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Legal Opinion Summary — Chagla, C.J.

Factual and Procedural Background

The underlying suit sought specific performance (alternatively damages). The plaintiffs were lessees of the "Paradise Cinema" and their lease contained an option to purchase the property. The plaintiffs alleged that on 3 February 1942 the defendants entered into an agreement of sale in favour of Paradise Cinema, Limited without giving the plaintiffs the option. The defendants replied that the plaintiffs had been informed and had failed to exercise the option, and that subsequently (on 4 September 1945) the defendants had transferred the rents, issues and profits of the property to Paradise Cinema, Limited for fifteen years from 3 February 1942.

The suit proceeded; the parties compromised after about a week of hearing and signed written consent terms. The consent terms comprised several clauses; clause 8 used the term "Ordered" and provided that the defendants should execute a lease within two months and that the defendants "undertook" to have Paradise Cinema, Limited join as a confirming party to the lease.

The defendants failed to execute the lease as agreed; the Court ultimately ordered the Prothonotary to execute the lease. The plaintiffs then asked the defendants to get Paradise Cinema, Limited to join as a confirming party. The defendants failed to secure that confirmation; the plaintiffs moved for contempt. Mr. Justice Bhagwati found a willful default by the defendants and ordered that the defendants carry out their undertaking within one month or face committal to prison.

The present appeal (to the bench presided by Chagla, C.J.) challenges that committal order. The appellate court dismissed the appeal with costs, confirmed the order below, and extended the time for compliance for one month from the date of the opinion.

Legal Issues Presented

  1. Whether an "undertaking" incorporated in consent terms of a compromise decree can constitute an undertaking given to the Court (and therefore become an order of the Court enforceable by committal for contempt).
  2. Whether the defendants' failure to cause a third party (Paradise Cinema, Limited) to join the lease amounted to a willful default sufficient to permit contempt proceedings and committal.
  3. Whether the ordinary/plain meaning of the word "undertake" should be applied in construing consent terms, or whether the term has acquired a technical meaning in practice that makes it an undertaking to the Court.

Arguments of the Parties

Appellant's Arguments (Mr. Desai)

  • The "undertaking" in the consent terms was merely a solemn promise between the parties (a promise to the other party), not an undertaking to the Court; therefore it could not support committal proceedings.
  • Where parties compromise (O. XXIII, r. 3), the court is bound to record the compromise and pass a decree in its terms, and is not entitled to scrutinise or impose the parties' terms as undertakings to the Court except in special circumstances (e.g., where minors or charities are involved and court supervision is required).
  • The word "undertake" should be given its plain and natural meaning; absent express words "to the Court" the clause should not be treated as an undertaking to the Court.
  • Relying on authorities (specifically Nisha Kanto v. Saroj Bashini and passage in Halsbury), Mr. Desai argued that an undertaking enforceable by contempt requires that the Court have sanctioned a particular course of action or inaction, and that no such sanction existed here.
  • Since the defendants' undertaking was to cause a separate third party (Paradise Cinema, Limited) to act, and that third party was not before the Court and gave no undertaking, the defendants' failure could not be characterised as willful contempt unless the defendants themselves had deliberately refused to fulfil an obligation in their own power.

The opinion does not contain a detailed, separate summary of the respondents' (plaintiffs') argumentation; the record shows the plaintiffs pursued enforcement of the consent terms and applied for committal for non-compliance, but the respondents' arguments are not set out in the same structured manner as the appellant's in the text of the opinion.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Nisha Kanto v. Saroj Bashini (Calcutta High Court) The view (expressed by the Calcutta Chief Justice in that division bench) that the word “undertakes” should be given its ordinary meaning and, absent clarity that the undertaking was to the Court, it should be construed as a promise to the other party rather than to the Court. The Court considered and distinguished this decision: Chagla, C.J. concluded the bench in Nisha Kanto did not sufficiently take account of long-established original-side practice whereby “undertake” is understood to be to the Court; therefore Nisha Kanto was not followed as authoritative on the present facts.
Prokash Chandra Mukherji v. Manindra Nath Mukherji Single-judge decisions on the original side holding that an “undertaking” is to the Court (i.e., an undertaking to the Court may be implied from the use of the term). These single-judge decisions were cited as supporting the view that the word “undertake” on the original side had acquired the technical meaning of an undertaking to the Court; Chagla, C.J. regarded them as consistent with the long practice he relied upon.
Cotton v. Hey (English Court) Illustrates that an undertaking given in a compromised action may be enforced by contempt proceedings even when parties are not minors and no charity is involved. Used to support the proposition that undertakings in compromise decrees may be enforced by committal; the court cited this authority as analogous and supportive.

Court's Reasoning and Analysis

The court's analysis proceeded in distinct stages.

  1. Character of the consent terms and clause construction:

    The consent document comprised several clauses. The first seven clauses began with “Agreed” and recorded agreements between the parties. Clause 8 began with “Ordered that the defendants do execute the said lease within a period of 2 months from the date hereof,” thereby distinguishing an agreement from a court order. Clause 8 also incorporated an undertaking by the defendants to have Paradise Cinema, Limited join as a confirming party. On its face, clause 8 required an order of the Court and was framed so that the terms would be made a rule of the Court.

  2. Legal character of an "undertaking" in court practice:

    The court relied on established practice and authorities (including Oswald on Contempt of Court, forms in Seton on Decrees and Orders, and English practice) to conclude that the word “undertake” has acquired a technical meaning in decrees and orders: when used in that context on the original side, it is commonly understood to be an undertaking to the Court even when the words “to the Court” are not expressly used. Chagla, C.J. emphasized that counsel frequently state an undertaking on behalf of their clients without expressly saying “to the Court,” and that such undertakings have been understood to be to the Court and enforceable by committal proceedings.

  3. Undertaking becomes an order enforceable for contempt:

    The court cited the principle (from Oswald on Contempt) that an undertaking given to the Court by a party is equivalent to and has the effect of an order of the Court; breach of such an undertaking is therefore a proper subject for contempt proceedings. The court held that if the undertaking in clause 8 was given to the Court, it became an order of the Court and could be enforced by committal.

  4. Response to the appellant's plain-meaning argument and precedent:

    While acknowledging that a literal/plain reading of “undertake” might suggest only a promise between parties, the court rejected that approach because it failed to take into account long-standing original-side practice and the context of the clause. The Calcutta decision in Nisha Kanto was considered but distinguished; Chagla, C.J. concluded that the Nisha Kanto bench had not appreciated the technical meaning that “undertake” carries in practice. The court therefore construed the undertaking in clause 8 as one given to the Court.

  5. Whether the default was willful:

    The court recognized that contempt proceedings require proof of willful default. It accepted the appellant's contention in principle that mere non-performance is not enough if a party has used reasonable efforts to perform, especially where the undertaking involves making a third party act. However, the court observed that the record contained no materials showing that the defendants made any endeavour at all to get Paradise Cinema, Limited to join as a confirming party. Moreover, factual material showed that the defendants dominated the company (details of share distribution, positions as directors), making it easy for the defendants to secure the company's cooperation. Given the absence of evidence of effort and the defendants' effective control of the company, the court concluded the default was willful.

  6. Final application of law to facts:

    Applying the principles above, the court concluded that (a) the undertaking in clause 8 was an undertaking to the Court and thus equivalent to an order, and (b) the defendants wilfully defaulted in fulfilling it because they had not shown any effort to induce the company to join the lease despite being in a position to do so. Therefore contempt proceedings and the committal order were properly made by the court below.

Holding and Implications

Holding: APPEAL DISMISSED; the order of the learned Judge below (Mr. Justice Bhagwati) is confirmed subject to a modification extending the time for compliance by one month from the date of this opinion.

Direct consequences for the parties (as stated in the opinion):

  • The defendants were held guilty of contempt for willfully defaulting in the undertaking incorporated in the consent decree.
  • The court confirmed the order that the defendants must carry out the requisitions contained in the lower court's order; compliance was extended for one month from the date of the appellate opinion, failing which committal proceedings (imprisonment) would ensue.
  • The appeal was dismissed with costs in favour of the respondents.

Broader legal implication (as expressed by the court):

  • The court reaffirmed the principle that an undertaking expressed in consent terms or decrees may, in established practice, be construed as an undertaking to the Court and thereby become an order enforceable by committal for contempt. The court emphasized that context, the form of the clause (e.g., use of “Ordered”), surrounding circumstances, and established original-side practice are relevant in this construction.

The opinion limits its conclusions to the specific construction of the consent terms and the facts before it; it rests its conclusions on established practice and the absence of evidence of efforts by the defendants rather than announcing any abstract new rule beyond those premises.

Other Notations From the Record

Attorneys for appellants: Crawford, Bayley & Co.

Attorneys for respondents: Haridas & Co.

Disposition recorded in the opinion: Appeal dismissed.

    Bajranglal Gangadhar Khemka v. Kapurchand Ltd.

    Chagla, C.J:—

    This is an appeal from a judgment of Mr. Justice Bhagwati by which he made an order on a motion for contempt by which he ordered the committal of the appellants unless certain requisitions contained in the order were carried out within the time specified therein.

    The suit which led to the taking out of this motion was for specific performance, and alternatively for damages. The plaintiffs were the lessees of a Cinema known as the “Paradise Cinema” and in the lease there was a clause which gave the plaintiffs an option to purchase the property. The grievance of the plaintiffs was that, on February 3, 1942, the defendants had entered into an agreement of sale of the property in favour of the Paradise Cinema, Limited, without giving them the option to which they were entitled; and it was to enforce this option that the suit was filed. The answer given by the defendants was that the plaintiffs were informed of the agreement of sale with the Paradise Cinema, Limited, and that the plaintiffs had failed to exercise the option. The defendants further alleged that, subsequent to the agreement of February 3, 1942, in view of the objection taken to it by the head lessor, an agreement was arrived at on September 4, 1945, by which the defendants had transferred to the company the rents, issues and profits of the property for a period of fifteen years commencing from February 3, 1942. A supplemental plaint was filed, and the plaintiffs asked that they should be given the benefit of this agreement which was arrived at with the company. The suit came up for hearing and it went on for about a week. The parties then compromised the action, and consent terms were reduced to writing and signed by counsel for the parties. The particular term with which we are concerned in this appeal is the one with regard to the execution of a lease within a period of two months by the defendants in favour of the plaintiffs in respect of the property in suit. The term provided that the defendants would execute such a lease; and the term further provided that the defendants undertook to have the Paradise Cinema, Limited, to join as a confirming party to the lease. The defendants failed to execute the lease as agreed upon, and execution proceedings had to be taken out. It is unnecessary to go into the details of those proceedings, but ultimately an order was made by the Court by which the Prothonotary of this Court had to execute the lease as the defendants failed to do so. The plaintiffs then called upon the defendants to get the Paradise Cinema, Limited, to join as a confirming party to the lease, and the defendants having failed to comply with that requisition, a motion was taken out by the plaintiffs for contempt of Court. Mr. Justice Bhagwati held that there was a willful default on the part of the defendants, and thereupon he ordered that the defendants should carry out their undertaking within one month from the date on which the order was parsed; otherwise a warrant was to issue for the committal of the defendants to prison.

    Now, Mr. Desai before us has contended that no undertaking was given to the Court in respect of which committal proceedings could be taken out. He says that the undertaking referred to in the decree was merely a solemn promise given by his clients to the other side. Mr. Desai has argued that no undertaking to the Court can be given where an action is compromised and where the Court is bound under O. XXIII, r. 3, to record the compromise and to pass a decree in terms of the compromise. Mr. Desai says that the Court is not interested in what terms the parties have agreed to: the parties may agree to any terms, and if they are sui juris, the Court is bound to pass a decree in terms of the compromise; and, therefore, even though the consent terms may provide for an undertaking by one party, such an undertaking can never be construed as an undertaking to the Court. Mr. Desai's contention is that it is only when the Court is interested in passing a decree in a particular form, or is entitled to scrutinise the terms of the compromise, that the Court can insist upon an undertaking being given to it or the parties can give an undertaking to the Court. Such an eventuality, according to Mr. Desai, would only arise in cases where one of the parties was a minor or where charity was interested. Then the Court would have to sanction the terms of the compromise, and before the Court would sanction the compromise the Court may insist upon a particular undertaking or undertakings being given by a party to the suit. In this case, says Mr. Desai, the parties were at liberty to agree to any terms that they thought were proper, and the Court had no voice whatever in dictating to the parties how they should settle their disputes; and therefore, according to Mr. Desai, the undertaking referred to in the consent terms was not an undertaking to the Court.

    We are not prepared to accept a position which seems to us contrary to the long practice that has been established in this Court, and, apparently, also in England. There is no reason why even in a consent decree a party may not give an undertaking to the Court. Although the Court may be bound to record a compromise still, when the Court passes a decree, it puts its imprimatur upon those terms and makes the terms a rule of the Court; and it would be open to the Court, before it did so, to accept an undertaking given by a party to the Court. Therefore, there is nothing contrary to any provision of the law whereby an undertaking cannot be given by a party to the Court in the consent decree, which undertaking can be enforced by proper committal proceedings.

    It is necessary to understand what the true nature of the committal proceedings is in a case like this. As pointed out by Oswald on Contempt of Court, an undertaking entered into or given to the Court by a party or his counsel or solicitor is equivalent to and has the effect of an order of the Court, so far as any infringement thereof may be made the subject of an application to the Court to punish for its breach. Therefore, when an undertaking is given by a party to the Court, it becomes an order of the Court, and a particular mode is prescribed for enforcing that particular order. That mode is that proceedings for contempt can be taken out for the enforcement of that order. Therefore, if we find in this case that an undertaking was given by the party to the court resulting in that undertaking becoming an order of the Court, then it would be open to the party aggrieved by the non-compliance with the order to come to Court and ask for committal of the party in default. Therefore, what we have to really consider is whether, in fact, the plaintiffs gave an undertaking to the Court, and that we can only decide by looking at the consent decree itself

    It is necessary to look first at the scheme of the consent terms. We have first seven clauses which all deal with agreements between the parties. Each clause begins with the expression “Agreed”. Then we come to cl. 8, which begins by saying “Ordered that the defendants do execute the said lease within a period of 2 months from the date hereof.” Therefore, “Ordered” is used here in contradistinction to an agreement. Whereas the first seven clauses merely recorded an agreement between the parties, cl. 8 requires an order of the Court which would been executable order. And it is in this clause that the undertaking given by the defendants is incorporated. Therefore, cl. 8, on the face of it, was not dealing with any agreement between the parties at all. What the parties intended—and that intention is clear from the language used in cl. 8 itself—was that, with regard to a particular subject-matter dealt with in cl. 8, an order of the Court should be obtained. And that clause deals with two matters: one was the execution of the lease by the defendants themselves which they were ordered to do, and the other was that they undertook to get the Paradise Cinema, Limited, to join as a confirming party to the lease. In our opinion, the second part of cl. 8 was as much as an order of the Court as the first. The necessity for using the expression “undertake” will become clear when one realises that a mere lease executed by the defendants would not have been of much avail to the plaintiffs, because, as I pointed out earlier, the defendants had already transferred the income for fifteen years of the property in suit to the Paradise Cinema, Limited. Therefore, it was necessary in the interests of the plaintiffs that they should get the Paradise Cinema, Limited, to confirm the lease. It is because of the importance of the defendants getting the Paradise Cinema, Limited, to join in the lease that the parties advisedly used the expression “undertake.”

    It has been urged by Mr. Desai that there is no warrant for the Court reading into the expression used in cl. 8 the words “to the Court.” Mr. Desai says that we should put upon this clause its plain and natural construction, and the more so as we are dealing with a matter which involves serious consequences upon his clients. It is perfectly true that, if the word “undertake” bore its plain and natural meaning, then there would be no justification for construing that expression to mean that the undertaking was given to the Court. The clause does not state to whom the undertaking is given, and it may be that it would be possible to hold that, as the parties were settling the dispute between themselves, the undertaking was given by one party to the other; or, at the highest, the only thing that could be urged would be that the expression is ambiguous, and in a contempt matter, unless the Court is clearly satisfied that the undertaking was given to the Court the Court would not proceed to commit the person in default to jail. But, in our opinion, the expression “undertake” has come to acquire, through long practice, a technical meaning. In all orders and decrees of the Court, whenever the expression “a party undertakes” has been used, it has always borne the meaning that the undertaking has been to the Court. The Advocate General has also referred us to the forms and orders that appear in “Seton on Decrees and Orders”, and in those forms the expression used has always been “a party undertakes” and never “a party undertakes to the Court.” Therefore, in English Courts as well, the expression “a party undertakes” when used in decrees or orders has come to acquire the same technical meaning. What is more, it has been held by Mr. Justice Bhagwati—an opinion with which I entirely agree—that it has been the long-standing practice on the original side that, whenever counsel wishes to give an undertaking to the Court, he never expressly uses the words “to the Court” but merely states that he undertakes on behalf of his client, and that undertaking is always understood to be an undertaking to the Court which could be enforced by committal proceedings. In this case, we find that the consent terms were signed by Mr. Rege for Mr. Desai's clients and by Mr. Amin for the plaintiffs, both counsel with very large and extensive practice on the original side. Therefore, in our opinion, looking to the surrounding circumstances, looking to the context, and also looking to the fact that the expression has come to acquire a technical meaning, we can only construe the undertaking given by the defendants as an undertaking given to the Court and not given to the other side.

    In support of his contention, Mr. Desai has relied on a judgment of the Calcutta High Court in Nisha Kanto v. Saroj Bashini. In that case, a division bench consisting of Sir Trevor Harries, Chief Justice, and Mr. Justice Mukherjea had to consider a similar question. There also reliance was placed upon the practice on the original side. And the learned Chief Justice expressed the opinion that the sooner the practice was stopped the better. According to the learned Chief Justice, if one of the terms of the compromise was that one of the parties should give an undertaking to the Court, then the compromise should make it clear that such was the case, and if it did not make it clear and the compromise merely stated that one of the parties “undertakes,” then the ordinary construction must be given, and that is, a promise or a solemn promise given to the other party and not to the Court. Now, with very great respect to the learned Chief Justice, he seems to have taken the view that the word “undertake” must be given its ordinary dictionary meaning. He has not considered at all as to whether, by long practice understood both by counsel and by Judges, the expression “undertaking” had come to acquire a technical meaning. I am sure, if he had considered that aspect of the case, he would not have come to the conclusion that the only way to construe the expression “undertake” was to give it its plain natural meaning. What is more, there are three judgments of the Calcutta High Court, all delivered by single Judges undoubtedly but all of them sitting on the original side and having experience of the original side practice, which have taken the view that an “undertaking” means an “undertaking to the Court.” One was by Mr. Justice Gentle, whose decision was reversed by a bench in Nisha Kanta's case to which I have just referred; another by Mr. Justice Panckridge, and the third judgment is of Mr. Justice Das, which judgment was not cited before that bench: this is reported in Prokash Chandra Mukherji v. Manindra Nath Mukherji. Mr. Desai has also relied on the statement of the law as to undertakings that appears in Halsbury's “Laws of England,” Vol. VII, p. 35. Halsbury, in para. 51, puts it this way:—

    “The breach of an undertaking given to the Court by a person or corporation, pending, proceedings, on the faith of which the Court sanctions a particular course of action or inaction, is misconduct amounting to contempt.”

    According to Mr. Desai, there was no sanction given in this case for a particular course of action or inaction, and, therefore, even if the undertaking was given to the Court, it could not be made the subject-matter of contempt proceedings. In our opinion, Mr. Desai reads the expression “sanctions” used in Halsbury in much too narrow a sense. The very fact that the Court passed a decree after an undertaking was embodied in the consent terms clearly shows that the Court did sanction a particular course; and that course was the putting of its imprimature upon the consent terms. The Court was led to pass an order upon the defendants to execute a lease in view of the fact that an undertaking was given by the defendants to get the Paradise Cinema, Limited, to join the lease. As I said before, the mere executing of the lease by the defendants would have been entirely futile, and, therefore, the undertaking had to be given in order to ensure to the plaintiffs the benefit of the decree which they were taking from the Court.

    The Advocate General has also drawn our attention to a judgment of the English Court in Cotton v. Hey. That judgment goes to show that even if an undertaking was given in an action which was compromised, and where the parties were neither minors nor was charity interested, the undertaking could be enforced by contempt proceedings.

    The next question that we have to consider is whether it could be said that the default of the defendants was a willful default which would bring down upon them the heavy hand of the Court. It is again perfectly true that it is only in cases of willful default that the Court entertains contempt proceedings. The mere fact that the defendants have failed to carry out their undertaking is itself not sufficient to invoke the jurisdiction of the Court. The party that comes to Court must satisfy the Court that the other side had deliberately refused to carry out the undertaking given by him to Court. Mr. Desai emphasises the fact that in this particular case the undertaking given was not to do something by the party himself: The undertaking that was given was to make some other party to do something, and that other party was not before the Court and that other party did not give any undertaking at all. Therefore, we ought to be sure in this case that, whatever the defendants undertook to do was not done by them in defiance of the order of the Court and in breach of the undertaking given by themselves. We agree that the fact that the Paradise Cinema, Limited, refused to join as a confirming party to the lease should not be visited upon the heads of the defendants. But in view of the undertaking, it was necessary that the defendants should use their best efforts to induce the Paradise Cinema, Limited, to join the lease as a confirming party. If their endeavours had failed, then they would have a perfect answer to the Court inasmuch as they had done everything that lay in their power. Unfortunately, in this case, as the learned Judge points out when he makes a proper grievance of the fact, no materials whatever were placed before him to satisfy him that any endeavour was made by the defendants to get the Paradise Cinema, Limited, to join as a confirming party to the lease. And the facts with regard to this company are also very significant. It appears from the record that this company has been started with a capital of Rs. 2,00,000 divided into 2,000 shares of Rs. 100 each; and out of these 2,000 shares, 1,508 shares have been issued. 751 shares have been issued to defendant No. 1, 751 shares have been issued to defendant No. 2, 1 share has been issued to the father of defendant No. 1, 1 share to the brother of defendant No. 1 and 1 share each of the remaining four shares has been issued to the relatives or nominees of defendants Nos. 1 and 2. What is more, defendant 1 is the managing director of this company, and defendant No. 2 is also director. Therefore, it is patent that the defendants have a dominating voice in the affairs of this company, and nothing would be easier than for the defendants to get this company to join as a confirming party to the lease.

    Therefore, it is not merely because the defendants have failed to get the Paradise Cinema, Limited, to join as a confirming party to the lease that they are guilty of contempt of Court; they are guilty because they have failed to do anything to bring about a situation whereby the company could join the lease as a confirming party. It is not sufficient for the defendants to say that the company is a separate legal entity from themselves, and that whatever their view might be the company might take a different view. As they are in a position to get the company to conform to their view, it is their duty to do so and to give effect to the solemn undertaking that they have given to the Court. We are, therefore, of the opinion that the learned Judge was right in the view that he took that the defendants were guilty of contempt of Court, and he was also right in ordering them to carry out the requisitions contained in his order.

    We must, therefore, dismiss the appeal with costs and confirm the order of the learned Judge below. We would only modify the order to this extent, that as the time given by the learned Judge for carrying out the requisitions has expired, we would extend that time for one month from to-day.

    We would further like to say that the Defendants would be well advised in getting the company to join as a confirming party to the lease and we have no doubt that if they seriously intend to do so there should be no difficulty in their way in bringing about this result.

    Attorneys for appellants Crawford, Bayley & Co.

    Attorneys for respondents: Haridas & Co.

    Appeal dismissed.
    A.J.P
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    Comments

    Bajranglal Gangadhar Khemka v. Kapurchand Ltd.
    (Feb 9, 1950)