Rent realized in violation of court directions must be refunded with 12% annual interest.

The Petitioner initiated contempt proceedings under Sections 2, 10 and 12 of the Contempt of Courts Act, 1971, alleging wilful disobedience of orders dated 18 November 2015 in W.P.(C) 10654/2015 and 31 October 2017 in CONT.CAS(C) 1357/2016, concerning the collection of rent from tenants of the subject properties.

The order dated 18 November 2015 permitted the petitioners to receive rent after filing an affidavit, subject to maintaining accounts and further orders of the Court.

The order dated 31 October 2017 clarified that the Custodian of Enemy Property would not collect rent until disposal of the writ petition.

The Petitioner relied upon a rent receipt dated 30 November 2017 for Rs. 1,00,320 and also referred to two cheques dated 13 October 2016 for Rs. 86,100 and Rs. 1,05,000.

The Respondents stated that the two cheques had neither been presented for realization nor resulted in the issuance of rent receipts, but accepted that appropriate restitution could be directed if the amount covered by the receipt dated 30 November 2017 had been collected in violation of the Court’s orders.

Whether the Respondents committed contempt by presenting or collecting the two cheques dated 13 October 2016 for Rs. 86,100 and Rs. 1,05,000.

Whether realization of the amount of Rs. 1,00,320 covered by the rent receipt dated 30 November 2017 violated the orders dated 18 November 2015 and 31 October 2017.

Whether the Petitioner was entitled to restitution with interest in respect of any amount realized in violation of those orders.

The Petition was brought under Sections 2, 10 and 12 of the Contempt of Courts Act, 1971, which respectively concern contempt, the jurisdiction of High Courts to punish contempt of subordinate courts, and punishment for contempt.

The Court applied the operative directions in the orders dated 18 November 2015 and 31 October 2017: rent could be received only subject to the specified conditions, while the Custodian of Enemy Property was prohibited from collecting rent until disposal of the writ petition.

Where money is realized in breach of a binding judicial direction, the Court may order restitution, together with appropriate interest, to neutralize the consequence of the violation.

The Court found that no contempt was established regarding the two cheques because they had not been presented for realization, no rent receipts had been issued in respect of them, and the allegation was not pressed further.

In contrast, the rent receipt dated 30 November 2017 evidenced a potential collection of Rs. 1,00,320, but the Respondents’ affidavit did not clearly establish whether the amount had actually been realized.

The Court therefore treated actual realization as the material fact: if the amount had been collected, such collection would contravene the direction restraining the Respondents from collecting rent.

The appropriate consequence was restitution of the realized amount with interest, rather than further contempt proceedings on the existing record.

However, if the Respondents had realized the Rs. 1,00,320 covered by the rent receipt dated 30 November 2017, that realization constituted a violation of the Court’s directions, and the amount was to be refunded to the Petitioner with interest at 12% per annum from the date of realization until repayment.

Payment was directed within eight weeks from the date of judgment.

The contempt petition and all pending applications were accordingly disposed of, with no further orders required.