the liquidator. But the IFCI and its two officials moved the DRT recovery officer,who in "utter defiance of the order of the (high) court obliged the IFCI by accepting its application and granting it permission to utilise the sale proceeds," said the court.
