J U D G M E N T

MANMEET PRITAM SINGH ARORA, J:

1. The present contempt petition has been filed stating that the Respondent has acted in wilful breach of the Memorandum of Understanding (‘MoU’) dated 07.09.2019 entered into between the parties herein during the pendency of Complaint Case Nos. 27671/2019 & 27736/2019 (‘the cases’) titled as Hans Raj and Anr. v. A.M Investment Advisors and Associations and Anr., filed by the Petitioners under Section 138 of Negotiable Instruments Act, 1881 (‘the NI Act’), and the consequent undertaking dated 30.10.2019 given to the MM-03, South, Saket Court, Delhi (‘the Trial Court’) in the said cases.

1.1. In the MoU, the Respondent acknowledged that he had received from the Petitioners herein stock portfolio valued at Rs. 1,97,62,499/-. In addition, the Respondent agreed to pay a sum of Rs. 69,22,529, which has accrued till 17.07.2019 on the said stocks. The Respondent further agreed to pay interest at the rate of 12% per annum on the above amount till 29.02.2020.

1.2. This MoU was filed before the Trial Court, wherein, the Respondent gave an undertaking to the Trial Court that the entire settlement amount shall be paid on or before 29.02.2020 and it was further stated that in case of default, the Respondent herein would become liable for contempt of Court.

2. This contempt petition has been filed by the Petitioners on 02.03.2020 stating that the Respondent has only paid a sum of Rs. 42 lakhs and has failed to pay the balance of Rs. 2,40,84,782.14 as per the undertaking recorded in order dated 30.10.2019 passed by the Trial Court.

2.1 It is stated in the petition that the Petitioners are senior citizens, who are registered medical practitioners who were defrauded by the Respondent, who represented himself to be a portfolio Manager and lured the Petitioners to transfer their stock in shares to the Respondent. The said stock was misappropriated by the Respondent leading to the filing of two complaint cases under Section 138 of the NI Act, which led to the execution of the MoU for returning the said amount to the Petitioners.

3. By the detailed orders dated 13.07.2021 and 20.12.2021, the Respondent has been held guilty of contempt for wilful breach of terms of the MoU and the undertakings given vide order dated 30.10.2019.

4. This Court vide order dated 20.12.2021 granted an opportunity to the Respondent to purge the contempt, failing which it directed the matter would be heard on sentencing on 24.02.2022. A further opportunity was granted on 17.11.2022 and it was directed that if the Respondent fails to clear the outstanding payment, he shall be sentenced on the next date of hearing.

5. The Respondent failed to make the balance payment and, in these circumstances, arguments on sentencing were heard on 06.03.2023.

ArgumentsoftheRespondent

6. During the course of hearing on 06.03.2023, the Respondent acknowledged that a sum of Rs. 1.89 Crores remains outstanding as on date. He states that the amount of Rs. 1.89 Crore remains outstanding towards interest; and this has been noted by this Court in the orders dated 02.06.2022 and 17.11.2022. He states that the principal amount has been paid.

6.1. He states that Respondent owns an immovable asset i.e., property No. B-7/111A, Extension Safdarjung Enclave, New Delhi which he is willing to sell, however, he is unable to sell the same in view of the restraint order dated 24.02.2022 passed in the present proceedings.

6.2. He further states that the MoU, which is the subject matter of compliance in the present contempt petition was signed by the Respondent under coercion and should, therefore, not be enforced.

6.3. He lastly, states that the Respondent may not be sentenced to imprisonment and in this regard, he relies upon paragraphs 6 and 7 of the judgment of Supreme Court in Smt. Pushpaben and Another v. Narandas v Badiani and Another, (1979) 2 SCC 394.

BrieffactsleadingtoholdingtheRespondentguiltyforcontempt Proceedingsbeforethefilingofthiscontemptpetition

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