DELHI DEVELOPMENT AUTHORITY V.

SKIPPER CONSTRUCTION
COMPANY (P) LTD. AND ORS.

MANU/SC/0497/1996

Abstract

The following is a case summary of the Delhi Development

Authority v. Skipper Construction Company (P) Ltd. And Ors.
1996 case. The Supreme Court in the instant case interprets the
scope and nature of its Contempt Jurisdiction under Article 129
and Extra Ordinary Jurisdiction under Article 142 to do justice
between the parties. It invokes Suo Motu cognizance in the instant
proceedings. It emphasized on the elastic nature of power under
Article 142 to ensure justice and that provision can be moulded
according to the given situation.
1. PRIMARY DETAILS OF THE CASE

Case No. I.As. Nos. 23, 27 and 29 in SLP (C) No.

21000 of 1993
Jurisdiction Supreme Court of India
Case Decided On May 6, 1996
Judges Justice B.P. Jeevan Reddy and Justice K.S.
Paripoornan.
Legal Provisions Involved Constitution of India- Articles: 12, 129, 142,
226
Contempt of Courts Act 197- Section 12
Civil Procedure Code 1908- Section 151, Or
39, Rr. 1, 2, 2A
Indian Contract Act 1872- Section 17
Prevention of Corruption Act 1988- Section
16
Case Summary Prepared By Gaurav Dilip Jangle
Maharashtra National Law University,
Nagpur
2. BRIEF FACTS OF THE CASE

The Respondent Skipper Construction Pvt. Ltd. (Skipper) Purchased a plot in an auction by
DDA. However, it did not pay the amounts as per the stipulated terms of the agreement. It
constantly kept on asking for extensions for payments. Since, it failed to pay the amounts
even after multiple extensions, the DDA proposed to cancel the allotment. Pursuant to this
Skipper went to the Delhi High Court (HC), for a stay order and it succeeded. The Petitioner
again went to the HC for vacating the stay, but there were multiple adjournments by the
court. This provided a breather the to the Respondent. Meanwhile, it kept on selling places in
the proposed building to purchasers and received monies for that. The Hon’ble Delhi HC
passed its order asking Skipper to deposit Rs. 8 crores and all construction to be stopped till
full payment. However, it failed to pay this amount also. It went to the Hon’ble Supreme
Court (SC) by way of an SLP. The SC granted an interim order on 29-1-1991 to pay Rs. 2.5
crores within one month and the rest Rs. 2.5 crores by 8-4-1991. It also ordered to refrain
from creating any rights in favour of third parties in the proposed building. The said order of
the SC was violated by the Respondent by publishing advertisement in newspapers on 4-2-
1991 and multiple times after that to purchase space in the proposed building. The, SLP was
thus dismissed on 25-1-1993 and the DDA assumed all the rights absolutely on the building
on 10-2-1993 as the revised terms of the agreement and order the HC. It forfeited all the
amounts previously paid to it by Skipper. Before 29-1-1991, Skipper collected Rs. 14 crores,
and after it, as per its version collected Rs. 11 crores. It was also seen that same spaces was
sold to ore than one persons. The Respondent brazenly violated the orders of SC dated 29-1-
1991 by issuing advertisements, it also filed a suit in the Delhi High court seeking an
injunction restraining the DDA from interfering with its alleged title and possession over the
plot and for a declaration that the re-entry by DDA was illegal and void. Noticing the
conduct of the Respondent the supreme court initiated Suo Motu contempt proceedings
against Tejwant Singh and his wife Surinder Kaur, directors of the Respondent company and
by invoking under Article 129 r/w Article 142 imposed sentences of imprisonment and fine
on them.

3. ISSUES INVOLVED IN THE CASE

What should be the appropriate to be made by the Supreme Court while acting under (a) its
contempt jurisdiction under Article 129 and (b) its extra ordinary jurisdiction under Article 142
to do complete justice between the parties?

4. ARGUMENTS OF THE PARTIES

Delhi Development Authority

 The sentence of imprisonment to the directors of the company does not erase their
obligation to pay back the amounts to the said claimants whom they had deliberately and
fraudulent induced in the parting with substantial amounts and clear and direct violation
of the orders of this court.
 The order of attachment of the properties of Tejwant Singh and his wife and children was
an order independent from the order of punishment imposing sentence of imprisonment
and that the attachment was meant for realising amounts necessary for reimbursing the
persons defrauded.
 The attached properties should now be sold and proceedings there from utilised for
paying the post 29-1-1991 claimants.
 The claim of the pre 29-1-1991 purchasers for interest on the amounts paid by them is
still there and has to be kept in mind while passing orders in these applications.
 The contemnors should not be allowed to keep or enjoy the fruits of their contempt and
that until all the persons defrauded by Skipper are fully re compensated the contemnors
liability does not cease
 The various companies created by Tejwant Singh, his wife and children are merely fronts
and devices to defraud and defeat the claims of the purchases and that for doing complete
justice between the parties, the corporate veil should be lifted and all the said properties
which have already been attached should be proceded with to realise the amounts
necessary for paying the pre 29-1-1991 purchasers in full and also the post 29-1-1991
purchasers.
 Tejwant Singh and his wife were the only two directors of Tej Properties and that in 1988
and 1991 one H S Sharma, and Prabhjit Singh (one of the sons of Tejwant Singh) brought
in as its directors. It is submitted that this property really belongs to the contemnors and
 this property alone is sufficient to realise all the monies due to the persons defrauded by
the said contemnors.

Skipper Construction Company

 The monies for reimbursing should come out of the monies collected by the DDA on
account of the said plot.
 Interests of justice and considerations of equity, which are the guiding factors for this
code while acting under article 142 of the constitution called for such a direction.
 The amounts received from the purchaser has actually been utilised for raising the
construction which has now vested in the DDA in terms of the orders of Delhi High court
dated 21-12-1990/ 14-1-1991.
 DDA thus, not only got back the plot of the land but also the construction made by
Skipper free of any encumbrances.
 Skippers and their directors and attachment of their properties and adverse publicity in
that behalf, it has become impossible for them to generate any monies for depositing in
the court.
 The business of the two sons of Tejwant Singh and Surinder Kaur are independent and
distinct from their parents and that none of the monies received by the parents from the
aforesaid purchases has been diverted to them or to the companies which they are
directors.
5. LEGAL ASPECTS INVOLVED IN THE CASE

Constitution of India

Article 129-

Supreme Court to be a court of record- The Supreme Court shall be a court of record and shall
have all the powers of such a court including the power to punish for contempt of itself.

Article 142-

Enforcement of decrees and orders of Supreme Court and orders as to discovery, etc.—(1) The
Supreme Court in the exercise of its jurisdiction may pass such decree or make such order as is
necessary for doing complete justice in any cause or matter pending before it, and any decree so
passed or order so made shall be enforceable throughout the territory of India in such manner as
may be prescribed by or under any law made by Parliament and, until provision in that behalf is
so made, in such manner as the President may by order prescribe.

(2) Subject to the provisions of any law made in this behalf by Parliament, the Supreme Court
shall, as respects the whole of the territory of India, have all and every power to make any order
for the purpose of securing the attendance of any person, the discovery or production of any
documents, or the investigation or punishment of any contempt of itself.

Civil Procedure Code 1908

Section 151-

Saving of inherent powers of Court- Nothing in this Code shall be deemed to limit or otherwise
affect the inherent power of the Court to make such orders as may be necessary for the ends of
justice or to prevent abuse of the process of the Court.

Contempt of Courts Act 1971

Section 12- Punishment for Contempt of Court

6. JUDGEMENT IN BRIEF

Held:

The power under article 142 to is meant to supplement the existing legal framework- to do
complete justice between the parties- and not to supplant it. It is conceived to meet the situations
which cannot be effectively and appropriately tackled by the existing provisions of law.
However, it is advisable to leave this power undefined and uncatalogued so that it remains elastic
enough to be moulded to suit the given situation. The very fact that this power is conferred only
upon the Supreme Court, and on no one else, is itself an assurance that it will be used with
during restraint and circumspection keeping in view the ultimate object of doing complete justice
between the parties.

As regards the question as to what should be done with the persons who had been defrauded by
the Respondent and who had parted with substantial amounts on the basis of fraudulent and false
representations made by the Respondent, the Supreme Court made a distinction between the
persons who purchased the space before 29-1-1991 and the persons who purchased the space
thereafter and directed DDA to pay for the time being the principal amount (excluding interest
thereon) to the pre 20-1-1991 purchases and to keep apart the balance amount along with the
interest there on. However, these purchasers were entitled to the interest as well, claim in regard
to which were kept pending. At this stage several applications were filled by the post 29-1-1991
purchasers to sell the properties of Tejwant Singh, his wife and children which were attached by
the Supreme Court under its order dated 8-2-1995 (in suo motu contempt proceedings) and
utilise the proceeds so realised to reimburse them along with interest and damages.

7. COMMENTARY

Vinay Chandra Mishra, Re, (1995) relied on,

 Acts done in violation of the court’s order should not be allowed to perpetuate.
 A contemnor should not be allowed to enjoy the fruits of the acts of contempt.
 Even though, when the contemnor is undergoing a punishment for contempt, the court
can issue directions for remedying and rectifying the wrong done.
 It is necessary to exercise this inherent power by the court in the interest of justice.
 Article 129 is a constitutional power and when exercise in tandem with Article 142, all
such objections should give way.

Mohd Idris v. Rustam Jehangir Babuji, (1984) relied on

The concept of Corporate entities was introduces to encourage and promote trade and commerce.
It was not a means to commit illegal activities or defraud others. If someone is committing such
an unlawful act, the Corporate Veil can be lifted in the interest of justice.

“The fact that Tejwant Singh (T) and members of his family have to created several corporate
bodies does not prevent the Supreme Court from treating all of them as one entity belonging to
and controlled by T and family if it is found that these corporate bodies am merely cloaks behind
which lurks T and/ or members of his family and that the device of incorporation was really a
ploy adopted for committing illegalities and/ or to defraud people.”

Solomon v. Solomon & Co. Ltd., (1897) relied on

There should be a law that provides for forfeiture of the properties of persons holding “public
office” indulging in corrupt and illegal practices. The law must extend to not only holders of
such offices but also to the family of the holders including spouses, children, etc. SAFEMA is a
good example of that. The onus of burden of proof that such properties are not acquired by
monies/ properties/ received by corrupt/ illegal/ unlawful practices, should remain with the
holders of such offices. Many experts have concurred upon it to be of high time now and the
parliament should look into this now. The absence of a statutory provision will not inhibit the
Supreme Court while acting under Article 142 from making appropriate orders for doing
complete justice between the parties. The fiduciary relationship may not exist in the present case
nor is it a case of a holder of public office, yet if it is found that someone has acquired properties
by defrauding the people and if it is found that the person defrauded should be restored to the
position in which they would have been but for the said fraud, the court can make all necessary
orders. This is what equity means and in India the courts are not only courts of law but also
courts of equity.

Attorney General for India v. Amrat Lal Prajivandas, (1994) affirmed and applied

[Relevant part reproduced verbatim from the judgement.]

Where the acts and deeds of the officials are not only beyond their authority but are done with a
mala fide intent, it may not be just and fair to bind DDA with such mala fide acts and deeds. This
can be said without laying down the proposition that the DDA is not found by the acts and deeds
of its officials. Be that as it may, it is not necessary for the purpose of this case to pursue this line
of enquiry further or to express any definite opinion thereon.

On facts it is clear that a property which was sufficient to meet the present purpose actually
belonged to T and the corporate veil and the change of directorships are all my devices to screen
the said property and its income from the creditors including the purchasers. The transfer of
shareholding, if any, between the father and the son, (and their respective wives) must also be
treated as a Sham transaction. The above course appears justified and necessary look at from any
angle, viz., (a) that the contemnor should not be allowed to enjoy or retain the fruits of their
contempt; (b) the interests of justice which call for the lifting of the corporate veil- the said
property is in truth and effect of the property of T and members of his family and must be
available to satisfy the claims of the persons defrauded by him; (c) that while acting under
Article 142 the Supreme Court must do complete justice between the parties and for that purpose
it is necessary to ensure that a person who has defrauded a large number of persons by issuing
advertisement in the leading newspapers published from the capital inviting people to come and
purchase space in the said building in open and brazen violation of clear and specific orders of
the Supreme Court should not be allowed to benefit from his fraud and/ or contemptuous acts.

[Accordingly the court issued directions.]

Court should desist from granting interim orders- injunctions and stay orders- in a mechanical
manner as they cause harm to the other side and in some cases the public interest. It is no answer
to say that, "let's meet the order and if the other side is aggrieved let it come and apply for
vacating it." This is not a correct attitude. Before making the order, the court must be satisfied
that it is a case which calls for such an order. This obligation cannot be jettisoned and the onus
placed upon the Respondent to apply for vacating it.

8. IMPORTANT CASES REFERRED

 Attorney General for India v. AmratLal Prajeevandas (1994) 5 SCC 54.
 Century flour Mills limited v. S Suppiah (1975) Mad 270.
 Clarke v. Chadburne (1985) 1 All ER 211.
 Mohd. Idris v. Rustam Jahangir Babuji (1984) 4 SCC 216.
 Solomon v. Solomon & Co. Ltd. 1897 AC 22.
 Telco v. State of Bihar (1965) SC 40.
 Vinay Chandra Mishra, re, (1995) 2 SCC 584.