A sale of company assets after a court order restricting disposal constitutes contempt, allowing penalties while maintaining the validity of the transaction under specific circumstances.

1. Contempt Petition (Civil) Nos.338 of 2014 and 375 of 2014 at the instance of Ghanshyam Sarda, appellant in Civil Appeal No.10221 of 2014 and J.K. Jute Mills Mazdoor Ekta Union, appellant in Civil Appeal No.10223 of 2014 (‘applicants’, for short) seek to highlight disobedience and violation of the Order dated 08.05.2014 (“Order of 08.05.2014”, for short) passed by this Court in said Civil Appeals and other connected matters. The text of the Order of 08.05.2014 was to the following effect:
“Since it is not possible for us to take up the matter today, learned senior counsel appearing for the parties seek leave to mention before the Vacation Bench for seeking urgent hearing of the matter.
Permission is granted.
It would be open to the parties to mention before the Vacation Bench for urgent hearing of the matter.
However, it is directed that till further orders, capital assets of the Company shall not be disposed of without taking permission of this Court.”

2. The aforesaid Civil Appeals had challenged the judgment and order dated 06.01.2014 passed by the High Court of Gauhati in FAO No.10 of 2013, Writ Petition No.4303 of 2013 and Writ Petition No.6286 of 2013 and were disposed of by this Court vide its Judgment dated 13.11.2014, 2015 (1) SCC 298. The facts leading to the filing of those appeals and connected matters are dealt with in said Judgment dated 13.11.2014. It is alleged in the present contempt petitions that in violation of the Order of 08.05.2014, which was passed during the pendency of the aforesaid Appeals, the assets owned by the Company, namely, J.K. Jute Mills Company Ltd. (hereinafter referred to as the Company) at Saifganj, Katihar, Bihar spread across 1.6 acres of land (“Katihar property”, for short) were sold vide Conveyance Deed dated 02.07.2014 and consequently the persons arrayed as contemnors interfered with due administration of justice. It is prayed that the contemnors be punished for disobeying the Order of 08.05.2014 and at the same time the Conveyance Deed dated 02.07.2014 alienating Katihar property be declared null and void.

3. The Company had filed Reference No.149 of 1994 before the Board for Industrial and Financial Reconstruction (“the BIFR” for short) under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 (“Act” for short), pursuant to which, various steps for revival of the Company were being considered. By order dated 17.12.2008 the BIFR had directed “…The Company would not encumber / alienate / lease / sale any property without specific prior approval of the Board.” In the proceedings dated 26.08.2009, the BIFR had constituted Assets Sale Committee (“ASC” for short) in respect of properties of the Company including Katihar property. The proceedings of ASC dated 08.11.2012 of which Shri R.N. Lahoti, CEO of the Company was also a member show that the sale of Katihar property was engaging the attention of ASC.

4. The proceedings of the BIFR dated 07.02.2013 show that in compliance of the earlier directions, the Operating Agency was in the process of finalizing a Draft Rehabilitation Scheme (“DRS” for short) and in furtherance of the directions of sale of certain assets, notices were already sent to the Company, secured creditors and State of Bihar to nominate their representatives in ASC. The proceedings further show that the Operating Agency by letter dated 29.01.2013 had requested the BIFR to grant permission to proceed further for sale of assets of the Company situated in Bihar. The next proceedings of the BIFR dated 18.02.2013 indicate that the Operating Agency had got the assets valued and had sent notices