N VENKATA SWAMY NAIDU Vs. SRI SURYA TEJA CONSTRUCTIONS PVT LTD

JUDGEMENT

(1.) Seeking to have respondents 1, 2, 4 to 9, punished under the Contempt of Courts Act, for wilful disobedience and gross violation of the orders of the Company Law Board, Additional Principal Bench, Chennai dated 18.07.2005, this contempt case is filed. Facts, to the extent relevant, are that C.P. No. 24 of 2004 was filed by the petitioner herein, before the Company Law Board, under Sections 397, 398 and 402 read with Section 111 of the Companies Act, 1956. Among the interim reliefs sought for included an order to prevent the sale or dispossession of the land of the company and to prevent injury being caused to persons who were allotted flats in the project. Petitioner would submit that, when the Company Petition was pending consideration before the Company Law Board, respondents 1, 2, 4 to 9 had demolished the superstructure of the building necessitating his filing an application, in C.A. No. 84 of 2005, requesting the Company Law Board to interfere and grant status quo with regards the existing structure. The Company Law Board, by order dated 18.07.2005, granted status quo. According to the petitioner, the respondents continued to demolish the building, in violation of the order of "status quo", and when he brought these violations to its notice, the Company Law Board, by order in C.A.No.87 of 2005 dated 22.07.2005, appointed an Advocate Commissioner to verify and submit a report on the status of the superstructure and the physical features of the disputed property.

(2.) The Advocate Commissioner, in his report dated 31.07.2005, informed that he had visited/inspected the disputed site on 24.07.2005 and was assisted by the Counsel for the petitioner Mr. Dhanaraj and Mr. Rajnish Garje, the Company Secretary representing the respondents, that at the disputed site a group of twenty persons had met him and had represented that, though they had spent large sums of money for buying flats/houses, they were cheated, that the flats/houses were never constructed/delivered, that Sri K. Umamaheswara Rao, who was present at the site, was introduced to him by Mr. Rajnish Garje as one of the respondents, that Mr. Reddy, who was also present along with the respondent, had introduced himself as the builder, that he had issued memos to both the representatives of the petitioner and the respondents and had obtained attendance memos from them, that he had shot several photographs of the disputed site/structure, that the site consisted of two structures, one finished and the other partially demolished, that at the entrance of the site there were remains of a completely damaged structure, that demolition was in progress and it appeared that almost 70% of demolition had just been completed, that even the debris was not removed from the site, that steel rods were still found lying, that the structure, located at the entrance of the disputed site adjoining the main road, had already been demolished, that only some pillars were visible and it appeared as if the entire debris had just been shifted, that he found tyre/wheel marks of some heavy vehicles on the ground, that he had taken photographs of persons present at the site including Mr. Reddy and Mr. Umamaheswara Rao, that his overall observation was that demolition was in progress, that one structure was completely and the other partially demolished and that the debris was being removed.

(3.) The Company Law Board, in its order dated 04.10.2005, noted the respondents contention that 90% of the structures were demolished prior to the filing of the application in C.A. No. 84 of 2005 i.e. before 18.07.2005 and that, on receipt of written complaints, and to save the lives of children and others living in the vicinity, the remaining structures, with slabs which had become weak on account of continuous rains, were demolished on 29.07.2005. After referring to its order sheets the Company Law Board observed that the respondents had not chosen to mention before the Bench these serious developments having a bearing on the Contempt Application, that when the matter was heard on 01.08.2005, 09.08.2005 and 17.08.2005 Counsel for the respondent never made any statement regarding demolition of 90% of the structure before 18.07.2005 or that the remaining structures were demolished on 29.07.2005 on receipt of complaints from residents of the locality, that nothing prevented the respondents from seeking leave of the Bench to dismantle the structures in existence for the past nine years for whatever reason but they had, in violation of the orders of the Bench, gone ahead and completed the demolition process. The Company Law Board noted that, without furnishing details of demolition of the structures, a memo was filed on behalf of the respondent company on 31.08.2005 that "they had demolished the entire structures", that no reference was made therein to the dilapidated condition of the structures on account of continuous rains, that the complaints dated 21.01.2005, 20.07.2005 and 26.07.2005 reportedly made by the Secretary of the Rayala Avenue Flat Owners Welfare Society to the Board of Directors of the respondent company, for removal of the structures, ought to have been under the custody of the Company, yet these complaints were not referred to by the respondents during the course of hearing held on 01.08.2005, 09.08.2005 and 17.08.2005, but were produced only on 02.09.2005, that the complaints did not indicate that the structures had become weak on account of continuous rains, that the report of the Advocate Commissioner did not speak about the dilapidated condition of the structures on account of continuous rains, that it was beyond doubt that demolition of the disputed structures was in progress on 24.07.2005 at the time of inspection by the Advocate-Commissioner, that the facts stated in the Advocate Commissioner's report remained uncontroverted, that the respondents did not choose to file any objection on this part of the report of the Advocate Commissioner, that the contention of the respondents that, on receipt of the order, they had stopped demolition of the remaining 10% ran parallel to the conclusions of the Advocate Commissioner and that, against this backdrop, the assertion of the respondents that the photographs produced by the Commissioner represented 10% of the disputed structure was not based on concrete evidence. The Bench held that it was evident from their own statements that the respondents had demolished a part of the disputed structure inspite of the restraint orders of the Bench, that though the respondents had adequate time at their disposal between 18.07.2005 and 29.07.2005 to seek leave of the Bench they had failed to take the initiative and that the respondents must, therefore, be held to have acted in gross violation of the orders in demolishing the entire disputed structures.