TMI Blog2022 (7) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... ion from depositing the shortfall amount pursuant to order dated 06.05.2021 has also been dismissed by this Court. Therefore, thereafter it shall not be open for the respondents to submit that as order dated 22.01.2014 passed by the learned Single Judge is executable, the present contempt proceedings may not be entertained. Taking into consideration the earlier decisions of this Court in the cases of RITA MARKANDEY VERSUS SURJIT SINGH ARORA [ 1996 (9) TMI 641 - SUPREME COURT] and BANK OF BARODA VERSUS SADRUDDIN HASAN DAYA AND ORS. [ 2003 (12) TMI 665 - SUPREME COURT] , it is specifically observed and held by this Court that the petitioner can execute the decree can have no bearing on the contempt committed by the respondents. The respondents guilty for deliberate and wilful disobedience of judgment and order dated 19.08.2020 passed by this Court in Civil Appeal No. 5158/2016 as well as order dated 06.05.2021 passed by this Court in the present petition. The respondents have rendered themselves liable for suitable punishment under the provisions of the Contempt of Courts Act for such deliberate and wilful disobedience - Put up the matter before this Bench on 12.08.2022 for fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment to interim awards granting further relief to HSBC. That thereafter on 30.07.2012, HSBC filed Arbitration Petition No. 1062/2012 under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act, 1996) in the Bombay High Court, interalia, seeking directions to call upon the alleged contemnors to deposit a security amount to the extent of HSBC s claim in the arbitration proceedings that had begun under both the SSA and SHA. 2.3 On 03.08.2012, the learned Single Judge of the Bombay High Court passed an interim order under Section 9 petition, interalia, directing the Corporation Bank to allow the alleged contemnors to withdraw a sum of INR 1 crore from their account on or before 09.08.2012, but not to allow any further withdrawals until further orders, till which time, the account was to remain frozen. Meanwhile, the alleged contemnors challenged the jurisdiction of the threemember Arbitral Tribunal set up under the auspices of the SIAC. The Arbitral Tribunal on 07.12.2012 passed a unanimous final partial award on jurisdiction , dismissing the jurisdictional challenge. 2.4 That thereafter in Section 9 petition pending before the Bombay Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents herein alleged contemnors in Section 34 proceedings before the Bombay High Court. By a judgment and order dated 28.09.2015, the learned Single Judge dismissed Section 34 application/proceedings and an appeal under Section 37 of the Act, 1996 also came to be dismissed on 05.05.2017. Meanwhile, HSBC had moved the Bombay High Court to enforce the foreign final award dated 27.09.2014 in the SSA, of which enforcement proceedings were reported to be pending. 2.7 It appears that thereafter and pursuant to the judgment and order dated 19.08.2020 passed by this Court, the HSBC addressed a legal notice dated 04.09.2020 to the alleged contemnors and Avitel, calling upon them to interalia deposit the shortfall amount in the Corporation Bank account to maintain a total of USD 60 million. The alleged contemnors replied to the said notice by their reply dated 09.09.2020 and refused to deposit the shortfall amount on the ground that they were contemplating remedies under Article 137 of the Constitution of India. 2.8 That thereafter, the petitioner had filed the present petition against the respondents herein on 26.09.2020, alleging wilful, intentional and deliberate disobedience of Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner HSBC and Shri Mukul Rohatgi, learned Senior Advocate has appeared on behalf of the respondents alleged contemnors. A counter is filed on behalf of the respondents alleged contemnors. 4. Shri Neeraj Kishan Kaul, learned Senior Advocate appearing on behalf of the petitioner HSBC has vehemently submitted that there is wilful, intentional and deliberate disobedience of judgment and order dated 19.08.2020 and subsequent order dated 06.05.2021 by the respondents herein by not depositing the shortfall amount to a sum of USD 60 million in the Corporation Bank account maintained by the Avitel. It is submitted that the wilful, intentional and deliberate disobedience of orders passed by this Court has rendered the respondents alleged contemnors liable for suitable punishment under the provisions of the Contempt of Courts Act. 4.1 It is further submitted by Shri Kaul, learned Senior Advocate appearing on behalf of the petitioner HSBC that in the present case after judgment and order dated 19.08.2020 passed by this Court confirming the order passed by the learned Single Judge, directing the Avital and others to deposit the shortfall amount so as to maintain a su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that therefore and after this Hon ble Court issued the notice in the present contempt petition, this Hon ble Court passed an order dated 06.05.2021 directing respondents alleged contemnors to deposit the shortfall amount within a period of six weeks. It is submitted that instead of depositing the shortfall amount which expired on 17.06.2021, the respondents alleged contemnors filed an IA seeking exemption from the payment of the shortfall amount which came to be dismissed by this Hon ble Court. It is submitted that the offer made by the respondents to file an undertaking that they will not dispose of their assets in place of making deposit of the shortfall amount, has not been accepted and/or the said proposal has been rejected by this Hon ble Court. 4.5 It is further submitted that the case on behalf of the respondents alleged contemnors that they are unable to arrange and liquidate their assets is nothing but a false attempt on the part of the respondents not to deposit the shortfall amount. It is submitted that their inability to liquidate their assets and/or their inability to deposit the requisite amount is nothing but a lame excuse which as such is belated. It is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aised the issue of maintainability of the contempt petition. 4.9 It is submitted that while the alleged contemnors in the counter affidavit state that they have been in the process of collecting offers and actively pursuing sale of their personal assets , the alleged advertisements put up for sale of such assets have been published as late as on 8th July, 2021 (i.e. one week before the filing of counter affidavit and almost 11 months after the August Judgment and subsequent to the order rejecting the exemption application on 02.07.2021), which is nothing but an attempt to create an illusion of their attempts for compliance. 4.10 It is submitted that the list of assets provided by the alleged contemnors is untrustworthy and may not be relied upon on the grounds that: (i) The list of assets submitted by alleged contemnors is not verified / audited by neither any Chartered Accountant nor the income tax returns of the Alleged Contemnors; (ii) Does not contain a list of liabilities. Fails to disclose whether there are existing encumbrances on any of the assets disclosed; (iii) The assets disclosed by the alleged contemnors only amount to Rs 16.37 Crore (approx.) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is submitted that as such in addition the respondents alleged contemnors have further wilfully disobeyed order dated 06.05.2021 passed by this Hon ble Court. 4.13 It is submitted that this Hon ble Court in the case of Firm Ashok Traders Vs Gurumukh Das Saluja (2004) 3 SCC 155 has held that an application under Section 9 is not a suit and the order passed under Section 9 would fall within the expression interim measure of protection as opposed to all time or permanent protection. The purpose of Section 9 is to provide expedited interim relief in support of arbitration and safeguard the subject matter of the dispute so that irreparable loss would not cause. It is submitted that an execution application is to be filed for a default of Section 9 Order, then the whole purpose of Section 9 of Arbitration Act to get expeditious interim protection would be defeated. It is submitted that Section 9 proceedings are interim proceedings in nature. 4.14 It is further submitted that the purpose behind contempt is to bring violation of Court Orders to the notice of the Court and therefore Contempt is a matter between the court and the person in contempt of court. In contrast, the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on behalf of the respondents alleged contemnors that as the August Judgment did not provide a timeline for depositing the shortfall amount and therefore, the alleged contemnors respondents cannot be held to be in contempt of the orders of this Hon ble Court, it is submitted that the same is incorrect in facts and in law. It is submitted that the August Judgment required the alleged contemnors and Avitel to deposit the shortfall amount in Corporation Bank account as an interim relief and in the manner suggested by the learned Single Judge passed by the High Court i.e., within four weeks. Reliance is placed upon the decision of this Court in the case of Kunhayammed Vs. State of Kerala; (2000) 6 SCC 359. It is submitted that therefore, when this Hon ble Court confirmed the order passed by the learned Single Judge, the respondents alleged contemnors were required to deposit the shortfall amount in their owned Corporation Bank account at least within a period of four weeks from 19.08.2020. It is submitted that as such the respondents have been given many opportunities and ample time to comply with the August Judgment. They continue to be in contempt of order dated 06.05.2021 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that in light of the same it is uncertain what is the actual value of Avitel and what actual amount would be realizable from the sale of shares of Avitel. No independent valuation of Avitel or the alleged contemnors share in Avitel has been provided. The same is merely an eyewash. 4.22 It is further submitted that mere pendency of a review petition cannot be a ground for noncompliance of judgment/ order of this Hon ble Court. It is submitted that the respondents alleged contemnors and Avitel have a history of noncompliance of the orders of judicial authorities including the orders of the Arbitral Tribunal. It is submitted that the review petition has been filed only to delay the compliance of the August Judgment/order. It is submitted that although the review petition was filed in month of September 2020, which has been into in defects at the Registry due to want of procedural compliances. Such oneyear delay in curing the defects is a deliberate attempt to await (i) the retirement of the Judge who rendered the August Judgment, and (ii) rely on the mere filing of the review petition to argue against depositing of the amounts. It is submitted that as this Hon ble Court has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the order passed by the learned Single Judge has been confirmed by this Hon ble Court by judgment and order dated 19.08.2020 in Civil Appeal No. 5158/2016. It is submitted that as such a review application being R.P. Diary No. 20098/2020 has been filed by Avitel India requesting to recall/review the aforesaid judgment and order dated 19.08.2020. It is submitted that the said review application is pending for consideration by this Hon ble Court. 5.2 It is submitted that in just about 37 days of the August Judgment, the present contempt petition has been filed by the HSBC before this Hon ble Court on 26.09.2020 on expiry of three weeks time granted by HSBC. It is submitted on 30.04.2021, HSBC filed I.A. No. 59119/2021 for interim reliefs before this Hon ble Court to direct the respondents herein to restrain them from selling, alienating, encumbering, creating third party rights, transferring or diverting their movable and immovable assets during the pendency of the present contempt petition. It is submitted that the same application is pending adjudication before this Hon ble Court. 5.3 It is submitted that the respondents have also filed one I.A. No. 82521/2021 seeking the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Hon ble Court by the August Judgment has allowed the appeal of the petitioner herein and upheld the order of the learned Single Judge therefore, as such, the appropriate remedy for the petitioner herein is to approach the High Court of Bombay for execution if warranted and not this Hon ble Court. 5.6 It is submitted that so far as the decision of this Court in the case of Kunhayammed (supra) to elaborate the principle of merger particularly with respect to the maintainability of the present contempt petition, relied upon by the petitioner is concerned, the said decision shall not be applicable to the facts of the case on hand. It is submitted that the principle of merger as discussed and contemplated in the said decision was on a different footing and the same is evident from the conclusions set out in paragraph 44 of the said judgment. 5.7 It is further submitted by Shri Rohatgi, learned Senior Advocate appearing on behalf of the respondents that respondents herein never had and do not have any intention whatsoever to disobey the order passed by this Hon ble Court. It is submitted that despite absolute willingness and best efforts, the respondents are helpless in comply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the learned Single Judge has become a decree, Section 51 read with Order XXI Rule 40 of CPC lays down the guidelines for the execution of the same. 5.14 It is submitted that in the case of Rama Narang Vs. Ramesh Narang and Ors.; (2021) SCC Online SC 29, this Hon ble Court has observed and held that for bringing an action for civil contempt, the petitioner has to satisfy the court that there has been a wilful disobedience of any judgment, decree, direction, order, writ or other process of the Court. Shri Rohatgi, learned Senior Advocate appearing on behalf of the respondents has also relied upon the following decisions of this Court in the cases Ram Kishan Vs. Tarun Bajaj; (2014) 16 SCC 204; Kanwar Singh Saini Vs. High Court of Delhi; (2012) 4 SCC 307 and Kapildeo Prasad Sah Vs. State of Bihar; (1999) 7 SCC 569, in support of his above submissions and in support of his request and prayer not to entertain the present contempt petition and relegate the petitioner to avail any other remedy which may be available to the petitioner to execute order dated 22.01.2014 passed by the learned Single Judge, which has been affirmed and confirmed by this Hon ble Court vide judgment and ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interalia, deposit the shortfall amount in the Corporation Bank account to maintain a balance of USD 60 million. Despite the above, the respondents have failed to deposit and/or to maintain a balance of USD 60 million in their Corporation Bank account. That thereafter, the present contempt proceedings have been initiated/filed on 25.09.2020 alleging wilful, intentional and deliberate disobedience of judgment and order passed by this Court dated 19.08.2020. This Court had issued a notice in the present contempt proceedings on 06.11.2020. That thereafter by a further order dated 06.05.2021 this Court had directed the respondents to deposit the shortfall amount within a period of six weeks in the Corporation Bank account as per prayer (b) of the present application. The prayer (b) which has been granted by this Court vide order dated 06.05.2021 is as under: b) direct the Alleged Contemnors to forthwith deposit the shortfall of appx. USD 42 million (appx. INR 3,09,07,88,400 as on 18.09.2020), so as to maintain a sum balance of at least USD 60 million (appx. INR 4,41,54,12,000 as on 18.09.2020) in the Corporation Bank account to ensure obedience of the judgment dated 19.08.2020 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (Mauritius) Limited was allotted by the Company, total 614,327 Compulsorily Convertible Preference Shares on payment of nominal amount of Rs. 10 per share (total nominal amount paid= Rs. 61,43,270/) and Premium amount of Rs. 4355.75 per share (total premium amount paid= Rs. 267,58,52, 260/) and 1 Equity Share of nominal amount of Rs. I 0 per share (total nominal amount paid = Rs. I 0/) and Premium amount of Rs. 4460/per share (total premium amount paid = Rs. 4460/), as evident from the Return of allotment filed in Form 2 under Section 75(1) of the Companies Act, 1956. A copy of the said Form 2 filed by the Company showing the details of the shares issued and the amounts paid towards the same, is hereto annexed and marked as Annexure A2. (Page No. 13 to 19). Thus, a total amount of Rs. 268,20,00,000/( Rupees Two Hundred Sixty Eight Crores Twenty Lakhs equivalent to USD 60 Million) was invested in shares of the Company by the petitioner HSBC. 8. The applicants herein submit that presently an aggregate amount of Rs. 84,10,65,140/( Rupees EightyFour Crores Ten Lacs Sixty Five Thousand One Hundred Forty) is lying in the Corporation Bank. It is humbly submitted that the present a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 19072001 respectively, and registered owner of residential premises at Pleasant Palace, Narayan Dabholkar Road, Malabar Hill, Mumbai 400 006 since 07012011, and seven units of residential properties situated at Silver valley CHS, Panchgani (six units since 31.03.2011 and one more unit since 09.07.2012). Mrs. Shivani Siddhartha Jain wife of Applicant No. 2 Siddhartha Jain, and Mrs Priyanka Hrishi Jain wife of Applicant No. 3 Hrishi Jain are registered owners of office premises at Unit No. A9 A6 respectively, in Vimal Udyog Bhavan, Taikalwadi Road, Mumbai since 03092012 30082012. Mr. Rishab Jain son of Applicant No.1 and brother of Applicant No.2 3 is registered owner of office premises at Unit No. A11 in Vimal Udyog Bhavan, Taikalwadi Road, Mumbai since 30082012. The office premises at Juhu, Mumbai was a rented premises and was vacated in year February 2015. None of the premises mentioned in this paragraph are owned by the applicants. These facts are also being disclosed for providing complete information to this Hon'ble Court. 13. That, the Applicants inability to comply with the Order dated 06.05.2021 is genuine, unintentional and not lacking in bona fide. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Single Judge by the High Court by which the respondents were directed to maintain a balance of USD 60 million in their Corporation Bank account is executable is concerned, at the outset, it is required to be noted that in the present proceedings it is not the case of noncompliance of the order passed by the learned Single Judge confirmed by this Court alone. There is a further specific direction issued by this Court vide order dated 06.05.2021. Therefore, there is a noncompliance of direction issued by this Court dated 06.05.2021 by which the respondents were directed to deposit the shortfall amount so as to maintain a balance of USD 60 million. That thereafter, a further application for exemption from depositing the shortfall amount pursuant to order dated 06.05.2021 has also been dismissed by this Court. Therefore, thereafter it shall not be open for the respondents to submit that as order dated 22.01.2014 passed by the learned Single Judge is executable, the present contempt proceedings may not be entertained. 8.1 At this stage, a few decisions of this Court on contempt proceedings under the Contempt of Courts Act are required to be referred to. In the case of Rama Nara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e very foundation of our judicial system and undermines the rule of law, which we are bound to honour and protect. This is essential to maintain faith and confidence of the people of this country in the judiciary. It is further observed that there is a need of iron hand to enforce rule of law, punish contemnors and maintain faith and confidence of the people in judiciary. 9. Applying the law laid down by this Court in the aforesaid decisions to the facts of the case on hand and the subsequent specific directions issued by this Court in its order dated 06.05.2021, the objection on behalf of the respondents that as the order passed by the learned Single Judge of the High Court is executable and therefore, the present contempt proceedings may not be entertained is overruled. 10. Now so far as the submissions on behalf of the respondents that there is no wilful disobedience as they have no sufficient funds to deposit the shortfall amount and despite their best efforts, they are unable to get the requisite funds to comply with the order passed by this Court is concerned, at the outset it is required to be noted that all these submissions were made earlier in I.A. No. 68388/2021 se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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