They didn't pay Rs 39 crore despite 2 years of extensions. Then they argued: just execute the award.

A company got 2 years and multiple extensions to deposit Rs 39 crore. They never did. Then they told the Supreme Court: 'We don't have to—just execute the award.' The court's response? Contempt.

The question was deceptively simple. Could a company that had taken two years of court-granted extensions to deposit money, and then simply refused to pay, escape contempt by telling the judge: "You don't need to punish us—the other side can just enforce the award in execution proceedings"? The Supreme Court's answer landed like a hammer. The courtroom fell silent as the bench leaned forward.

When the arbitrator's award became a ticking clock

In August 2018, an arbitral tribunal handed down an award of roughly Rs 78 crore plus 18% interest in favour of Urban Infrastructure Real Estate Fund. The losing side—Dharmesh S. Jain and his company—had signed a Share Purchase Agreement. Now they had to pay. The award document, thick with legal clauses, sat in a file that would grow heavier with each passing month.

They didn't pay. Instead, they challenged the award under Section 34 of the Arbitration and Conciliation Act, 1996 (the provision that allows a party to ask a court to set aside an arbitral award on limited grounds like fraud or violation of public policy). The Bombay High Court granted them a stay of the award—but on one condition: they had to deposit 50% of the awarded amount, roughly Rs 39 crore, within 12 weeks. The order was clear, typed on crisp court stationery.

They never deposited it. Not in 12 weeks. Not in 12 months. Not in two years. The file remained untouched, the condition unmet.

The dance of extensions

What followed was a pattern that judges see far too often. The company kept coming back to court, asking for more time. The High Court gave extensions—each time, the lawyers stood before the bench, papers in hand, promising compliance. Then the company appealed to the Supreme Court, which dismissed the challenge on merits in September 2021—but gave them another eight weeks to deposit the money. The courtroom air was thick with the smell of old case files and the rustle of gowns.

Eight weeks came and went. No deposit. The court registry noted the silence.

On October 28, 2021, the Supreme Court passed a stronger order. It directed compliance and warned of "serious consequences" if the money wasn't paid. The bench's tone was measured but firm—Justice M.R. Shah and Justice B.V. Nagarathna made it clear that this was no mere suggestion. The company now had a clear, unambiguous court order telling them to deposit Rs 39 crore.

They still didn't pay. The warning hung in the air, unanswered.

The audacious argument

When contempt proceedings were initiated, the company tried a new tactic. They asked the court to recall its October 28 order—arguing it had been passed without hearing them properly. The Supreme Court dismissed that application on January 25, 2022. The bench's gaze was steady, unimpressed.

Then came the argument that would seal their fate. The company's lawyers told the Supreme Court: the deposit condition was never mandatory. If we didn't pay, the award creditor could simply go to execution proceedings (the legal process of enforcing a court decree by seizing assets or bank accounts). So there was no need for contempt. Just let them execute the award. The words hung in the courtroom like smoke.

The court was not impressed. Justice Shah's pen stopped moving. The silence was deafening.

Why "just execute the award" wasn't enough

The Supreme Court's reasoning cut through the argument in two sharp moves.

First, the court held that the jurisdiction of a court under the Contempt of Courts Act does not disappear just because the order or decree could also be enforced through execution. "Irrespective of whether or not a decree is executable," the bench observed, "the question in determining contempt is whether the conduct of the contemnor was such as would make a fit case for awarding punishment for contempt of Court." This principle, drawn from precedents like R.N. Dey & Ors. v. Bhagyabati Pramanik & Ors. and Rama Narang v. Ramesh Narang & Anr., established that contempt jurisdiction is independent of execution remedies. The court's power to punish for disobedience is not a backup option—it is a primary tool to uphold the dignity of judicial orders.

Second, the court pointed to the company's own conduct. They had taken the benefit of multiple extensions over two years. They had been warned of serious consequences. They had tried and failed to get the warning order recalled. Having taken every advantage the court offered, they could not now turn around and say the condition wasn't mandatory. The bench cited Bank of Baroda v. Sadruddin Hasan Daya & Anr. and Sudhir Vasudeva v. M. George Ravishekaran to reinforce that wilful disobedience—not the mere availability of alternative remedies—determines contempt.

"A party that has taken the benefit of extended time periods granted by courts for compliance with a conditional order," the court held, "cannot subsequently contend that the condition was not mandatory and that non-compliance merely triggers alternative consequences." The judgment was crisp, the reasoning airtight.

What the law actually requires

The court laid down a clear rule for anyone facing a conditional court order. When a party is required to comply with a court order within a stipulated time, it has exactly two options: either explain the circumstances that prevented compliance, or seek further time before the deadline expires. If it does neither, its failure may constitute contempt. This principle, drawn from State of Bihar v. Subhash Singh and Maruti Udyog v. Mahinder C. Mehta, closes the door on any argument that non-compliance is merely a procedural hiccup.

The company had done neither. They had simply waited, taken extensions, and then argued that the whole exercise was optional. The court also referenced Rita Markandey v. Surjit Singh Arora and Jolly George Varghese & Anr. v. The Bank of Cochin to underscore that contempt is not about the decree's enforceability but about the contemnor's conduct—the deliberate defiance of a court's authority.

The court found them guilty of civil contempt for wilful disobedience of both the High Court's August 2019 order and the Supreme Court's October 2021 order. They were held liable to be punished under the Contempt of Courts Act, 1971. The court directed that they be heard on the question of sentence. The file, now marked with the contempt finding, was set aside for the next hearing.

What this means for you

For any party that has obtained a conditional stay from a court—whether in arbitration, commercial litigation, or any other proceeding—this judgment closes a dangerous loophole. You cannot take the benefit of court-granted time, fail to comply, and then argue that the other side should just execute the decree. The court's power to punish for contempt exists independently of execution proceedings. The bench's message was clear: a court order is not a suggestion; it is a command.

THE PLAY: If you have a conditional court order requiring you to deposit money or take any action within a deadline, either comply or seek an extension before the deadline expires—never assume that non-compliance is merely an invitation to the other side to execute the decree.

The company got two years and multiple extensions. They never deposited a rupee. Then they told the court their failure was someone else's problem to solve. The court disagreed—and held them in contempt. The courtroom, once filled with the sound of arguments, fell quiet as the order was read out. The contemnor's lawyers gathered their papers in silence, the weight of the judgment settling over them like a shroud.