Court Power to Remedy Wilful Disobedience of Interim Arbitral Orders Under Contempt Jurisdiction

The Petitioner filed a contempt petition alleging wilful disobedience of an interim order dated 20.12.2024 passed by a learned Arbitrator in Case Ref. No. DIAC/8230/04-24

The Arbitrator had directed the Respondents not to ban the Petitioner and ensured their participation in future tenders remained unimpeded despite the cancellation of a subject contract

Despite no appeal being filed against this order, the Respondents issued adverse remarks in the Work Load Register (WLR) of September 2024 and May 2025, stating the Petitioner was "Not recommended" due to "adverse remarks in WLR"

In their counter-affidavit, the Respondents conceded to not implementing the interim award

1. Whether the Respondents’ continued insertion of adverse remarks in the WLR and non-implementation of the Arbitrator's interim order constitutes wilful disobedience under the Contempt of Courts Act, 1971

2. Whether the court should exercise its inherent power to undo the effects of the Respondents' non-compliance to ensure they do not benefit from their contempt

The court applied the Contempt of Courts Act, 1971, regarding the punishment for wilful disobedience of judicial/quasi-judicial orders

DDA v. Skipper Construction Co. (P) Ltd. (1996) 4 SCC 622, which mandates that a contemnor should not be permitted to enjoy the fruits of their contempt and that the court has a duty to "set the wrong right"

Mohd. Idris v. Rustam Jehangir Babuji (1984) 4 SCC 216 and Clarke v. Chadburn (1985) 1 All ER 211 to affirm that the court is bound to exercise its inherent power to undo acts done in violation of its orders

The court reasoned that since the Respondents did not challenge the Arbitrator’s directions, those directions remain binding

By repeating the same adverse remarks in tender evaluations and subsequent WLRs that were specifically addressed by the Arbitrator's order, the Respondents acted in direct contravention of the mandate to keep the Petitioner’s participation "unimpeded"

The court found the Respondents' admission in their counter-affidavit—that they were simply not implementing the award—to be an exacerbation of wilful disobedience

Relying on the Skipper Construction precedent, the court determined it must pass restorative orders to ensure the Respondents do not use the adverse WLR entries to disqualify the Petitioner’s future bids

The Respondents are restrained from making any observations in the WLRs in derogation of the Arbitrator's directions

The court clarified that the pending arbitral dispute shall not obstruct the Petitioner's bids in future tenders

The Respondents were directed to purge their conduct and file a compliance affidavit within four weeks, failing which the court will take further action