Authorization to encumber property, without proof of actual encumbrance, does not establish contempt.

The complainant alleged that the accused had willfully disobeyed the Karnataka High Court’s order dated 10 July 2020, which restrained the judgment debtor from alienating or encumbering any of its properties, including properties disclosed by affidavit, until further orders.

It relied on lists of properties and an Extraordinary General Meeting resolution dated 11 November 2025, authorising the company’s Board to secure a loan by creating a charge or pledge over tangible and intangible assets.

The complainant also referred to a Delhi High Court decision concerning the alleged dilution of shareholding through an increase in subscribed share capital.

The contempt petition was brought under Sections 11 and 12 of the Contempt of Courts Act, 1971.

1. Whether the accused had willfully disobeyed the order dated 10 July 2020 by alienating or encumbering the company’s properties.

2. Whether the materials produced established that any property covered by the restraint order had in fact been charged, pledged, alienated, or encumbered.

The petition invoked Sections 11 and 12 of the Contempt of Courts Act, 1971, alleging disobedience of a court order.

The operative order prohibited the judgment debtor from alienating or encumbering any of its properties until further orders.

The Court’s decision turned on whether the complainant had placed material on record demonstrating an actual breach of that restraint; it did not set out or apply a separate precedent or elaborate a broader contempt-law test.

The Delhi High Court decision cited by the complainant was relied on in support of its argument concerning share-capital dilution, but was not adopted as the basis for the Court’s decision.

The EGM resolution authorised the Board to arrange loans and create charges or pledges over the company’s tangible and intangible assets, but the complainant produced no document showing that any such transaction concerned an asset listed in the company’s affidavit of assets.

The trademark list was also insufficient to establish a relevant encumbrance in light of the resolution.

As there was no documentary evidence of actual alienation or encumbrance of the company’s properties, the Court held that a breach of the 10 July 2020 order had not been demonstrated.

It granted liberty to file afresh if evidence of breach is obtained, in accordance with law, and disposed of the petition; pending applications were also closed.