India Law Journal

The advent of international trade and globalization has resulted in the entry of multinational companies into India, many of whom enter into a large number of contracts locally. When such contracts go sour, peculiar situations arises before the Indian courts with respect to the jurisdiction for adjudicating disputes and enforcement of orders. This issue has been deliberated upon by the Hon'ble High Court at Mumbai ("Court") in relation to contempt proceedings in the matter of M/s. Clough Engineering Ltd. ("Clough Engineering/Company") and others Vs. Oil & Natural Gas Corporation ("ONGC").

In a contempt proceeding filed by ONGC against Clough Engineering and others, which had its office in Australia, ONGC alleged that sale of certain machinery ("Machinery") by Clough Engineering was in violation of the injunction order passed by the court amounting to contempt of court.

The Learned Single Judge noted that if the Machinery had been disposed of or sold by the officers of Clough Engineering in Australia, then the Company would be liable for contempt for the acts done by its officers in Australia. As the names of the officers of the Company were known only to the Company, the Learned Single Judge directed the Company to disclose the names of the concerned officers responsible for the sale of the Machinery.

In the appeal proceedings, Clough Engineering argued that as action for contempt of court was quasi-criminal in nature and as such, the standard of proof required was that of a criminal proceeding where the breach would have to be established beyond reasonable doubt. If Clough Engineering were to be found guilty of contempt of court and punished thereunder, directions could not have been passed calling upon Clough Engineering to disclose the names of its concerned officers as the said directions would be against Article 20(3) of the Constitution of India, which states that "No person accused of any offence shall be compelled to be a witness against himself." Clough Engineering therefore prayed for quashing of the said directions. Defending the appeal, ONGC, relying upon the decision of Supreme Court in the matter of Zahira Habibullah Sheikh & Anr. Vs. State of Gujarat & Ors, argued that the Court could decide its own procedure as it deemed fit and proper whilst determining a contempt petition.

Interestingly, whilst holding that it did have ample power to decide and follow procedure as deemed fit by it in contempt proceedings, the Court quashed the directions passed by the Learned Single Judge holding that it may lead to self-incrimination of the Appellant, which in turn was against Article 20(3) of the Constitution of India. The Court was faced with a peculiar situation! On the one hand, it had brought to the notice of the Court that an offence of contempt had been committed and it was expected to take appropriate steps and investigate the said allegation and punish the contemnors in order to maintain the discipline and dignity of the court and also to deter any acts of contempt. On the other hand the names of the contemnors was not known to the Court and the Court could not give directions to the Company, to disclose the names of the contemnors.

The Court, ensuring that it did not remain a mere silent spectator, proceeded to issue directions by invoking the provisions of Section 166-A of the Code of Criminal Procedure, 1973, which deals with a situation where evidence in respect of a crime or offence is available outside India. The Court directed the Chief Metropolitan Magistrate, Mumbai, to issue a letter of request to the competent court/authority in Australia to investigate the issue as to who are the officers of the Company responsible for the disposal of the Machinery. Upon receipt of the said information from the competent court/authority in Australia, it was directed that the same be transmitted to the Learned Single Judge, to enable him to take further steps in the matter.

By this judgment, the Court has stated that it will not remain a mere mute spectator and/or helpless in such matters. The Court has further showed that in matters of contempt, which are of a quasi-criminal nature, the Court shall not hesitate in providing and following procedure as deemed fit by it, using its inherent powers, to meet the logical end.