IFCI CEO gets one month’s imprisonment for contempt of court

In an unprecedented order, the Delhi High Court awarded one month simple imprisonment to top officials of Industrial Finance Corporation of India Ltd (IFCI) after holding them guilty of contempt of court for defiance and misusing the judicial system.

Justice PK Bhasin awarded one month simple imprisonment to CEO-cum-managing director Atul Kumar Rai, Shalini Soni, assistant general manager (Law) of IFCI and RK Bansal of Debts Recovery Tribunal for contempt of court and undermining the judicial order passed by the high court.

The court, however, kept its order in abeyance for four weeks to enable the contemnors to approach the appellate court for any relief, if so desired.

On contacting IFCI, the financial body declined to comment saying the matter is sub-judice.

The court also slapped a fine of Rs5 lakh on the IFCI and said, “A public sector organisation is to bear the brunt of fine because of the lapses committed by its head and a senior officer.”

“The facts of the present case show that a very dangerous trend has started amongst the litigants and that trend is to approach the authorities subordinate to this court to get rid of some adverse orders passed by this court and get relief from the subordinate authorities which stands declined by this Court,” the court observed.

“That kind of an evil trend needs to be nipped in the bud. In case no stern action is taken at the initial stage the subordinate authorities shall also get emboldened and with impunity they shall start obliging the litigants by giving them reliefs for extraneous considerations even though the high court had rejected the same relief,” the court noted.

The court’s order came on contempt proceedings initiated by the official liquidator of Koshika Telecom that some of the assets of the company had been auctioned at the instance of IFCI by the Debts Recovery Tribunal-I, where proceedings had been initiated by the IFCI against Koshika for recovery of over Rs200cr.
Out of the sale proceeds of the auctioned assets of Koshika, about Rs12cr were permitted by the recovery officer attached to DRT to be retained by the IFCI.

On this, the High Court had in October 2009 passed an order giving a direction to IFCI to remit the amount got from the telecom company to the official liquidator.

However, IFCI did not comply with the direction and contempt was initiated.

Claiming innocence, Rai had contended before the bench that being the CEO of such a huge public sector financial institution he could not be expected to oversee each and every matter.
“Courts are not expected to get swayed away like that just because the contemnor happens to be a person holding a high position like that of a Managing Director of IFCI. In my view, he has missed the bus and it is now too late in the day for him to be praying for exoneration and that too for himself only and leaving his colleagues to sail alone in the sea which has now turned rough. Being the captain of the ship he should not have even made such an attempt to jump out of the ship alone and reach the shore in a single seater boat meant only for him,” the court said.

The bench directed IFCI to deduct a sum of Rs3.5 lakh from the salary of Rai and Rs1.5 lakh from that of Soni, so that it would not have to bear the brunt of the fine, but after it has paid the same.