TMI Blog2019 (7) TMI 1304X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar issue fell for consideration before the Hon ble Supreme Court in Babu Ram Gupta vs. Sudhir Bhasin and another [ 1979 (4) TMI 164 - SUPREME COURT ] , wherein the Hon ble Supreme Court observed that in absence of a written undertaking given by the contemnor to the court or incorporation of the same by the court in its order, mere non-compliance of a consent order or compromise decree, would not amount to civil contempt. The consent terms agreed upon by the parties if not carried upon, can be a ground for execution of a compromise decree or the Consent Terms but it cannot be a ground for initiation of a contempt proceeding. This Appellate Tribunal had not gone in to merit and allowed the appeal to be withdrawn on 29th May, 2018 in view of the consent terms reached between the parties. In the disposed of appeal, Interlocutory Application was filed to show that the parties have reached the final consent terms, but there was no undertaking given by any party before this Appellate Tribunal nor any direction was issued - Petitioners filed the Contempt Petitions for execution of their consent terms , which will be apparent from the fact that companies namely Reliance C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( Reliance Infratel Ltd. ) to Reliance Jio until further orders. 3. The aforesaid interim order dated 12th March, 2018 was challenged by Reliance Infratel Limited Others (Contemnors herein) before this Appellate Tribunal in Company Appeal (AT) No. 99 of 2018 . 4. During the pendency of the Company Appeal (AT) No. 99/2018 , petition for initiation of Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016, was filed against Reliance Infratel Limited ; Reliance Communications Limited and Reliance Communications Infrastructure Limited . The aforesaid fact was brought to the notice of this Appellate Tribunal and in the interest of the companies, the parties reached settlement by a Term of Settlement (dated 15th June, 2018) which was noticed by this Appellate Tribunal on 29th May, 2018, when the following order was passed: 29.05.2018 When the matter was taken up, learned Counsel appearing on behalf Reliance Infratel Limited Ors. produced a letter dated 29.05.2018 which reads as follows: 29.5.2018 To, 1. HSBC Daisy Invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Crossover Segregated Portfolio, 5. Galleon Special Opportunities Master Fund, SPC, Limited Galleon Asia Crossover Segregated Portfolio, 6. IIC Pond View R Tower Limited, 7. IIC Lispenard R Tower Limited 8. Investment Partners B(Mauritius) Limited, 9. NSR PE Mauritius LLC/Revendell PE LLC, and 10. Quantum (M) Limited .. hereinafter collectively referred to as Respondents Appellants and Respondents are hereinafter collectively referred to as Parties and individually as Party . 1. The Respondents are minority shareholders (holding 4.26% shares) in Appellant No. 1 Company. Being aggrieved by various acts of the majority shareholders (Appellant Nos. 2 and 3), the Respondents had filed a Company Petition No. 7 of 2016 against inter alia the Appellants alleging oppression and mis management, which is pending before the NCLT, Mumbai Bench. 2. The parties have now agreed to put an end to the ongoing disputes and in view thereof have entered into the present Consent Terms to be effective upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts) For (1) HSBC Daisy Investments (Mauritius) Limited (2) Drawbridge Towers Limited (3) Galleon Technology Offshore Limited (4) Galleon Special Opportunities Master Fund, SPC, Limited Galleon Crossover Segregated Portfolio (5) Galleon Special Opportunities Master Fund, SPC, Limited Galleon Asia Crossover (6) IIC Pond View R Tower Limited (7) IIC Lispenard R Tower Limited (8) Investment Partners B(Mauritius) Limited (9) Revendell PE LLC (10) Quantum (M) Limited (Respondent Nos. 1 to 10) Mr. Robert Pavrey (Authorised Representative) Advocates for Respondent Nos. 1 to 10 ANNEXURE A Proportion of each Respondent Respondent No. Name Percentage 1. HSBC Daisy Investments (Mauritius) Limited 27.826 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rms with the consent terms after Insolvency exit date if permissible. Both the appeals stand disposed of with the aforesaid observations. 5. From the order dated 29th May, 2018, it is clear that the appeal was allowed to be withdrawn by this Appellate Tribunal with clear understanding that this Appellate Tribunal has not gone into the merit of the case and given liberty to the parties to proceed with the consent terms after Insolvency exit date , if permissible . 6. Subsequently, in a proceeding for initiation of Corporate Insolvency Resolution Process initiated against Reliance Infratel Ltd ; Reliance Telecome Ltd. and Reliance Communications Ltd. an interim order was passed by this Appellate Tribunal on 30th May, 2018 in Company Appeal (AT) (Insolvency) Nos. 255-256 of 2018 etc. , which reads as follows: 30.05.2018 These appeals have been preferred by the Appellants-Directors and Shareholders of Reliance Infratel Ltd. ; Reliance Telecom Ltd. and Reliance Communications Ltd. against the common orders dated 15th May, 2018 and 18th May, 2018, passed by the Adjudicating Authority (National Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Respondent- Ericsson India Pvt. Ltd. - ( Operational Creditor ) has agreed to settle the matter if affront payment of ₹ 600 Crores (Rupees Six hundred Crores Only) is made by the Appellants/ Corporate Debtors . 9. Mr. Kapil Sibal, learned Senior Counsel for the Appellants informed that the Appellants have agreed to pay a sum of ₹ 550 Crores (Rupees five hundred fifty Crores only) (jointly) in favor of Ericsson India Pvt. Ltd. - ( Operational Creditor ) and sought for 120 days time to pay the total amount. 10. Learned Senior Counsel appearing on behalf of Ericsson India Private Limited - ( Operational Creditor ), on instructions from the Respondent, informed that the 1st Respondent has agreed to receive a sum of ₹ 550 Crores (Rupees Five hundred fifty Crores only), if the total amount is paid within 120 days as proposed by the learned Senior Counsel for the Appellants. 11. Taking into consideration the stand taken by the parties and the fact that if the Corporate Insolvency Resolution Process is allowed to continue, all the Financial Creditors as also the Operational Creditors may suffer more loss and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor will pay back the amount to the Corporate Debtors . 12. The Appellants and the Operational Creditors are directed to file their respective affidavits of undertaking in terms of their statement as made and recorded above within 10 days. Let the appeals be listed for admission on 3rd October, 2018. 13. In the meantime, it will be open to the parties to file Interlocutory Application if orders and directions given above are not complied. Interlocutory Application Nos. 701-702, 709-710 and 712-713 of 2018 stand disposed of with aforesaid observations and directions. 7. Immediately, in the disposed off appeal Company Appeal (AT) No. 99 of 2018 an Interlocutory Application No. 865 of 2018 was filed by the parties wherein this Appellate Tribunal noticed the plea taken by the parties and recorded the following order on 29th June, 2018 : 29th June, 2018 : Pursuant to an interim order, passed by the National Company Law Tribunal (hereinafter referred to as Tribunal ), Mumbai Bench, Mumbai, in a petition under Sections 241 and 242 of the Companies Act, 2013, an appeal was preferred by Rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itius) Limited, 9. NSR PE Mauritius LLC/Rivendell PE LLC, and 10. Quantum (M) Limited. hereinafter collectively referred to as Respondents Appellants and Respondents are hereinafter collectively referred to as Parties and individually as Party . 1. The Respondents are minority shareholders (holding 4.26% shares) in Appellant No. 1 Company. Being aggrieved by various acts of the majority shareholders (Appellant Nos. 2 and 3), the Respondents had filed a Company Petition No. 7 of 2016 against inter alia the Appellants alleging oppression and mis management, which is pending before the NCLT, Mumbai Bench. 2. The parties have now agreed to put an end to the ongoing disputes and in view thereof have entered into the present Consent Terms to be effective upon the order dated 15 May 2018 passed by the Mumbai Bench of NCLT in petition nos. CP(IB) 1385(MB)/2017, CP(IB) 1386(MB)/2017 and CP(IB) 1387(MB)/2017 filed by Ericsson inter alia against Appellant Nos. 1 and 3 under the Insolvency and Bankruptcy Code, 2016 being stayed or set aside which has occurred on 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) Galleon Special Opportunities, Master Fund SPC Ltd. Galleon Asia Crossover, (6) IIC Pond View R Tower Limited (7) IIC Lispenard R Tower Limited (8) Investment Partners B (Mauritius) Limited (9) Rivendell PE LLC (10) Quantum (M) Limited (Respondent Nos. 1 to 10) Mr. Robert Pavrey (Authorised Representative) Advocates for Respondent Nos. 1 to 10 Annexure A Proportion of each Respondent Respondent No. Name Percentage 1. HSBC Daisy Investment (Mauritius) Ltd. 27.826 2. Drawbridge Towers Ltd. 17.391 3. Galleon Technology Offshore Ltd. 8.696 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which was filed against the Majority Group and were pending before the NCLT and the Hon ble Supreme Court. Later on, during discussions with the representatives of the Reliance Group and Contemnor No. 26 , the Petitioners were informed that Contemnor No. 26 was working with the Banks and will furnish a Bank Guarantee as per this Appellate Tribunal s order. Petitioners were further informed that since the sale of the assets was in progress, the amount would be paid earlier than the scheduled i.e. between 10-12 September, 2018. It is alleged that in spite of such undertaking no amount has been paid, nor Bank Guarantee has been provided for defaults of order of this Appellate Tribunal dated 29th June, 2018. 10. Learned counsel appearing on behalf of the Petitioners relied upon the decision of the Bombay High Court in Bajaranglal Gangadhar Khemka Ors. v. Kapurchand Ltd. ILR 1951 Bom 125 . In the said case, the defendants had given undertaking pursuant to which consent decree was passed. The court held that undertaking given in a consent decree and breach of such undertaking amounts to contempt of court. 11. Learned counsel for the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not decided by this Appellate Tribunal on merit and was allowed to be withdrawn on 29th May, 2018 as the parties reached the Terms of Settlement . Subsequently on 29th June, 2019, though Interlocutory Application was not filed for any decision, the appeal having withdrawn, it was taken on record and the Consent Terms , which parties treated as final decree and in absence of any date shown therein, this Appellate Tribunal merely stated that we treat it as an agreement reached between the parties on 15th June, 2018. 14. From bare perusal of the orders passed on 29th May, 2018 and 29th June, 2018, it is clear that no undertaking was given by any of the parties before this Appellate Tribunal. In fact the appeal was allowed to be withdrawn in view of the Consent Terms reached between the parties. 15. Similar issue fell for consideration before the Hon ble Supreme Court in Babu Ram Gupta vs. Sudhir Bhasin and another (1980) 3 SCC 47 , wherein the Hon ble Supreme Court observed that in absence of a written undertaking given by the contemnor to the court or incorporation of the same by the court in its order, mere non-compliance of a consent o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings for contempt of court against B but to approach the executing court for directing a warrant of delivery of possession under the provisions of the Code of Civil Procedure. Indeed, if we were to hold that non-compliance of a compromise decree or consent order amounts to contempt of court, the provisions of the Code of Civil Procedure relating to execution of decrees may not be resorted to at all. In fact, the reason why a breach of clear undertaking given to the court amounts to contempt of court is that the contemner by making a false representation to the court obtains a benefit for himself and if he fails to honour the undertaking, he plays a serious fraud on the court itself and thereby obstructs the course of justice and brings into disrepute the judicial institution. The same cannot, however, be said of a consent order or a compromise decree where the fraud, if any, is practised by the person concerned not on the court but on one of the parties. Thus, the offence committed by the person concerned is qua the party not qua the court, and, therefore, the very foundation for proceeding for contempt of court is completely absent in such cases. In these circumstances, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
