Kalimirch Vyapari Association v. National Commodity and Derivative Exchange Ltd. & Ors. (Contempt of Court)

# **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE SHAJI P.CHALY** **FRIDAY, THE 10[TH] DAY OF DECEMBER 2021 / 19TH AGRAHAYANA, 1943 CON.CASE(C) NO. 1367 OF 2020** **AGAINST THE ORDER IN WP(C) 13768/2018 OF HIGH COURT OF KERALA** ## **PETITIONER:** ## **KALIMIRCH VYAPARI ASSOCIATION** **G-17, RESIDENCY, NEAR AGRAWAL PUBLIC SCHOOL, PIPLIYAHANAN INDORE 452 016, REPRESENTED BY ITS AUTHORISED SIGNATORY, SHRI. ABHINAYA KULKARNI.** **BY ADVS.** **M.GOPIKRISHNAN NAMBIAR SRI.K.JOHN MATHAI SRI.JOSON MANAVALAN SRI.KURYAN THOMAS SRI.PAULOSE C. ABRAHAM SRI.RAJA KANNAN SRI.JAI MOHAN** ## **RESPONDENTS/2nd RESPONDENT AND 3RD PARTY TO THE WRIT PETITION:** - **1 VIJAY KUMAR VENKATARAMAN (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), CHIEF EXECUTIVE OFFICER AND MANAGING DIRECTOR, NATIONAL COMMODITY AND DERIVATIVES EXCHANGE LIMITED, HAVING ITS REGISTERED OFFICE AT 1ST FLOOR, AKRUTI COPORATE PARK, NEAR GE GARDEN, LBS ROAD, KANJURMARG (WEST), MUMBAI400079** - **2 SRINATH SRINIVASAN, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), DIRECTOR, NATIONAL COMMODITY AND DERIVATIVES EXCHANGE LIMITED, HAVING ITS REGISTERED OFFICE AT 1ST FLOOR, AKRUTI CORPORATE PARK, NEAR GE GARDEN, LBS ROAD, KANJURMARG (WEST), MUMBAI-400079** - **3 PURVI AMITBHAI MEHTA BHATT** **(AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), DIRECTOR, NATIONAL COMMODITY AND DERIVATIVES EXCHANGE LIMITED, HAVING ITS REGISTERED OFFICE AT 1ST FLOOR, AKRUTI CORPORATE PARK, NEAR GE GARDEN, LBS ROAD,** C.O.(C) No.1367 of 2020 2 ## **KANJURMARG (WEST), MUMBAI-400079** - **4 NIRMALENDU JAJODIA, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), DIRECTOR, NATIONAL COMMODITY AND DERIVATIVES EXCHANGE LIMITED, HAVING ITS REGISTERED OFFICE AT 1ST FLOOR, AKRUTI CORPORATE PARK, NEAR GE GARDEN, LBS ROAD, KANJURMARG (WEST), MUMBAI-400079** - **5 CHAMAN KUMAR, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), DIRECTOR, NATIONAL COMMODITY AND DERIVATIVES EXCHANGE LIMITED, HAVING ITS REGISTERED OFFICE AT 1ST FLOOR, AKRUTI CORPORATE PARK, NEAR GE GARDEN, LBS ROAD, KANJURMARG (WEST), MUMBAI-400079** - **6 VENUGOPAL NAYAR BHASKARAN, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), DIRECTOR, NATIONAL COMMODITY AND DERIVATIVES EXCHANGE LIMITED, HAVING ITS REGISTERED OFFICE AT 1ST FLOOR, AKRUTI CORPORATE PARK, NEAR GE GARDEN, LBS ROAD, KANJURMARG (WEST), MUMBAI-400079** - **7 ASHOK GULATI, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), DIRECTOR, NATIONAL COMMODITY AND DERIVATIVES EXCHANGE LIMITED, HAVING ITS REGISTERED OFFICE AT 1ST FLOOR, AKRUTI CORPORATE PARK, NEAR GE GARDEN, LBS ROAD, KANJURMARG (WEST), MUMBAI-400079** - **8 RAVINDRA KUMAR ROYE, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), DIRECTOR, NATIONAL COMMODITY AND DERIVATIVES EXCHANGE LIMITED, HAVING ITS REGISTERED OFFICE AT 1ST FLOOR, AKRUTI CORPORATE PARK, NEAR GE GARDEN, LBS ROAD, KANJURMARG (WEST), MUMBAI-400079** - **9 PREMKUMAR MALHOTRA, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), DIRECTOR, NATIONAL COMMODITY AND DERIVATIVES EXCHANGE LIMITED, HAVING ITS REGISTERED OFFICE AT 1ST FLOOR, AKRUTI CORPORATE PARK, NEAR GE GARDEN, LBS ROAD, KANJURMARG (WEST), MUMBAI-400079** - **10 SUNIL KUMAR, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), DIRECTOR, NATIONAL COMMODITY AND DERIVATIVES EXCHANGE** C.O.(C) No.1367 of 2020 3 ## **LIMITED, HAVING ITS REGISTERED OFFICE AT 1ST FLOOR, AKRUTI CORPORATE PARK, NEAR GE GARDEN, LBS ROAD, KANJURMARG (WEST), MUMBAI-400079** - **11 RAKESH KAPUR, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), NOMINEE DIRECTOR, NATIONAL COMMODITY AND DERIVATIVES EXCHANGE LIMITED, HAVING ITS REGISTERED OFFICE AT 1ST FLOOR, AKRUTI CORPORATE PARK, NEAR GE GARDEN, LBS ROAD, KANJURMARG (WEST), MUMBAI-400079** - **12 ATUL ROONGTA, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), CHIEF FINANCIAL OFFICER, NATIONAL COMMODITY AND DERIVATIVES EXCHANGE LIMITED, HAVING ITS REGISTERED OFFICE AT 1ST FLOOR, AKRUTI CORPORATE PARK, NEAR GE GARDEN, LBS ROAD, KANJURMARG (WEST), MUMBAI-400079** - **13 HARISH KUMAR, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), COMPANY SECRETARY, NATIONAL COMMODITY AND DERIVATIVES EXCHANGE LIMITED, HAVING ITS REGISTERED OFFICE AT 1ST FLOOR, AKRUTI CORPORATE PARK, NEAR GE GARDEN, LBS ROAD, KANJURMARG (WEST), MUMBAI-400079** - **14 ANIL JHAWAR, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), MANAGING DIRECTOR, JICS LOGISTICS LTD., HAVING ITS REGISTERED OFFICE AT OFFICE NO. 502, A- WING, ORCHID BUSINESS PARK, TWIN ARCADE MILITARY ROAD, CST-380, 380/182, MAROL, ANDHERI, MUMBAI- 400 059** - **15 PRANAV JHAWAR, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), WHOLE-** - **TIME DIRECTOR AND CHIEF FINANCIAL OFFICER, JICS LOGISTICS LTD., HAVING ITS REGISTERED OFFICE AT OFFICE NO. 502, A- WING, ORCHID BUSINESS PARK, TWIN ARCADE MILITARY ROAD, CST-380, 380/182, MAROL, ANDHERI, MUMBAI- 400 059** - **16 KAMALESH SARANGI, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), NOMINEE DIRECTOR, JICS LOGISTICS LTD., HAVING ITS REGISTERED OFFICE AT OFFICE NO. 502, A- WING, ORCHID BUSINESS PARK, TWIN ARCADE MILITARY ROAD, CST-380, 380/182, MAROL, ANDHERI, MUMBAI- 400 059** C.O.(C) No.1367 of 2020 4 - **17 DEVENDRA AGRAWAL, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), DIRECTOR, JICS LOGISTICS LTD., HAVING ITS REGISTERED OFFICE AT OFFICE NO. 502, A- WING, ORCHID BUSINESS PARK, TWIN ARCADE MILITARY ROAD, CST-380, 380/182, MAROL, ANDHERI, MUMBAI- 400 059** - **18 ANIL ARORA, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), ADDITIONAL DIRECTOR, JICS LOGISTICS LTD., HAVING ITS REGISTERED OFFICE AT OFFICE NO. 502, A- WING, ORCHID BUSINESS PARK, TWIN ARCADE MILITARY ROAD, CST-380, 380/182, MAROL, ANDHERI, MUMBAI- 400 059** - **19 YASH GUPTA, (AGE AND FATHER'S NAME NOT KNOWN TO THE PETITIONER), COMPANY SECRETARY, JICS LOGISTICS LTD., HAVING ITS REGISTERED OFFICE AT OFFICE NO. 502, A- WING, ORCHID BUSINESS PARK, TWIN ARCADE MILITARY ROAD, CST-380, 380/182, MAROL, ANDHERI, MUMBAI- 400 059 BY ADVS.** - **R1 TO R13 BY SRI.MADHU RADHAKRISHNAN R14 TO R19 BY SRI.TOM K.THOMAS** **THIS CONTEMPT OF COURT CASE (CIVIL) HAVING COME UP FOR ADMISSION** **ON 10.12.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** C.O.(C) No.1367 of 2020 5 ## **JUDGMENT** This Contempt Petition is filed by the writ petitioner Association complaining that the directives contained in the interim order dated 13[th] April, 2018 in W.P.(C) No.13768/2018, which are extended from time to time are flouted by the respondents. The said order reads thus: “ O R D E R Learned Government Pleader takes notice for respondents 1, 3 and 4. Learned Standing Counsel takes notice for the second respondent. Post after vacation for counter or statement along with W.P.(C) No.22681/13. In the meanwhile, the coercive action threatened under Ext.P12 series shall be kept in abeyance on condition that goods belonging to the members' of the petitioner and retained by the second respondent shall be the pledge for the amount claimed under Ext.P12 series. This order will be operative for a period of two months. 2. The interim order was being extended periodically and finally it was extended C.O.(C) No.1367 of 2020 6 until further orders on 27.9.2019. Relief sought for in the writ petition was to quash Exhibit P12, Exhibit P12(a) & Exhibit P12(b) notices dated 4.2.2018, informing some of the members of the contempt petitioner that the 2[nd] respondent in the writ petition viz., M/s.National Commodity and Derivative Exchange Ltd., Mumbai is proceeding to auction the goods held by them to recover the costs incurred against the goods. A further relief of mandamus was sought to declare that the members of the petitioner society are not liable to pay any cost including costs involved in salvaging, cleaning, reprocessing, testing, warehousing charges or any other charges incurred. At the outset, it is relevant to point out that in the writ petition, the respondents are; (1) State of Kerala, represented by Chief Secretary, Thiruvananthapuram, (2) M/s.National Commodity and Derivative Exchange Ltd., Mumbai, (3) M/s.JICS Logistic Limited, Mumbai, (4) The Commissioner of Food Safety, Thiruvananthapuram and (5) District Food Safety Officer, Designated Officer, Ernakulam. 3. In the contempt petition, the 1[st] respondent is one Vijay Kumar Venkataraman, who is said to be the Chief Executive Officer and Managing Director of M/s.National Commodity and Derivative Exchange Ltd., Mumbai and respondent Nos.2 to 13 are said to the Directors of the said M/s.National Commodity and C.O.(C) No.1367 of 2020 7 Derivative Exchange Ltd., and none of them are parties in the writ petition. Respondent Nos.14 to 19 are said to be the Directors/Additional Directors/Company Secretary of JICS Logistics Limited, Mumbai, and they are also not parties in the writ petition. The. Subject issue raised basically in the writ petition is, attempted sale of Black Pepper by M/S National Commodity and Derivative Exchange Ltd. which are earmarked for delivery to the members of the petitioner society, to recover the alleged costs incurred for warehousing the goods, by selling off the goods in auction. 4. The case projected by the contempt petitioner is that M/s.National Commodity and Derivative Exchange LtdMumbai, who was in full control of goods, was specifically directed by this court as per the interim order in question, to keep the coercive action threatened under Exhibit P12 series of notice in abeyance, however, with a rider that it would form as a pledge for the amount claimed under Exhibit P12 series; that the directions were applicable not only to M/s.National Commodity and Derivative Exchange Ltd. but also all its agents, associate entities including its accredited warehouse such as M/s.JICS Logistics Limited, Mumbai. 5. Therefore, it is the case of the contempt petitioner that pursuant to the order passed by this Court, M/s.National Commodity and Derivative Exchange Ltd., was under legal obligation to ensure that the pledged goods are well protected and C.O.(C) No.1367 of 2020 8 safeguarded against any coercive action. However, though the respondents were well aware that the goods were the subject matter of litigation before this Court and the National Commodity and Derivative Exchange Ltd. and its associates had been instructed to keep the coercive action in abeyance, not only did not comply with the order passed by this Court but flouted the order in every respect. 6. It is the case of the petitioner that in absolute violation of the order passed by this Court, M/s. JICS Logistics Limited, the warehousing company in question, auctioned the goods under the aegis of the National Commodity and Derivative Exchange Ltd. It is further contended that over a month after conducting auction, M/s.JICS Logistics Limited sent an email dated 19.8.2020 to M/s.Betul Oil Limited, one of the members of the petitioner society, inter alia stating that 10.351 MT of goods had been publicly auctioned and that emails were sent to the other members of the petitioner society informing them about the auction. Two of such emails are produced as Annexure E & F. 7. Thus it is the case of the petitioner that by auctioning the goods, M/s. National Commodity and Derivative Exchange Ltd., Mumbai and M/s. JICS Logistics Limited, Mumbai, are attempting to render the writ petition in question infructuous. It is also submitted that if the goods, which are the subject matter of the writ petition are C.O.(C) No.1367 of 2020 9 auctioned, there would be nothing left to adjudicate upon. Therefore, it is contended that M/s. National Commodity and Derivative Exchange Ltd. and M/s.JICS Logistics Limited have exhibited blatant disregard to the directions issued by this Court, wherein coercive action threatened was directed to be kept in abeyance. 8. According to the contempt petitioner, M/s.National Commodity and Derivative Exchange Ltd., was responsible and duty bound to maintain the goods in safe custody, pursuant to the interim order passed by this Court, and the Directors of the said company as well as of M/s.JICS Logistics Limited were well aware of the interim order passed by this Court and therefore, even if they were not parties to the writ petition, they are liable to be proceeded with under the Contempt of Courts Act, 1971 for flouting the orders of this Court. 9. Various facts and circumstances are put forth in the contempt petition to substantiate the point that the respondents in the contempt petition have clear knowledge with respect to the interim order passed by this Court, and the action of the respondents auctioning the goods in violation of the interim order, which is wilful and deliberate, thus interfering with the fair administration of justice and the said action of M/s. National Commodity and Derivative Exchange Ltd. and M/s.JICS Logistics Limited, Mumbai are contumacious in nature liable to be proceeded with. C.O.(C) No.1367 of 2020 10 10. It is important to note that in the contempt petition, M/s. National Commodity and Derivative Exchange Ltd. & M/s.JICS Logistics Limited, Mumbai, registered under the Companies Act, are not made parties, but the Directors are made parties. Along with the contempt petition, memos of charges against the respondents are submitted. The charges are typical in nature and one memo of charges submitted against Vijay Kumar Venkataraman – the 1[st] respondent in the contempt petition is extracted: ## “ MEMO OF CHARGES (1st Respondent] That you, Shri Vijay Kumar Venkataraman, father's name not know to the Petitioner, age not known to the Petitioner, Chief Executive Officer and Managing Director, National Commodity and Derivatives Exchange Limited, Having its registered office at 1st Floor, Akruti Corporate Park, Near G E Garden, L B S Road Kanjurmarg (West), Mumbai-400079, the 1st Respondent herein, have knowingly and willfully disobeyed the directions contained in the order dated interim order dated 13.04.2018 in Writ Petition (Civil) No. 13768 of 2018 of this Hon'ble Court, rendering yourself punishable under Section 12 of the Contempt of Court Act,1971. Dated this the 23rd day of August, 2020. Sd/- Counsel for the Petitioner” C.O.(C) No.1367 of 2020 11 11. Typical memos of charges are submitted against the Managing Director/Directors/Company Secretary etc of M/s. National Commodity and Derivative Exchange Ltd. & M/s.JICS Logistics Limited. To put it precisely, the contempt petitioner seeks to proceed against all the respondents under the Contempt of Courts Act, 1971. 12. Respondents 1 to 13 viz., Managing Director and Directors of M/s. National Commodity and Derivative Exchange Ltd., have filed a joint affidavit refuting the allegations raised against them, basically contending that Exhibit P12 series of notices were issued by 2[nd] respondent in the writ petition viz., M/s. National Commodity and Derivative Exchange Ltd., seeking to recover the costs incurred for salvaging the stocks of black pepper, which were ordered to be destroyed by the Commissioner of Food Safety, Kerala, on the basis of the allegations of adulteration. The five separate orders of destruction passed by the Commissioner of Food Safety, Kerala were challenged before this Court by way of five writ petitions by M/s. National Commodity and Derivative Exchange Ltd. in the interest of the market and on the request made by stakeholders. Apparently, interim orders were passed in the said writ petitions . 13. According to the said respondents, on the basis of an interim order passed by this Court in I.A.No.6246/2018 in W.P.(C) No.22681/2013, M/s. National Commodity and C.O.(C) No.1367 of 2020 12 Derivative Exchange Ltd. issued notices for recovering proportional cost from the parties including some of the members of the petitioner association and it was on the basis of the same, petitioner has filed W.P.(C) No.13768/2018 challenging the notices issued by M/s. National Commodity and Derivative Exchange Ltd. It is the case of the said respondents that the interim order passed by this Court, which is the subject matter of this contempt petition, was restricted to the notices issued by M/s.National Commodity and Derivative Exchange Ltd. and therefore, the contempt petition having not been initiated by any of the aggrieved persons is not maintainable in law. 14. It is also submitted that the petitioner cannot maintain the contempt petition since it is not an affected party. The said respondents have also a contention that the writ petition is not maintainable at the instance of the petitioner which is having no manner of relationship with the companies in question. Anyway, in my view that is not a subject matter to be considered in the instant contempt petition. That apart it is contended by the said respondents that stocks have been sold in auction by the warehouse operator - M/s. JICS Logistics Limited, Mumbai, and no details of the stock sold, quantity of stocks sold, amount recovered, dues payable to the warehouse proprietor etc. are not revealed in the contempt petition. 15. That apart, it is contended that the contempt petition is not maintainable in C.O.(C) No.1367 of 2020 13 law as the order in question is pertaining to Exhibit P12 series of notices alone, which has been obeyed by M/s. National Commodity and Derivative Exchange Ltd. in letter and spirit. It is predominantly contended that M/s. National Commodity and Derivative Exchange Ltd. cannot be made responsible for any action taken by JICS Logistics Limited, Mumbai since it is a separate legal entity providing warehouse services , exercising the rights vested in it under law and it is not under the control or supervision of M/s. National Commodity and Derivative Exchange Ltd. 16. That apart, it is contended that, in the contempt petition, there is no averment that the auction was conducted by M/s. Jics Logistics Ltd., on the basis of the directions issued by M/s. National Commodity and Derivative Exchange Ltd. or any of its directors. Other contentions are also raised with respect to the amounts due to M/s. National Commodity and Derivative Exchange Ltd. However, in my view, those are not subject matters to be considered in the contempt petition. 17. The 15[th] respondent in the contempt petition i.e., Pranav Jhawar, Wholetime Director and Chief Financial Officer of the JICS Logistics Limited, Mumbai, has filed an affidavit for and on behalf of himself and respondents 14 to 19 refuting the allegations against them. Basically, it is contended that they are not parties to the writ petition and they do not have the knowledge with respect to the interim order passed C.O.(C) No.1367 of 2020 14 by this Court; that there is no wilful or deliberate action on its part; apart from contending that the petitioner society is not entitled to maintain a writ petition, and therefore, it is not entitled to maintain the contempt petition. 18. It is also contended that the interim order in question passed by this Court is not binding on respondents 14 to 19 as they were deliberately not made parties to the writ petition in question and the above order was obtained behind the back of the respondents. It is also pointed out that the orders of extension made by this Court were also not aware of the said respondents. Apart from the same, the circumstances that led to auctioning of the goods by M/s. JICS Logistics Limited, Mumbai are all narrated. 19. It was submitted that there is an outstanding amount of Rs.240939980/towards warehouse charges from the members of the contempt petitioner. Even though an amount of Rs.84452623/- could be realised in auction as on 15.7.2020, an amount of Rs.15912886/- is outstanding. That part, it is contended that JICS Logistics Limited, Mumbai is not under the control of M/s. National Commodity and Derivative Exchange Ltd. and JICS Logistics Limited, Mumbai has entered into indemnity agreements with various individual operators in the field to store the goods in the warehouses. Apart from the same, it is submitted that M/s. National Commodity and C.O.(C) No.1367 of 2020 15 Derivative Exchange Ltd. has no control over JICS Logistics Limited, and therefore, the activities of warehouses are maintained and controlled by JICS Logistics Limited on its own and without the juncture of M/s. National Commodity and Derivative Exchange Ltd. and its directors. 20. It is also pointed out that the petitioner has not made out any case to proceed against respondents 14 to 19, who are non parties in the writ petition, especially due to the fact that there are no charges made out against the directors of JICS Logistics Limited and the memo of charges submitted are typical in nature without incorporating the role played by them in the company in the matter of discharging their duties and therefore, by virtue of the provisions of the Contempt of Courts Act, 1971 itself, the contempt petition is not maintainable. 21. Petitioner has filed a reply to the counter affidavit filed by respondents 13 to 15 i.e., Managing Director/Directors/Company Secretary of M/s.JICS Logistics Limited. In the reply, it is stated that when this Court directed to keep in abeyance Exhibit P12 series of coercive action, it was not open for an associate entity of National Commodity and Derivative Exchange Ltd. to auction the goods on the pretext of another excuse. It is also pointed out that National Commodity and Derivative Exchange Ltd. had filed a criminal complaint against certain depositors, wherein it is C.O.(C) No.1367 of 2020 16 averred that “ the ecosystem of the complainant for the purpose of making delivery of the relevant point of time consisted of the Warehouse Service Providers (WSP), the Depositors (NCDL/CDSL), the Assayers and the R&T Agents. The functioning of the said WSP, NCDL/CDSL, Assayers and the R & T Agents are governed by the relevant provisions of the Regulations of the complainant which are made under the bye-laws of the complainant. They are additionally bound by the respective Agreements executed by and between the Complainant, WSP and Depositories. It is further submitted by the Complainant that the WSPs are required to follow the due process for deposit and delivery of stocks as set out in the Physical Delivery Guide.” 22. Other aspects in respect of certain submissions made in the complaint are also extracted in the reply. The sum and substance of the contention is that the relation between the National Commodity and Derivative Exchange Ltd. and the Warehouse Service Providers is of Principal and Agent and even otherwise as per the own showing of National Commodity and Derivative Exchange Ltd., its accredited warehouse is governed by the bye-laws of National Commodity and Derivative Exchange Ltd. and is subject to the terms, conditions and obligations set out in the warehousing agreements and is further as part of its ecosystem responsible for delivery of goods to the purchasers. Therefore, it is contended that in the facts and C.O.(C) No.1367 of 2020 17 circumstances, the Warehouse Service Providers are under the control or supervision of National Commodity and Derivative Exchange Ltd. Other contentions are also raised in the reply affidavit so as to impress upon this Court that M/s.JICS Logistics Limited has sufficient knowledge about the orders passed by this Court and therefore, they are also liable to be proceeded under the Contempt of Courts Act, 1971. That apart it is submitted in W.P.(C) No.25854/20149 filed by M/s.JICS Logistics Limited against the National Commodity and Derivative Exchange Ltd. and others, in regard to a dispute by and between the said parties, later withdrawn and accordingly dismissed as per a judgment dated 21.10.2020, which is produced as Annexure 1, along with the reply. So also it is contended that other contentions are available on record in order to identify the role of M/s.JICS Logistics Limited in flouting the interim order passed by this Court. 23. I have heard, learned Senior counsel for the petitioner Sri.E.K.Nanadakumar, assisted by Adv.Paulose C. Abraham, Adv Sri.Madhu Radhakrishnan for respondents 1 to 13 and Adv Sri.Tom K.Thomas for respondents 14 to 19 and perused the pleadings and material on record. 24. The paramount contention advanced by the learned Senior Counsel appeared for the contempt petitioner, Sri.E.K.Nandakumar is that prima facie there C.O.(C) No.1367 of 2020 18 are sufficient materials before this Court to proceed against the respondents, who are the Managing Director and Directors of National Commodity and Derivative Exchange Ltd. and M/s.JICS Logistics Limited respectively. Further it is submitted that M/s.JICS Logistics Limited and its Directors, though they are not parties to the writ petition, was well aware of the interim order passed by this Court and it should have restrained itself from auctioning the goods without securing orders from this Court. It was also submitted that the materials produced along with the contempt petition and the reply would show that the respondents cannot plead ignorance of the interim order passed by this Court. Above all, it is contended that the auction conducted by the respondents was deliberate and a challenge to the interim order passed by this Court, and therefore, it is contumacious in nature and liable to be proceeded under the Contempt of Courts Act, 1971. 25. On the other hand, learned counsel appearing for respondents 1 to 13 submitted that M/s.JICS Logistics Limited is a company incorporated under the Companies Act and it is functioning independently and without any control or regulatory measures of National Commodity and Derivative Exchange Ltd. That apart, it was submitted that M/s.JICS Logistics Limited is entering into separate agreement with the business enterprises in order to warehouse goods belonging to C.O.(C) No.1367 of 2020 19 said business enterprises, which is quite clear and evident from the agreement produced along with the affidavit filed by respondents 14 to 19, and the National Commodity and Derivative Exchange Ltd. has no manner of power so as to stop any action taken by M/s.JICS Logistics Limited to recover the amount due to it on account of warehouse charges. That apart it is contended that the National Commodity and Derivative Exchange Ltd. is a limited company incorporated under the Companies Act and therefore, if at all there is any liability, it was that of the company, however, the company is not a party in the contempt proceedings and therefore, the contempt of court application itself is bad for non joinder of necessary parties. 26. It is also contended that even though the Managing Director and Directors of National Commodity and Derivative Exchange Ltd. are made parties to the contempt petition in contemplation of section 12(4) of the Contempt of Courts Act, 1971, no allegations are made in the contempt petition so as to sustain a charge, and further that, in the charge filed along with the contempt petition against the Managing Director and Directors, no allegations in contemplation of law is made and therefore, the contempt petition is bad for vital and necessary pleadings. That apart it was also contended that Exhibit P12 series i.e., Exhibits P12, P12(a), P12 (b) and C.O.(C) No.1367 of 2020 20 P12(c) are only notices issued to some of the merchants, who are said to be members of the contempt petitioner, but goods were stocked by several other people and the notices issued to them were not under challenge. Therefore no prohibition was created in the interim order to proceed against any other merchants, who have availed warehouse services of the Warehouse operator viz., M/s.JICS Logistics Limited. 27. Learned counsel for respondents 14 to 19 has addressed arguments in accordance with the pleadings put forth in the affidavit filed by them. Primarily it was contended that M/s.JICS Logistics Limited is a company incorporated under the Companies Act and it is functioning independently without any regulatory measures of National Commodity and Derivative Exchange Ltd. Learned counsel has also invited my attention to some of the agreements produced along with the affidavit to show that it is entering into agreement with the merchants independently by way of an indemnity bond. Learned counsel has also invited my attention to the agreement executed by and between the National Commodity and Derivative Exchange Ltd. and M/s.JICS Logistics Limited in regard to the warehousing services. Clause 1.13 is pointed out specifically to show that the warehouse operator i.e., M/s.JICS Logistics Limited has agreed to provide its warehouse and other storage facilities to the C.O.(C) No.1367 of 2020 21 participants of the National Commodity and Derivative Exchange Ltd. for deposit of commodities as may be permitted to be traded on the National Commodity and Derivative Exchange Limited's platform for the purpose of deliveries arising out of trades on the platform of National Commodity and Derivative Exchange Ltd. Other obligations and duties are undertaken by National Commodity and Derivative Exchange Ltd. and M/s.JICS Logistics Limited in regard to the said arrangement. 28. However, it is clear from the said agreement that the nature of arrangement entered into by and between the parties is a Principal to Principal basis; it shall not create an employer/employee relationship and; that the said agreement be deemed not to create any partnership, joint venture, agency between the National Commodity and Derivative Exchange Ltd. and warehouse or the representatives and employees. Therefore, the contentions advanced by learned counsel for respondents 14 to 19 is that allegations in the contempt petition and the reply against the respondents 14 to 19 that since it was under the regulatory measures, of M/s.National Commodity and Derivative Exchange Ltd. it had sufficient knowledge with respect to the interim order passed by this Court is not true and correct. That apart it was submitted that more than Twenty Four Crores of rupees was due to it from the merchants on account of warehousing charges and it had no other C.O.(C) No.1367 of 2020 22 alternative than to recover the dues by selling of the goods in accordance with the terms and conditions of indemnity bond executed by M/s.JICS Logistics Limited and each of the merchants.Therefore, according to the respondents, there was no deliberate or wilful conduct on the part of the respondents in not obeying the interim order passed by this Court. 29. I have evaluated the rival submissions made across the Bar. It is true that the Contempt of Courts Act, 1971 has been introduced for the purpose of ensuring that the rule of law and the democratic set up prevailing in the country is scrupulously followed by implementing any judgment, decree, order etc. passed by the courts of law, and the constitutional court discharging its duties and powers under Article 226 of the Constitution of India. However, one has to bear in mind that the contempt of court, is a special jurisdiction to be exercised sparingly and with caution and in order to ensure the effective administration of justice or any action on the part of any person, which is tending to impede its authority. 30. In order to understand the rule, purport and the manner in which the provisions of Contempt of Courts Act, 1971 are to be invoked, a reference to some of the provisions of the Act would be worthwhile. Civil contempt is defined under section 2(b) to mean, 'wilful disobedience to any judgment, decree, direction or writ C.O.(C) No.1367 of 2020 23 or other process of court or wilful breach of an undertaking given to a court.' Section 12 deals with punishment for contempt, which reads thus: — **“12. Punishment for contempt of court.** (1) Save as otherwise expressly provided in this Act or in any other law, a contempt of court may be punished with simple imprisonment for a term which may extend to six months, or with fine which may extend to two thousand rupees, or with both: Provided that the accused may be discharged or the punishment awarded may be remitted on apology being made to the satisfaction of the court. Explanation.—An apology shall not be rejected merely on the ground that it is qualified or conditional if the accused makes it bona fide. (2) Notwithstanding anything contained in any other law for the time being in force, no court shall impose a sentence in excess of that specified in sub-section (1) for any contempt either in respect of itself or of a court subordinate to it. (3) Notwithstanding anything contained in this section, where a person is found guilty of a civil contempt, the court, if it considers that a fine will not meet the ends of justice and that a sentence of imprisonment is necessary shall, instead of sentencing him to simple imprisonment, direct that he be detained in a civil prison for such period not exceeding six months as it may think fit. (4) Where the person found guilty of contempt of court in respect of any undertaking given to a court is a company, every person who, at the time the contempt was committed, was in charge of, and was responsible to, the company for the conduct of business of the company, as well as the company, shall be deemed to be guilty of the contempt and the punishment may be enforced, with the leave of the court, by the detention in civil prison of each such person: C.O.(C) No.1367 of 2020 24 Provided that nothing contained in this sub-section shall render any such person liable to such punishment if he proves that the contempt was committed without his knowledge or that he exercised all due diligence to prevent its commission. (5) Notwithstanding anything contained in sub-section (4), where the contempt of court referred to therein has been committed by a company and it is proved that the contempt has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of the contempt and the punishment may be enforced, with the leave of the court, by the detention in civil prison of such director, manager, secretary or other officer. Explanation.—For the purposes of sub-sections (4) and (5),— (a) “company” means any body corporate and includes a firm or other association of individuals; and b) “director”, in relation to a firm, means a partner in the firm. 31. In the instant case, going by the pleadings put forth in the contempt petition and in the reply affidavit filed by the contempt petitioner, it is clear that the petitioner has a specific case that the contempt is committed by M/s.National Commodity and Derivative Exchange Ltd. and M/s.JICS Logistics Limited. In this regard a reference to sub-section (4) of section 12 of Contempt of Courts Act, 1971 would be worthwhile, which stipulates that, 'where the person found guilty of contempt of court in respect of any undertaking given to a court is a company, every person who, at the time the contempt was committed, was in charge of, and was C.O.(C) No.1367 of 2020 25 responsible to the conduct of the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the conduct and the punishment may be enforced with the leave of the court, by the detention in civil prison of each such person'. 32. However, the proviso makes it clear that nothing contained in sub-section (4) shall render any such person liable to such punishment if he proves that the contempt was committed without his knowledge or that he exercised all due diligence to prevent its commission. Sub-section (5) also makes it clear that notwithstanding anything contained in sub-section (4), where the contempt of court referred to therein has been committed by a company and it is proved that the contempt has been committed with the consent or connivance of, or is attributable to any neglect on the part of any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be guilty of the contempt and the punishment may be enforced with the leave of the court by detention in civil prison. 33. Therefore, on an analysis of sub-section (4), it is clear that apart from the company, which committed contempt, every person who was in charge of and responsible to the company in the matter of conduct of its business shall be deemed C.O.(C) No.1367 of 2020 26 to be guilty of the contempt. Sub-section (5) has a different implication detached from sub-section (4) for the reason that it takes care of the company, director, manager, secretary or other officers of the company and if any wilful disobedience on their part, then such person can be proceeded with and punished in contempt. 34. The aforesaid aspects are discussed in detail for the reason that at least there should be prima facie pleadings against the persons, who are covered under sub-sections (4) & (5) of section 12 of the Contempt of Courts Act, 1971. In fact, going by the pleadings put forth by the contempt petitioner, what I could gather is that M/s.National Commodity and Derivative Exchange Ltd. was responsible for the violation of the interim order passed by this Court. It is an admitted fact that the coercive action under Exhibit P12 series was directed to be kept in abeyance on condition that the goods remaining with M/s.National Commodity and Derivative Exchange Ltd. shall be treated as a pledge against the amounts due to it. 35. Such an order was passed on the basis of the pleadings put forth in the writ petition that M/s.National Commodity and Derivative Exchange Ltd. is holding goods for and on behalf of merchants with the warehouse operator. There is no pleading at all in the writ petition that the warehouse services are provided by a separate legal entity independently from the clutches and control of M/s.National Commodity and C.O.(C) No.1367 of 2020 27 Derivative Exchange Ltd. One thing is clear that this Court by passing the interim order has only interfered with the coercive action taken by M/s.National Commodity and Derivative Exchange Ltd. against some of the merchants as per Exhibit P12 series notices. The goods were entrusted to M/s.JICS Logistics Limited by various merchants and proceedings are also apparently initiated against such merchants to recover the warehouse charges. If at all the interim order was binding on the Managing Director and directors of the two companies specified above, it was only in respect of Exhibit P12 series of notices. 36. However on an analysis of the pleadings made in the contempt petition and even in the reply affidavit filed by the petitioner apart from making allegations against M/s.National Commodity and Derivative Exchange Ltd. and M/s.JICS Logistics Limited, there are no independent pleadings, and allegations made against Managing Director/Directors/Company Secretaries in order to proceed against them under the Contempt of Courts Act, 1971. Which thus means, in order to proceed in contempt against any directors and any other officers of a company, at least there should be sufficient pleadings made in the contempt petition that such and such officers and such and such directors were responsible for the violation of the interim order passed by this Court. C.O.(C) No.1367 of 2020 28 37. It is also significant to note, and clear from section 12(4) and 12(5) of the Contempt of Courts Act, 1971 that in order to establish contempt against the persons responsible and the officers in charge as well as any person who has consented or connived or attributable to any neglect in respect of a company, there should be sufficient pleadings in the contempt petition that the company being primarily responsible, such officers and directors are liable to be proceeded with and accordingly in the charge filed along with the contempt petition there should clear allegations made with respect to the role played by such persons in flouting the orders. One of the charge memos filed along with the contempt petition is extracted above, and the charge memos are typical in nature but it is not at all discernible from the pleadings in the contempt petition and in the charge memo as to the role played by the Managing Director/Directors/Company Secretaries and the officers, and the persons responsible in the matter of flouting the interim order passed by this Court. 38. Apart from all these aspects, it is relevant and important to note that in order to proceed against the persons responsible for the conduct of the company, the company should have been made a party, however, in the contempt proceedings, neither M/s.National Commodity and Derivative Exchange Ltd. nor C.O.(C) No.1367 of 2020 29 M/s.JICS Logistics Limited are not made parties. The provisions of Section 12 of Act 1971 makes it clear that if contempt is said to be committed by the company, the company is a necessary party to the contempt proceedings, which is the mandatory requirement under law . 39. From the pleadings put forth by the petitioner in the contempt petition also it refers to the 2[nd] respondent in the writ petition i.e., the M/s.National Commodity and Derivative Exchange Ltd. Even assuming that M/s.JICS Logistics Limited was aware of the interim order passed by this Court, M/s.JICS Logistics Limited should have been made a party to the proceedings. This I say because in the contempt petition and in the reply filed by the petitioner to the counter affidavit filed by respondents 14 to 19, the allegation made is that M/s.JICS Logistics Limited was aware of the interim order passed by this Court and it has flouted the orders deliberately and wilfully and is of a contumacious nature. Even in the reply affidavit, the contempt petitioner has not pleaded at all the role played by the Managing Director/Directors/Company Secretaries of the said company also. 40. In the memo of charges also, except a blunt statement that such persons have committed contempt by selling off the goods, the role played by the Director in the company in the matter of committing the contempt are not spelt out. Which thus C.O.(C) No.1367 of 2020 30 means, there is no necessary and sufficient pleadings in order to proceed in contempt by framing charges against the respondents. 41. In this regard, a reference to some of the judgments of the Apex Court would be fruitful in order to arrive at a logical conclusion. In **Anil Ratan Sarkar and Others v. Hirak Ghosh and others** (2002) 4 SCC 21], the Apex Court held that the Contempt of Courts Act, 1971 is a powerful weapon in the hands of the courts for the purpose of imbuing confidence in the people and to ensure the due and proper administration of justice in India. However, for that very reason the powers under it should be exercised cautiously and in the larger interest of society and only after the court is satisfied beyond doubt as to the guilt of an accused as well as the bona fides of the complainant, the contempt action should be taken against the alleged contemners. In my considered opinion, in order to proceed with any contempt, there should be prima facie material before the court. The basic requirement, in my assessment, is proper and necessary pleadings against the alleged contemners made in the contempt petition. 42. In **Union of India and Others v. Subedar Devassy P V** [(2006) 1 SCC 613], it was held that in contempt proceedings, the court is concerned only with the question whether the decision has been complied with or not and it cannot examine C.O.(C) No.1367 of 2020 31 the correctness of the decision or traverse beyond it and take a different view from what was taken therein or give additional directions or delete any direction. 43. In **R.N.Dey and Others v. Bhagyabati Pramanik and Others** [(2000) 4 SCC 400], it was held by the Apex Court that contempt is a matter between the court and the contemner and the aggrieved has no right to insist that court should exercise its jurisdiction. 44. In **Mrityunjoy Das and Another v. Sayed Hasibur Rahaman and others** [(2001) 3 SCC 739], the Apex Court considered the question of standard of proof required in contempt proceedings and held that, it is that of criminal proceedings and so contempt must be established beyond a reasonable doubt. It was further held in the said judgment that “he, who asserts, must prove” is applicable to allegations of contempt of Court. This judgment has got very vital relevance to the facts and circumstances of this case, basically for the reason that in order to proceed in contempt, the contemners should know what are the allegations made against them, and only if any allegations are made against the contemners, then it can be said that there is prima facie case to be proceeded against the contemners. 45. The proposition of law laid down by the apex court in **Ram Kishan v.** C.O.(C) No.1367 of 2020 32 **Tarun Bajaj and Ors.** [(2014) 16 SCC 204], is that contempt proceedings are quasi- criminal in nature, and, standard of proof required in these proceedings is beyond all reasonable doubt and it would be rather hazardous to impose sentence for contempt on authorities in exercise of contempt jurisdiction on mere probabilities. 46. In **Babulal and Another v. Municipal Corporation, Ratlam and others** [(2005) 13 SCC 101], the Apex Court considered a question as to whether a person not a party in the original proceedings, can be proceeded against. In which it was held that it is a debatable issue taking into account the judgment in **S.N.Banerjee v. Kuchwar Line and Stone Co. Ltd.** [AIR 1938 PC 295], and held that any person aiding and abetting contempt can be punished. The said judgment also shows that third parties responsible can be proceeded in contempt but in order to proceed against such contemners, there should be basic pleading in regard to the nature of the role played by them. In the matter of flouting the interim order of this Court by two companies viz. M/s.National Commodity and Derivative Exchange Ltd. and M/s.JICS Logistics Limited, no attempt is made to make pinpointed allegations against the Managing Director/Directors/Officers of the company or any agent and its Directors. ' C.O.(C) No.1367 of 2020 33 47. In **Sitaram v. Balbir Alias Bali** [(2017) 2 SCC 456], Apex Court considered this question and held in unequivocal terms as follows: **“** 42 **.** In Seaward v. Paterson [Seaward v. Paterson, (1895-99) All ER Rep 1127 : (1897) 1 Ch 545 (CA)] the landlord of the premises concerned had obtained an injunction against Paterson i.e. his tenant restraining him from doing or allowing to be done anything on the premises which would be a nuisance to the landlord and from using the premises otherwise than for the purposes of a private club. Alleging that the tenant had committed contempt of the court by allowing the premises to be used for boxing matches, the landlord applied for committal of two other persons, namely, Sheppard and Murray on the ground that they had aided and assisted the tenant in his disobedience to the injunction. The following passages from the judgment of Lindley, L.J. are quite instructive : (All ER pp. 1130 F-G & 1131 B-D) Now, Let us consider what jurisdiction the court has to make an order against Murray. There is no injunction against him—he is no more bound by the injunction granted against Paterson than any other member of the public. He is bound, like other members of the public, not to interfere with, and not to obstruct, the course of justice; and the case, if any, made against him must be this, not that he has technically infringed the injunction, which was not granted against him in any sense of the word, but that he has been aiding and abetting others in setting the court at defiance, and deliberately treating the order of the C.O.(C) No.1367 of 2020 34 court as unworthy of notice. If he has so conducted himself, it is perfectly idle to say that there is no jurisdiction to commit him for contempt as distinguished from a breach of the injunction, which has a technical meaning. *** A motion to commit a man for breach of an injunction, which is technically wrong unless he is bound by the injunction, is one thing; and a motion to commit a man for contempt of court, not because he is bound by the injunction by being party to the cause, but because he is conducting himself so as to obstruct the course of justice, is another and a totally different thing. The difference is very marked. In the one case the party who is bound by the injunction is proceeded against for the purpose of enforcing the order of the court for the benefit of the person who got it. In the other case, the court will not allow its process to be set at naught and treated with contempt. 43 **.** In Z Ltd. v. A-Z and AA-LL the plaintiff had obtained injunction against certain defendants and the assets of one such defendant against whom the injunction was granted, were held by a bank. The bank was served with a copy of the injunction but the defendant concerned had not yet been served. While considering the question whether any disposal of assets belonging to the defendant by the bank would make it liable for committing contempt of court, it was stated as under : (All ER pp. 566g-j & 567a-b) “I think that the following propositions may be stated as to the consequences which ensue when there are acts or omissions which are C.O.(C) No.1367 of 2020 35 contrary to the terms of injunction : (1) The person against whom the order is made will be liable for contempt of court if he acts in breach of the order after having notice of it. (2) A third party will also be liable if he knowingly assists in the breach, that is to say if knowing the terms of the injunction he wilfully assists the person to whom it was directed to disobey it. This will be so whether or not the person enjoined has had notice of the injunction. *** I will give my reasons for the second proposition and take first the question of prior notice to the defendant. It was argued that the liability of the third person arose because he was treated as aiding and abetting the defendant (i.e. was an accessory) and as the defendant could himself not be in breach unless he had notice it followed that there was no offence to which the third party could be an accessory. In my opinion this argument misunderstands the true nature of the liability of the third party. He is liable for contempt of court committed by himself. It is true that his conduct may very often be seen as possessing a dual character of contempt of court by himself and aiding and abetting the contempt by another, but the conduct will always amount to contempt by himself. It will be conduct which knowingly interferes with the administration of justice by causing the order of the court to be thwarted.” 48. Therefore, it is clear that there is nothing wrong in proceeding against a third party to the writ petition in contempt as per the provisions of the Contempt of C.O.(C) No.1367 of 2020 36 Courts Act, 1971 but ultimately the principle is that there should be sufficient allegations made against the third persons as to the manner in which they have violated the interim order passed by this Court in terms of the provisions of section 12 of the Act, 1971 that is totally absent in the case at hand. 49. Even Though learned Senior counsel Sri.Nandakumar invited my attention to the Division Bench Judgment of this court in **Re: M.V. Jayarajan v.** [2011 (4) KLT 570 = 2011 (4) KHC 437], I am of the considered opinion that, it was in respect of criminal contempt initiated under Section 15 of Act 1971, on the basis of a public speech made by a political leader making aspersions and declaring that the people were openly flouting the Judgment by holding meetings and rallies on public roads and road margins causing wide ramifications in the administration of justice, which has no bearing to the issue on hand . 50. As I have pointed out earlier, allegations are made by the petitioner in the contempt petition as well as in the reply affidavit only against the companies, however, they are not made parties in the contempt petition. Taking into account the above factual and legal circumstances, I am of the considered opinion that the petitioner has not made out any prima facie case to proceed against the respondents in accordance with the provisions of the Contempt of courts Act 1971. C.O.(C) No.1367 of 2020 37 Needless to say, contempt petition fails, accordingly, it is dismissed. However, it is made clear that the findings rendered herein will not have any bearing to any proceedings pending by and between the parties before any court of law or other authorities. Sd/- **SHAJI P.CHALY JUDGE** smv C.O.(C) No.1367 of 2020 38 ## **APPENDIX OF CON.CASE(C) 1367/2020** |**PETITIONER'S ANNEXURE**|| |---|---| |**ANNEXURE A**|**TRUE COPY OF THE ORDER DATED 13.04.2018 IN**| ||**WRIT PETITION (CIVIL) NO. 13768 OF 2018.**| |**ANNEXURE B**|**TRUE COPY OF THE ORDER DATED 27.09.2019 IN**| ||**WRIT PETITION (CIVIL) NO. 13768 OF 2018.**| |**ANNEXURE C**|**COPY OF THE EMAIL DATED 27.11.2013 SENT BY**| ||**NCDEX TO JICS LOGISTIC LIMITED.**| |**ANNEXURE D**|**TRUE COPY OF THE EMAIL DATED 29.11.2013 SENT**| ||**BY NCDEX TO JICS LOGISTIC LIMITED.**| |**ANNEXURE E**|**TRUE COPY OF EMAIL DATED 19.08.2020 ADDRESSED**| ||**BY JICS LOGISTIC LIMITED TO BETUL OIL LIMITED.**| |**ANNEXURE F**|**TRUE COPY OF EMAIL DATED 19.08.2020 ADDRESSED**| ||**BY JICS LOGISTIC LIMITED TO LIKMI CHAND**| ||**PRABHULAL.**|