A) ABSTRACT / HEADNOTE

The judgment concerns prolonged non-compliance with a Memorandum of Settlement dated 04.05.2015 entered into between two rival groups, namely the Seth Group and the Mittal Group, arising out of disputes in a Joint Venture real estate project. The settlement had been judicially recognized and incorporated into an order of the Supreme Court disposing of connected writ petitions. Persistent defaults by the Mittal Group in fulfilling their contractual and court-mandated obligations led to contempt proceedings under Article 32 of the Constitution of India.

The Court examined the scope of wilful disobedience under the Contempt of Courts Act, 1971, particularly in the context of obligations relating to renewal of development licenses and payment of External Development Charges (EDC). A prior order dated 24.04.2020 had already held the Mittal Group guilty of deliberate and intentional non-compliance, granting them additional time as a last opportunity. The present judgment scrutinized continued defaults, reciprocal obligations of both groups under the MoS, and the legal consequences of obstructive conduct affecting third-party homebuyers.

The Court undertook a clause-by-clause interpretation of the MoS to allocate liabilities proportionately, clarified responsibility for renewal of licenses, and harmonized settlement obligations with a newly introduced One Time Settlement Scheme, “Samadhan Se Vikas”, notified by the Government of Haryana. Emphasis was placed on compliance, equity, and public interest. The judgment reinforces judicial intolerance towards defiance of binding settlements and underscores the supervisory role of constitutional courts in enforcing consent-based resolutions.

Keywords:
Contempt of Court; Memorandum of Settlement; License Renewal; External Development Charges; Wilful Disobedience; One Time Settlement Scheme

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The litigation emanated from disputes between two constituent groups of a Joint Venture company formed for real estate development in Sector 89, Haryana. The Joint Venture had acquired land and obtained development licenses with the intent to develop residential projects. Subsequent disagreements led to fragmentation of development rights and sale thereof, which in turn generated disputes regarding financial liabilities, statutory dues, and compliance obligations.

To resolve mounting litigation, the parties executed a Memorandum of Settlement dated 04.05.2015, which was expressly accepted and incorporated by the Supreme Court while disposing of pending writ petitions. The MoS delineated reciprocal obligations, particularly concerning renewal of licenses Nos. 34, 35, and 36 of 2007, payment of EDC liabilities, and execution of ancillary documents.

Despite judicial imprimatur, disputes resurfaced due to alleged non-compliance by the Mittal Group. The Seth Group invoked contempt jurisdiction alleging wilful and deliberate disobedience of binding directions. In an earlier order dated 24.04.2020, the Court categorically held the Mittal Group guilty of intentional default, yet granted additional time in the interest of justice and project completion.

The present judgment arose from interlocutory applications filed by both sides, highlighting continued deadlock, failure to renew licenses, non-payment of statutory dues, and the resultant hardship to homebuyers. The Court was thus required to balance enforcement of its authority, interpretation of settlement terms, and equitable resolution within the framework of contempt jurisdiction.

D) FACTS OF THE CASE

The Seth Group and Mittal Group were stakeholders in a Joint Venture company that had secured licenses for development over 48.03 acres of land. Over time, internal disputes led to a division of development rights, whereby 14.80 acres fell to the Seth Group and 33.23 acres to the Mittal Group and others.

Persistent litigation culminated in arbitration proceedings and eventually a Memorandum of Settlement dated 04.05.2015. Under the MoS, both groups undertook specific financial and procedural obligations. These included payment of license renewal fees, EDC liabilities, provision of bank guarantees, and execution of documents necessary for renewal and bifurcation of licenses.

The Supreme Court, by order dated 05.05.2015, disposed of pending writ petitions in terms of the MoS, thereby conferring binding force to its clauses. However, disputes continued. The Seth Group alleged that the Mittal Group failed to renew licenses and to pay their share of EDC, despite repeated demands and judicial directions.

In its order dated 24.04.2020, the Court found that the Mittal Group had “deliberately and wilfully not fulfilled their obligations” under the MoS and rendered themselves liable under the Contempt of Courts Act, 1971. The Court granted two months’ time post-lockdown to comply, warning of stringent consequences.

Despite this, licenses remained unrenewed, EDC liabilities unpaid, and the project stalled, directly impacting homebuyers. Both groups filed interlocutory applications blaming each other. The Mittal Group relied on alleged non-furnishing of documents by the Seth Group, while the Seth Group alleged deliberate obstruction. These factual assertions formed the basis of adjudication in the present judgment .

E) LEGAL ISSUES RAISED

i. Whether the Mittal Group committed wilful and deliberate disobedience of the Supreme Court’s orders incorporating the Memorandum of Settlement?
ii. How should license renewal fee liability be apportioned between the Seth Group and the Mittal Group under the MoS?
iii. Whether non-renewal of licenses justified continued non-payment of EDC by either party?
iv. What is the legal effect of the newly introduced One Time Settlement Scheme “Samadhan Se Vikas” on existing court directions?
v. Whether continued default warranted coercive action under the Contempt of Courts Act, 1971?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for the Seth Group submitted that the Mittal Group had persistently and deliberately obstructed compliance with the MoS and the Court’s orders. It was argued that renewal of licenses was the exclusive responsibility of the Mittal Group, and failure to do so was calculated to stall the project.

It was contended that the Seth Group had already discharged its financial obligations, including deposit of substantial sums towards license renewal fees. Any insistence on further documentation was described as mala fide and contrary to Clause 17 of the MoS, which expressly stated that no additional documents were required from the Seth Group beyond those already furnished.

The Seth Group emphasized that the ultimate victims of non-compliance were homebuyers, whose interests warranted immediate judicial intervention. Relief was sought for bifurcation and renewal of licenses in favour of the Seth Group in the event of continued default by the Mittal Group.

G) RESPONDENT’S ARGUMENTS

The counsels for the Mittal Group argued that renewal of licenses required compliance with a checklist prescribed by the DTCP, Haryana, and that the Seth Group had failed to furnish necessary documents. The delay, according to the Mittal Group, was thus attributable to the Seth Group’s inaction.

It was further submitted that subsequent to the order dated 24.04.2020, the State introduced a new One Time Settlement Scheme “Samadhan Se Vikas” for EDC dues. The Mittal Group expressed willingness to avail the scheme and contended that liabilities should be recalibrated accordingly.

The Mittal Group denied wilful disobedience and sought directions compelling the Seth Group and other developers to complete formalities required for license renewal.

H) JUDGEMENT 

The Supreme Court undertook a meticulous examination of the Memorandum of Settlement dated 04.05.2015. The Court reaffirmed its earlier finding that the Mittal Group bore primary responsibility for renewal of licenses. A conjoint reading of Clauses 1.3, 2, 5.4, 17, and 18 demonstrated that license renewal fees were to be shared proportionately, with the Seth Group liable only to the extent of land falling to its share, along with half the liability of third-party developers.

The Court rejected the Mittal Group’s attempt to shift blame onto the Seth Group for non-renewal of licenses. It clarified that documentary obligations of the Seth Group were limited and already complied with. Any further documentation was to be demanded by the competent authority, not unilaterally by the Mittal Group.

With respect to EDC liabilities, the Court took judicial notice of the newly notified One Time Settlement Scheme “Samadhan Se Vikas” under Section 9-A of the Haryana Development and Regulation of Urban Areas Act, 1975. Considering the mutual willingness of parties, the Court harmonized earlier directions with the new policy and mandated compliance under Option 1(a).

Detailed financial computations as communicated by DTCP were accepted without scope for dispute. Stringent timelines were fixed, undertakings were mandated, and a clear warning was issued that any further non-compliance would attract action under the Contempt of Courts Act, 1971. The judgment thus combined enforcement, clarification, and equitable adjustment.

a) RATIO DECIDENDI

The binding force of a court-approved settlement is equivalent to a judicial command, and deliberate non-compliance thereof constitutes civil contempt. Allocation of liabilities must strictly follow the contractual text as judicially incorporated, and subsequent administrative schemes may be accommodated only to facilitate, not frustrate, compliance. Continued defiance after a finding of wilful disobedience justifies coercive judicial supervision.

b) OBITER DICTA

The Court observed that real estate disputes involving large housing projects demand heightened responsibility, as defaults have cascading effects on innocent homebuyers. Judicial patience cannot be infinite where litigants weaponize procedural objections to defeat substantive compliance.

c) GUIDELINES

i. License renewal applications must be made by the party contractually obligated without creating artificial impediments.
ii. Financial liabilities must be discharged proportionately and within stipulated timelines.
iii. Statutory settlement schemes may be availed only through mutual consent and binding undertakings.
iv. Authorities must communicate documentary requirements clearly and expeditiously.
v. Any further obstruction shall invite contempt action without further indulgence.

I) CONCLUSION & COMMENTS

The judgment exemplifies firm judicial control over post-settlement defiance. It reinforces that consent decrees are not negotiable instruments subject to unilateral reinterpretation. The Supreme Court’s approach balances strict enforcement with pragmatic accommodation of evolving statutory frameworks.

By integrating the Samadhan Se Vikas scheme, the Court ensured fiscal resolution without diluting accountability. The repeated emphasis on timelines, undertakings, and warnings underscores intolerance for strategic non-compliance. The decision strengthens contempt jurisprudence by clarifying that repeated defaults after explicit findings of wilfulness aggravate liability.

The judgment also foregrounds the interests of homebuyers, situating private disputes within a broader public law context. It serves as a cautionary precedent for joint venture partners that judicially endorsed settlements are final, binding, and enforceable with the full authority of constitutional courts.

J) REFERENCES

a) Important Cases Referred

i. Ashish Seth v. Sumit Mittal and Others, [2020] 11 SCR 525

b) Important Statutes Referred

i. Constitution of India, Article 32
ii. Contempt of Courts Act, 1971
iii. Haryana Development and Regulation of Urban Areas Act, 1975, Section 9-A