Bombay high court gives 2 builders civil prison term but suspends sentence

MUMBAI: The Bombay high court sentenced two builders to 180 days—six months—of civil imprisonment after holding them guilty under the Contempt of Court Act for wilful disobedience of its order passed last month. The order was in a dispute between Axis Finance Ltd and Orbit Venture Developers for over Rs 100 crore due to the financial institution.
A bench of Justices S J Kathawalla and Milind Jadhav passed the sentence on Justice Kathawalla’s last day as HC judge on March 23.The bench, however, suspended the sentence after the builder duo gave an undertaking to make Rs 102 crore payment in six installments starting March 31 and ending September 30 and to not create third-party rights in several flats in Swarvoski Apartments in Khar (West).
Under Contempt of Courts act, wilful disobedience of court order or undertaking to court amounts to civil contempt of court and sentence is to be served in a civil prison, if court feels it is necessary. A sentence can be of maximum 6 months only. HC accepted the undertaking made by developers through senior counsel Shyam Mehta and advocate Firoz Bharucha. HC had directed Rajen and Hiren Dhruv to deposit their passports with court registrar, which they did. They will get them back on complying with HC directions.
Axis Finance had approached the HC through senior counsel V R Dhond and advocates Rashmin Khandekar and Nishit Dhruva for recovery of Rs 163 crore from Orbit Venture with 16.25 percent interest per year from January 1, 2021 till payment is done. The amount, said Dhond, was due in a facility agreement along the lines of a sanction letter executed between them on September 25, 2017, when Axis Finance had given a loan of Rs 130 crore, which is to be repaid.
The account turned a non-performing asset in December 2019. Axis Finance then began recovery process under SARFAESI (Securitisation and Reconstruction of Financial Assets Act), and developer made several categorical promises in July 2020 to repay the dues, saying it expected Rs 100 crore from unsold flats. In January 2021, the developer said the money from unsold flats would be less than Rs 50 crore with no explanation at the reduction, nor did they explain how 12 unsold flats had reduced to nine.
“The matter has a chequered history and the conduct of the respondents has throughout been dubious,” HC noted.