The Karnataka High Court has closed a contempt petition filed by Morgan Securities and Credits Private Limited against BPL Limited and its directors, finding no documentary evidence that the company had breached a 2020 order restraining it from alienating or encumbering its properties. A Division Bench of Justice Jayant Banerji and Justice Tara Vitasta Ganju observed that the petitioner had not established that any of BPL’s assets had actually been charged or pledged in violation of the order.

“Given that the complainant/petitioner has not placed on record any document reflecting either alienation or encumbrance of the properties of the accused No.1/company, the contempt petition is closed,” the court ruled.

The order dated July 10, 2020, had restrained BPL Limited from alienating or encumbering its properties, including those already disclosed through affidavits, until further orders. Morgan Securities alleged that BPL and its directors were seeking to create charges or pledges over the company’s tangible and intangible assets to secure loans, in violation of that restraint.

Allegations Based on EGM Resolution

The contempt plea relied heavily on a resolution passed at BPL’s extraordinary general meeting (EGM) on November 11, 2025, which authorised the board to create such encumbrances. The petitioner argued that the mere passing of the resolution constituted an attempt to breach the court’s order, even if no actual encumbrance had yet been recorded.

Morgan Securities also contended that increasing BPL’s subscribed share capital in favour of third parties, thereby diluting the controlling interest, would violate the restraint against creating third-party interests in shares. It cited a Delhi High Court judgment to support this submission, but the Division Bench did not engage with that precedent, noting the absence of any concrete evidence linking the resolution to the specific assets covered by the 2020 order.

The court examined the EGM resolution, which authorised the board to enter into or continue existing contracts with E.R. Computers Private Limited, a related party, up to ₹100 crore. The contracts were to be in the ordinary course of business and on an arm’s-length basis. The resolution also authorised the board to secure loans by creating charges or pledges over the company’s tangible and intangible assets.

Court’s Observations on Evidence

The Bench pointed out that Morgan Securities had not produced any documents showing that the proposed transactions involved any of BPL’s assets listed in its undated affidavit filed with the petition. It also noted that another annexure contained a list of BPL’s trademarks, but that was not relevant at that stage in view of the resolution’s general authorisation.

The court’s finding that no breach had been established was decisive. It declined to infer a violation merely from the existence of the EGM resolution, emphasising that contempt proceedings require clear proof of disobedience. The Division Bench made it clear that without evidence of actual alienation or encumbrance, the petition could not proceed.

Liberty to File Fresh Petition

Despite closing the contempt case, the court granted Morgan Securities liberty to file a fresh petition in accordance with law if it obtains documents evidencing a breach of the July 10, 2020 order. This leaves the door open for the petitioner to return to court with concrete proof should BPL take further steps to encumber its assets.

For the moment, BPL Limited and its directors have been relieved from the contempt proceedings. The company had argued that the resolution was merely an enabling step for ordinary business operations and did not itself amount to a violation. The court’s order appears to accept that position, at least until specific assets are shown to have been affected.

The case highlights the high evidentiary threshold in contempt proceedings, particularly when the alleged breach involves future or potential actions rather than completed transactions. The Division Bench’s insistence on documentary proof underscores that courts will not punish based on apprehension or inference alone.

Morgan Securities will now have to monitor BPL’s actions and gather tangible evidence before renewing its challenge. Until then, the 2020 order remains in force, but its enforcement depends on the ability of the petitioner to demonstrate a clear violation.

The contempt petition was heard by the Division Bench on multiple occasions before the final order was pronounced. The court’s ruling brings a measure of finality to this phase of the dispute, though the underlying issues over BPL’s property dealings remain unresolved.

Legal professionals following the case will note the court’s strict approach to contempt jurisdiction, requiring actual proof of disobedience rather than a mere attempt or intention. The judgment reinforces the principle that contempt is a quasi-criminal proceeding and the burden of proof lies squarely on the complainant.

With the petition closed, BPL Limited can proceed with its ordinary business activities, including the EGM-authorised contracts, as long as they do not involve the specific properties covered by the 2020 order. The company’s board retains the authority to create charges or pledges, but any such action that touches on the restrained assets could invite fresh contempt proceedings if properly documented.

The case is a reminder that strategic litigation in corporate disputes must be supported by concrete evidence, particularly when seeking to invoke the court’s contempt powers. The Karnataka High Court’s decision provides clarity on the limits of such proceedings and the need for petitioners to present more than corporate resolutions to establish a breach.