Karnataka HC Drops Contempt Case Over Heirs’ Conditional Sale Agreement During Injunction, Finding Wilful Disobedience Unproven

The complainants, the wife and legal heirs of H. Ramaiah Reddy, brought O.S. No. 8762/2012 seeking declarations of ownership and permanent injunction.

On 31 August 2013, the Trial Court restrained the defendants and persons acting for them from interfering with the complainants’ possession or executing or registering documents creating rights over the suit properties on the basis of an alleged will.

While the suit was pending, accused Nos. 1–5 entered into an Agreement of Sale dated 17 November 2022 with accused Nos. 6–8 concerning Item Nos. 1, 2, 3 and 6; the agreement acknowledged the litigation and made completion conditional.

The complainants also relied on a Declaration dated the same day and a Release Deed dated 30 March 2023.

The Trial Court later dismissed the suit as to those four items, and the complainants challenged that decision in pending appeals, in which interim protection was granted.

The complainants alleged wilful disobedience of the injunction; the accused disputed their knowledge and the applicability of the order, and denied that a sale deed had been executed.

The petition invoked Sections 10 and 12 of the Contempt of Courts Act, 1971.

The Court’s inquiry was whether the record established wilful and deliberate disobedience of the order complained of; it considered the nature and terms of the restraint, the persons bound by it, and the circumstances of the alleged breach.

The complainants relied on Tayabbhai M. Bagasarwalla v. Hind Rubber Industries (P) Ltd., (1997) 3 SCC 443, and Samee Khan v. Bindu Khan, (1998) 7 SCC 59, but the Court held that those authorities did not advance their case on these facts.

The Court found that the Agreement of Sale acknowledged the pending litigation, made completion subject to stipulated conditions, and had not resulted in a registered sale deed conveying title to accused Nos. 6–8.

It also considered that accused Nos. 1–5 had entered the suit as legal representatives of the original defendant, disputed knowledge of the injunction, and said no separate injunction order had been made against them.

The Trial Court’s subsequent dismissal of the claim concerning the relevant items, while under appeal, and the circumstances surrounding the transaction did not sufficiently establish wilfulness for contempt purposes.

The Court therefore declined to treat execution of the agreement alone as conclusive proof of contempt.

It dismissed the contempt petition and dropped proceedings against accused Nos. 1–8.

Its observations were confined to the contempt question and were not to prejudice the parties’ rights in the pending appeals or other proceedings concerning the properties.