Breach of a solvent surety furnished as a condition for leave to defend constitutes civil contempt.

In brief

The question

1. Whether the disposal of property furnished as a solvent surety, without court permission, constitutes "civil contempt" under Section 2(b) of the Contempt of Courts Act, 1971

The court held

The Court held the Respondents guilty of civil contempt but showed leniency following their undertaking to settle the suit

It also directed

The Court ordered: (i) Respondents to pay a fine of ₹2,000/-; (ii) Accepted the undertaking to pay ₹4,60,00,000/- as a full and final settlement of the suit, with ₹2.30 crores to be deposited by May 8, 2026, and the balance in four monthly installments; (iii) Petitioners permitted to withdraw deposits without condition; and (iv) On full compliance, the trial court shall dispose of the suit in terms of the signed Consent Terms

01Facts

The Petitioners (original plaintiffs) filed a summary suit for ₹2,30,00,000/- based on a 2009 agreement regarding flat compensation

¶ 5

The trial court granted the Respondents (defendants) conditional leave to defend, subject to furnishing a solvent surety equal to the claim amount

¶ 1

Respondent No. 2 submitted a solvency certificate for Gat No. 775

¶ 2

Despite court orders clarifying that the surety must continue during the pendency of the suit, the Respondents executed a registered sale deed for the secured property in favor of a third party on June 13, 2023

¶ 3/6

The Respondents admitted the breach but tendered an unconditional apology, citing financial distress and medical needs of Respondent No. 2, a 91-year-old

¶ 4/8

They offered to replace the surety or deposit the principal amount only after contempt notices were issued

¶ 25

02Issues

i.1. Whether the disposal of property furnished as a solvent surety, without court permission, constitutes "civil contempt" under Section 2(b) of the Contempt of Courts Act, 1971

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ii.2. Whether an unconditional apology and an offer to replace the surety/deposit the principal amount are sufficient to discharge the contemnors from liability

¶ 10/11

03Law Applied

Section 2(b) of the Contempt of Courts Act, 1971, which defines "civil contempt" as willful disobedience of any judgment, decree, or order of a court

¶ 10/18

Section 12 regarding punishment and the standard for accepting apologies, specifically the requirement of bona fides

¶ 10/21

Supreme Court precedent in Balwantbhai Somabhai Bhandari v. Hiralal Somabhai Contractor, which established that a solvent surety carries an implicit undertaking to keep the property unencumbered and that an apology is not a "legal trick" to escape responsibility

¶ 12/15/19/22

Section 145 of the CPC regarding the enforcement of liability of a surety

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Provisions in the judgment · 5 · Linked ones open on LawLens

Code of Civil Procedure, 1908 Section 145 Section 37

Contempt of Courts Act, 1971 Section 2 Section 12

Transfer of Property Act, 1882 Section 52

04Reasoning

The Court reasoned that furnishing a solvent surety as a condition for leave to defend is a solemn assurance to the court that the property will remain available to satisfy a potential decree

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Disposing of such property without prior permission defeats the very purpose of Order XXXVII of the CPC and constitutes a willful breach of the court’s trust

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The Court rejected the Respondents' initial excuse—that they believed interim orders expired with the suit's transfer—calling it "arrogance"

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Following Balwantbhai, the Court found the apology was not bona fide but rather a "calculated risk" taken to pocket sale proceeds

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During the sentencing session, the Court noted a change in conduct: Respondent No. 1 tendered a fresh undertaking to settle the entire suit for ₹4,60,00,000/- (principal plus interest) via specific installments

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Given the settlement terms and the age/health of Respondent No. 2, the Court determined that a fine rather than imprisonment was appropriate

¶ 32/35