When a matter is yet to be finally adjudication, it is appropriate to pass any order in a collateral proceeding like any contempt proceeding emantaring out of that? It is appropriate to entertain the request made by a party to conduct cross examination in a contempt proceeding?

In one of such a recent case , the Hon'ble High Court of Gujarat at Ahmedabad thrown light was having an occassion to deal with one of such a case.

In this matter , one contempt petition was filed against violation of one undertaking given by Respondent in a Appeal proceeding. In this contempt proceeding the Respondent No.1 made a request to conduct the cross examination of the Petitioner. Let us see, how this issue was dealt with by the Hon'ble Court.

In this case Petitioner namely Analytix Business Solutions (i) Pvt Ltd invoked provisions of Order 39 Rule 2A CPC seeking initiation of contempt proceeding against the Respondent No.1 namely Mr.Nihir Shah.

Respondent No.2 is the name of company being run, controlled and Managed by the Respondent No.1.The Respondent No.1 is engaged in the same business activity as that of the Petitioner.

The factual background , leading to filing of the present Contempt Petition was that:
A software or computer program namely 'Financial Statement Review Application" was conceptualized and developed by the in-house team of the applicant in the year 2017.

The Respondent No.1 was working as employee of the Petitioner and was also part of said Team. At the time of Joining the Petitioner Company, the Respondent No.1 also undertook not to divulge any proprietary information, intellectual property or any data to any third party or even for its own use.

Inspite of that the Respondent No.1 was indulging in disclosing the said confidential information to other parties. Constrained of which suit was filed by the Petitioner against the Respondent No.1 seeking the relief of inter alia restraining the Respondent No.1 from divulging such information.

However no interim injunction was granted in favour of the Petitioner. Being aggrieved of the same, the Petitioner filed Appeal before the Hon'ble High Court of Gujarat at Ahmedabad.

In Appeal, the Respondent No.1 appeared on first date and undertook not to utilize the said confidential information namely Financial Statement Review Application to any other person, till next date. The said undertaking continued further.

During the pendency of the Appeal proceeding, it came to the notice of the Petitioner that the Respondent No.1 was violating the afore mentioned undertaking given to court.

Accordingly the Petitioner moved application under Order 39 Rule 2A CPC seeking initiation of contempt proceeding against the Respondents.

During the course of argument on contempt Petition, the Respondent No.1 sought permission from the court to conduct the cross examination of the Petitioner.

The Hon'ble Court observed that in view of several documents having been presented and in view of the request for cross-examination being made, detailed adjudication is deserved to be made, but under the guise of this off shoot proceedings, it is not open for the parties to avoid the hearing of the main matter on merit.

The Hon'ble Court indicated that any observation or conclusion which may be made will have a bearing upon the issue being examined in the main proceedings and that normally, to be avoided in the present off shoot procceding.

The Hon'ble Court also relied upon the Judgement of Hon'ble Supreme Court of India, passed in similar situations, titled as Quantum Securities Private Limited and others Vs. New Delhi Television Limited reported in (2015) 10 SCC 602 :

22. We are also of the considered view that when the issue on merits is seized of by the original court in civil suit/proceedings and rights of the parties are still not decided on merits then it is not proper for this Court to probe into the facts and record any finding on any of the issues arising out of collateral proceedings such as the one here else our observation may cause prejudice to the parties while prosecuting their case before the original court on merits.

Actually facts of the afore mentioned case was also almost similar to present case. In Quantum Securities Private Limited and others Vs. New Delhi Television Limited case also, the Plaintiff therein filed suit against the Defendant therein and sought the relief of inter alia permanent injunction from writing any defamatory letters to third parties.

The Court granted ex-parte injunction in favour of plaintiff.During the course of proceeding, it came to the notice of the Plaintiff that the Defendants were disobeying the court order. In such situation contempt petitions were filed two times by the Plaintiff and notices against the Defendants were issued on the said contempt petition. Being aggrieved of the afore mentioned issuance of notices in the contempt petition, the defendant filed Appeal.

In the aforementioned Appeal, Plaintiff relied upon a judgment of Hon'ble Supreme Court of India, reported as Welset Engineers and Anr. vs. Vikas Auto Industries & ors, 2006 (32) PTC 190 (SC) where in it was observed by the court that merely because disputed questions of fact are involved, it would not preclude the Court from exercising its jurisdiction under the Contempt of Courts Act, 1971.

However in afore mention Quantum Securities Private Limited and others Vs. New Delhi Television Limited reported in (2015) 10 SCC 602, the Supreme Court of India kept the contempt petition pending and instead preferred the main matter to be decided.

In the instant case , the main Appeal against refusal of interim injunction order was still pending and rights of the parties were yet to be adjudicated. The request made by the Respondent No.1 for cross examination in off shoot proceeding of contempt , would certainly be having bearing on the main proceeding .

In view of the above, the Hon'ble Court adjourned hearing in the contempt petition. The Court however keep the right of Petitioner to press for this petition, after disposal of the main Appeal itself.

It is submitted, there fore conclusion is that where rights of parties are yet to be finally adjudicated, it is not advisable to passed any order on the request of cross examination made in any colatetal proceeding like the present Contempt Petition was.

The reason beahind this is, it may be possible that the case may be decided against the person, who is pressing for initiation for contempt proceeding.Hence it is preferable to decided the main proceeding, instead of entertaining any request of cross examination made in collateral proceeding.

Case Discussed
Date Of Judgement: 08.06.2022
Case No: Appeal From Order No. 113 Of 2021
Case Title: Saint-Analytix Business Solutions I Pvt Ltd Vs Nihir Shah
Name Of Hon'ble Court: High Court Of Gujarat At Ahmedabad
Name Of Hon'ble Judge: The Honourable Justice Shree Ashutosh J.Shastri

Written By: Ajay Amitabh Suman, IPR Advocate, Hon'ble Delhi High Court,
Email: [email protected], 9990389539