G.C. Jain, J.

1. Lease hold rights in plot No. 16, Nehru Place, New Delhi measuring 445.93 sq. mts. were auctioned by the Delhi Development Authority (for short D.D.A.) at a Public auction. The bid of Smt. Kanwaljit Kaur Bhasin and Smt. Kamleen Bhasin, respondents, for Rs. 63,11,000, was accepted by the DDA by its letter dated November 8, 1979. The said lease hold rights were acquired to construct a multi-storeyed building on the said plot in accordance with the terms and conditions, plans and other particulars stipulated by the DDA.

2. By an agreement dated March 3, 1980 the respondents agreed to sell to M/s. Jyoti Limited, the petitioner the third and fourth floors of the proposed multi-storeyed building with an area measuring 9000 sq. ft. at Rs. 340 per square ft. or for a total sum of Rs. 30,60,000. A sum of Rs. 2 lakh was to be paid to the respondents on execution of the said agreement. A sum of Rs. 1 lakh was to be paid on furnishing proof to the petitioner of having taken possession of the plot by the respondents from the DDA. Remaining amount of Rs. 27,60,000 was to be paid to the respondents on completion of the building and at the time of delivery of possession of the said floors. Clause 5 of the agreement provided that time shall always be the essence of the contract. It further provided any payment made by JYOTI within 30 days of its becoming due for payment to the BUILDERS shall be deemed to have been made in time.

3. The sum of Rs. 2 lakhs which under the agreement was to be paid on the execution of the agreement was admittedly not paid on March 3, 1980 when the agreement was executed. By letter dated March 15, 1980 the agreement of sale was cancelled by the respondents alleging breach of the term of the contract by the petitioner relating to the payment of said sum of Rs. 2 lakhs which had not even been paid by that date. On March 22, 1980 the petitioner sent a letter to the respondents with a bank draft dated March 13, 1980 for rupees two lakhs. It was stated that at the time of the signing of the agreement the respondents had been intimated that the bank draft for this amount was to be received from Baroda and will be paid to the respondents when received. It was further stated that the very fact that the respondents signed the agreement indicated that they did not insist on making this payment at the time of execution of the agreement and in any event under clause 5 of the agreement the payment could be made within 30 days of its becoming due.

4. On May 12, 1980 the petitioner brought a suit against the respondents seeking a decree for declaration that the purported cancellation of the agreement dated March 3, 1980 by the said respondents was wrongful and not binding on the petitioner and a decree for specific performance of the agreement dated March 3, 1980 and in the alternative, in case specific performance was not decreed, an enquiry regarding the damages suffered by the petitioner and a decree for the said amount.

5. Along with the suit the petitioner filed an application (LA. 1803/80) under Order 39 rule 1 read with Section 151, Code of Civil Procedure seeking temporary injunction restraining the respondents from dealing with or disposing the third and fourth floors of the premises of the multi-storeyed building to be constructed on plot No. 16, Nehru Place, New Delhi or any portion thereof in any manner. On May 13, 1980 D.R. Khanna, J. made the following order on this application :

Notice of the application to the defendants for 22nd May, 1980. In the meanwhile the defendants are restrained from transferring in any manner the 3rd and 4th floor of the multi-storeyed building to be set up on plot No. 16 Nehru Place, New Delhi. Notice dasti.

6. After hearing the parties, this order was confirmed and extended till the decision of the suit by order dated October 8, 1980. Appeal against the said order was dismissed as withdrawn by a Division Bench of this court on April 15, 1981.

7. On February 8, 1983 the petitioner brought the present applications (IA 630/83) under Order 39 rule 2A of the Code of Civil Procedure. It was averred that in complete disregard to the order dated May 13, 1980 which had been confirmed on October 8, 1980 the respondents had transferred and/or sold and/or alienated and/or parted with the possession of the complete third and fourth floor of the said building and had thus wilfuly disobeyed and flouted the said orders of the court. The wilful, deliberate and contemptous disobedience and flagrant violation of the said orders of the court made the respondents liable to action. It was prayed that respondents be directed to revoke their actions contrary to the aforesaid orders and the court may direct the attachment of the property of the respondents and/or in the alternative direct the respondents to be detained in a civil prison.

8. On the same date i.e. February 8, 1983 the petitioner filed a separate petition (Civil Contempt Petition No. 5/83) under Article 215 of the Constitution and Sections 11 and 22 of the Contempt of Courts Act, 1971 and Section 151 of the Code of Civil Procedure for initiating contempt proceedings against the respondents under Article 215 of the Constitution of India and the Contempt of Courts Act, 1971 and inflicting such punishment on them as the court deemed just and proper and also a direction to the respondents to comply with the orders of the court dated May 13, 1980 and October 8, 1980 and revoke their actions taken contrary to the aforesaid orders. Their reliefs were claimed on the same allegations which formed part of application under Order 39 Rule 2A, C.P.C.

9. Both these applications were contested by the respondents. It was not denied that the third and fourth floors had since been sold/transferred/alienated and possession parted with. It was, however, averred that the third floor had been booked in March, 1980 i.e. before the restraint orders. It was explained that the respondents in the very beginning contemplated that a joint stock company under the name and style of M/s. Tower Height Builders Pvt. Ltd. (hereinafter to be referred as the company) would be floated. The negotiations between the representatives of the respondents started a few months before the agreement dated March 3, 1980. The terms were earlier settled tentatively and one of the term provided that the respondents were promoting a company by the name of M/s. Tower Height Builders Pvt. Ltd. of which Smt. Kanwaljit Bhasin, respondent No. 1 and Smt. Kamleen Bhasin, respondent No. 2 were to be the chairman and the managing director respectively. The said company was incorporated on January 10, 1980. Leasehold rights in respect of the plot, on which the multi-storeyed building was to be constructed, were transferred in favour of the company on November 12,1980. The third and fourth floors subject matter of the dispute were actually transferred by the company and not by the respondents. The respondents had, thus, not in any manner disobeyed or flouted the orders of this court.

10. This order shall dispose both the applications i.e. LA. 630 of 1983 and civil contempt petition No. 5 of 1983.

11. Order 39 Rule 2A(1) of the Code of Civil Procedure and Section 2(b) and 12(1) and 12(3) of the Contempt of Courts Act read as under :

Order 39

R. 2A Consequence of disobedience of breach of injunction.

(1) In the case of disobedience of any injunction granted or other order made under rule 1 or rule 2 or breach of any of the terms on which the injunction was granted or the order made, the court granting the injunction or making the order, or any court to which the suit or proceeding is transferred, may order the property of the person guilty of such disobedience or breach to be attached, and may also order such person to be detained in the civil prison for a term not exceeding three months, unless in the meantime the Court directs his release.

Section 2(b) of the Contempt of Court Act, 1971

Civil contempt means wilful disobedience to any judgment,

decree, direction, order writ or other process of a court or wilful breach of an undertaking given to a court ;

Section 12(1)

Save as otherwise expressly provided in this Act or in any other law, a contempt of court may be punished with simple imprisonment for a term which may extend to six months, or with fine which may extend to two thousand rupees, or with both :

Provided that the accused may be discharged or punishment awarded may be remitted on apology being made to the satisfaction of the court.

Explanation

An apology shall not be rejected merely on the ground that it is qualified or conditional if the accused makes it bona fide.

Section 12(3)

Notwithstanding anything contained in this section, where a person is found guilty of a civil contempt, the court, if it considers that a fine will not meet the ends of justice and that a sentence of imprisonment is necessary, shall, instead of sentencing him to simple imprisonment, direct that he be detained in a civil prison for such period not exceeding six months as it may think fit.

12. Whether Smt. Kanwaljit Kaur Bhasin and Smt. Kamleen Bhasin, the respondents, had wilfully disobeyed the order, dated May 13, 1980, which was confirmed on October 8 1980, restraining them from transferring in any manner the third and fourth floors of the multi-storeyed building to be set up on plot No. 16, Nehru Place, New Delhi is the question which requires determination, in view of the above provisions.

13. The respondents in their reply to these applications have admitted that the fourth floor had been sold, transferred, alienated and parted possession with by the company (M/s. Tower Height Builders Pvt. Ltd.) after passing of the said orders.

14. The Company is a private limited company. It was incorporated under the Companies Act 1956 on January 10, 1980. A company, duly incorporated, is a distinct and independent legal person. It has a legal entity and in law equal to a natural person. Like a partnership it is not a mere aggregate of its members. In law it is legal independent person distinct from its members. In law it is legal independent person distinct from its members. It bears its own name and has a seal of its own. Its assets are separate and distinct from those of its members. It can sue and be sued in its own name. This position is well settled ever since the decision in case of Aron Salomon vs. A. Salomon & Company Limited (1987) AC 22.

15. The doctrine that a company has a legal and separate entity of its own, has, however, been subjected to certain exceptions by the application of the fiction that the corporate veil can be lifted and its face examined in substance.

16. Gower in Modern Company Law, 2nd Edition, has classified seven categories of cases where the veil of a corporate body has been lifted. One of the categories of such cases is where the corporate personality is being blatantly used as a cloak for fraud or improper conduct. In Palmers Company Law 23rd edition the occasions when the corporate veil may be lifted have been enumerated and classified in fifteen categories. Category 8 has been described thus: the courts have further shown themselves willing to lift the veil where the device of incorporation is used for some illegal or improper purpose. (page 202) Pennington in his Company Law 4th Edition states In a few cases the court has disregarded the separate legal personality of a company and has investigated the personal qualities of its shareholders or the persons in control of it because there was an overriding public interest to be served by doing so. All these cases involved questions of nationality, and all of them, except one, were decided in wartime when the nationalities involved were those of enemy alients.

17. In Life Insurance Corporation of India vs. Escorts Ltd and Others 1986(1) Supreme Court Cases 264, the Supreme Court after examining the law on the subject said :

Generally and broadly speaking, we may say that the corporate veil may be lifted where a statute itself contemplates lifting the veil, or fraud or improper conduct is intended to be prevented, or a taxing statute or a beneficent statute is sought to be evaded or where associated companies are inextricably connected as to be, in reality, part of one concern. It is neither necessary nor desirable to enumerate the classes of cases where lifting the veil is permissible, since that must necessarily depend on the relevant statutory or other provisions the object sought to be achieved, the impugned conduct, the involvement of the element of the public interest, the effect on parties who may be affected etc.

18. The object to punish the wilful disobedience to any order of a court is to secure the enforcement of the said order. Justice would be undone if any court is disobeyed without fear of any punitive consequences. Vindication of the public interest by punishment for contemptuous conduct is the purpose sought to be achieved. It is the plain and unqualified obligation of every person against, or in respect of, whom an order is made by a court of competent jurisdiction to obey it unless and until that order is discharged. The uncompromising nature of this obligation is shown by the fact that it extends even to cases where the person affected by an order believes it to be irregular or even void. (See Handkinson v. Handkinson, (1952) II. The All England Law Reports 567 at 569.,

19. About the nature of the contempt proceedings the Supreme Court in Advocate General, Bihar v. M. P. Khair Industries, AIR 1980 SC 946 [LQ/SC/1980/105] to 949 held:

......it may be necessary to punish as a contempt, a course of conduct which abuses and makes a mockery of the judicial process and which thus extends its pernicious influence beyond the parties to the actions and affects the interest of the public in the administration of justice. The public have an interest, and abiding and a real interest, and a vital stake in the effective and orderly administration of justice, because, unless justice is so administered, there is the peril of all rights and liberties perishing. The court has the duty of ^protecting the interest of the public in the due administration of justice and, so, it is entrusted with the power to commit for Contempt of Court, not in order to protect the dignity of the Court against insult or injury as the expression Contempt of Court may seem to suggest, but to protect and to vindicate the right of the public that the administration of justice shall not be prevented, prejudiced, obstructed or interfered with. It is a mode of vindicating the majesty of law, in its active manifestation against obstruction and outrage. Per Frank Furter J. in Offutt v. U.S. (1954) 348 US 11.

The law should not be seen to sit by limply, while those who defy it go free, and those who seek its protection lose hope. Per Judge, CurtisRaleigh quoted in Jennison v. Baker (1972) 1 All. ER 997 at p. 1006.

20. In Phonographic Performance Ltd. v. Amusement Caterers (Peckham) Ltd. (1963) 3 All. ER 493 at 496 Cross J said. As is pointed out in Halsburys Laws of England (1), where there has been wilful disobedience to an order of the court and a measure of contumacy on the part of the defendants, then civil contempt, what is called contempt in procedure bears a two-fold character, implying as between the parties to the proceedings merely a right to exercise and a liability to submit to a form of civil execution, but as between the party in default and the state, a penal or disciplinary jurisdiction to be exercised by the Court in the public interest.

21. Thus, it is clear that the law of contempt is conceived in the public interest. In the present case, I have no doubt, the corporate veil is being blatantly used as a cloak to wilfully disobey the orders of the courtan improper purpose. Lifting the corporate veil, in these circumstances, is imperative to punish improper conduct. Public interest requires the corporate veil must be lifted to find out the person who disobeyed the order of the court.

22. Once, the corporate veil is lifted it is crystal clear that the orders of the court in question were disobeyed by the respondents. The company (M/s. Tower Height Builders Pvt. Ltd.) was admittedly promoted by the respondents alone. They, only were its shareholders and Directors. One of the respondents Smt. Kanwaljit Kaur Bhasin was its Chairman and the other respondent, Smt. Kamleen Bhasin, its Managing Director. The entire interest in the company was of the respondents. Thus, in reality the orders of the court were disobeyed by the respondents.

23. Wilful according to the Strouds Judicial Dictionary 5th Edition, implies nothing blameable, but merely that the person of whose action or default the expression is used is a free agent and that what has been done arises from the spontaneous action of his free will and it amounts to nothing more than this, that he knows what he is doing and intends to do what he is doing, and is a free agent; whatever is intention is wilful. According to Shorter Oxford Dictionary wilful means asserting or disposed to assert ones own will against persuasion, instruction, or command, governed by will without regard to reason ; obstinately self-willed or perverse. A wilful act, thus means an intentional and deliberate act.

24. In the present case there was no allegation even that the act of transferring the fourth floor was not an intentional or deliberate act. Thus it has been proved that the disobedience was wilful.

25. Respondents contemnors were entitled to justify their action. However, no justification worth the name is forthcoming except the corporate veil. The facts, that the construction work was supervised by S. Pritipal Singh husband of respondent No. 1, or that husbands of the respondents were new in the business do not furnish any justification for wilfully disobeying the orders of the Court.

26. Mr. G.S. Vohra, learned counsel for the respondents contended that the company was not conceived in fraud i.e. for the purpose of disobeying the orders of the court. The respondents contemplated the formation of this company at the time of the auction of the leasehold rights of the plot in question and it was actually incorporated on January 10, 1980 i.e. long before the injunction was granted. The respondents, no doubt, contemplated the formation this company since beginning. It had actually been incorporated on January 10, 1980 i.e. before the injunction orders were granted. However, nothing turns on it. The fact that the company was incorporated earlier is no justification for disobeying the orders of the court. I may add here that the lease-hold rights in respect of the plot in question were transferred in favour of the company only on November 12, 1980 i.e. after the injunction order. Prior to that the company had no right, title or interest in this property.

27. Arguments on these applications were partly heard on December 10, 1986. Mr. G.S. Vohra, learned counsel for the respondents, on that date made a request for permission to file additional affidavits. This request was allowed The arguments were thereafter heard from February 9, 1987 onwards. On 16th February, 1987 when the arguments had already been completed the respondent filed affidavits tendering unconditional apology. Para 4 of the affidavit of Smt. Kanwaljit Kaur Bhasin dated 16.2.87 reads as under :

That I humbly tender unconditional apology, which may be placed on the record. My counsel Sh. G.S. Vohra tendered apology on my behalf before he closed his opening arguments on 11.2.87. I have utmost respect for the orders and processes of this Honble Court as well as of all courts of law in the country. The circumstances under which transfers of floors took place has been stated in my affidavit and the same not be repeated here.

Similar statement was made in the affidavit of Smt. Kamleen Bhasin of the same date.

28. I have carefully considered the apology. The apology made after the conclusion of the argument is no apology. It lost its value. It was an after-thought and a mere device to escape punishment. It does not purge the contempt. Apology has to be offered clearly at the earliest opportunity indicative of remorse and contrition which is the essence of the purging of a contempt and it should not be offered in the hope and with the object of avoiding punishment. (See E.T. Sen v. E. Naraynan AIR 1969 Delhi 201 (FB). This is not so in this case. The contempt committed by the respondents was serious. The respondents, it appears, had no regard for the orders of the court. All the time they tried to take advantage of the corporate veil. Apology appears to have been tendered because of some odservations made by the court during arguments. In these facts and circumstances, the apology, in my view was not bona fide and is rejected.

29. One of the purposes of punishment in contempt proceedings is vindication of public interest by punishment of contemnors conduct. The sentence must be adequate. It would be a traversty of justice if the courts were to allow gross contempt of court to go unpunished.

30. In the present case the respondents had wilfully disobeyed the orders of the Court made on 13th May, 1980. Instead of obeying the said orders, which they were under an obligation to obey, they employed a subterfuge i.e. veil of corporation to avoid compliance of the Courts order. The respondents were guilty of flagrant disobedience of the orders of the Court. It was a contempt of heinous character. For such contempt sentence of fine, in my view, would not meet the ends of justice.

31. I intended to impose a severe punishment but keeping in view the fact that respondents were women and that Smt. Kanwaljit Kaur Bhasin is stated to have been suffering from diabetes, hypertension and angina and Smt. Kamleen Bhasin had two children aged 3 and 7 years old their detention in civil prison for a period of 15 days, in my opinion, would meet the ends of justice.

32. I, consequently, accept the petitions and direct the respondents to be detained in civil prison for 15 days. The petitioner is directed to deposit Rs. 3.000 in account for meeting their expenses within a week. On the deposit of the said amount warrants for their arrest for the purpose of their detention in the civil prison would immediately be issued. Petitioner is entitled to costs which are assessed at Rs. 5,000.