Delhi High Court - Orders
Koninklijke Philips N.V vs Xiaomi Inc & Ors on 3 June, 2021
Author: Anu Malhotra
Bench: Anu Malhotra
$~6
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(COMM) 502/2020 & I.A. 7191-7192/2021
KONINKLIJKE PHILIPS N.V. ..... Plaintiff
Through: Mr. Chander M. Lall, Sr. Adv. with
Ms. Saya Choudhary Kapur, Mr.
Ashutosh Kumar, Mr. Devanshu
Khanna, Mr. Nikhil Chawla, Ms.
Vrinda Bagaria, Advs.
versus
XIAOMI INC & ORS. ..... Defendants
Through: Mr. Akhil Sibal, Sr. Adv. with Mr.
Nitin Masilamani, Ms. Anannya
Ghosh, Mr. Dushyant Manocha, Ms.
Shreya Munoth, Advs. for D-1to 5, 7.
CORAM:
HON'BLE MS. JUSTICE ANU MALHOTRA
ORDER
% 03.06.2021 I.A. 7192/2021(Exemption) Exemption allowed, subject to just exceptions. CS(COMM) 502/2020 & I.A. 7191/2021 The matter is indicated to be listed en bloc for the date 04.08.2021 before the Joint Registrar for completion of pleadings. The matter is taken up on I.A. 7191/2021 filed on behalf of the applicant/ defendant nos.1 to 5 and 7 under Order 39 Rule 4 and Section 151 of the CPC, 1908 seeking the setting aside or modification of orders dated 27.11.2020 and 08.12.2020. The prayers made in the said application are to the effect:
(a) Allow the present application and set aside the Orders dated 27.11.2020 and 08.12.2020 insofar as they require the Applicants to jointly and/or severally maintain Rs. 1000 crores Signature Not Verified Digitally Signed By:SUMIT GHAI Signing Date:03.06.2021 19:35:12 This file is digitally signed by PS to HMJ ANU MALHOTRA.
in their bank account;
(b) In the alternative, in the unlikely event prayer (a) is not allowed, permit the Applicants to submit a bank guarantee favouring the Registrar General of this Hon'ble Court for a sum computed in line with internationally accepted principles for computation of royalty in lieu of jointly and/or severally maintaining a cash balance in their/ its bank accounts;
(c) Pass any other and further order(s) as it may deem fit in the facts and circumstances of the present case."
As regards the prayers made qua seeking the setting aside of orders dated 27.11.2020 and 08.12.2020 in so far as requiring the applicant/ defendant nos.1 to 5 and 7 to jointly and severally maintaining a cash balance of Rs.1,000 crores in their bank accounts, it is submitted on behalf of the plaintiff that the response thereto would be filed and the same be filed accordingly, which prayer would be considered on its own merits.
Presently without any observation qua even the aspect of the prayer clause (a) of the application which is yet to be considered qua which a response of the plaintiff is yet to be filed, presently, the submission that has been made on behalf of the applicants/ defendants seeking to submit a bank guarantee favouring the Registrar General of this Court for a sum of Rs.1000 crores only is what is being considered.
At the outset, on behalf of the applicants/ defendants it has been submitted that the maintaining of a sum of Rs.1,000/- crores in their bank accounts is a financial distress as the money is required to be utilized for their business purposes. The said prayer is vehemently opposed on behalf of the plaintiff by learned senior counsel for the plaintiff submitting to the effect that much more is due to the plaintiff from the defendants/ applicants beyond the sum of Rs.1,000/- crores and that there have been several Signature Not Verified Digitally Signed By:SUMIT GHAI Signing Date:03.06.2021 19:35:12 This file is digitally signed by PS to HMJ ANU MALHOTRA.
misconducts also by the defendants. It is however, the avowed contention on behalf of the applicants that rather the sum of Rs.1,000/- crores would be more secure by submission of the bank guarantee by the defendants/ applicants by internationally accepted practice and that the money would be rather more secure for meeting the ends of justice.
Reliance is sought to be placed on behalf of the defendants/ applicants specifically on the proceedings of the date 08.12.2020 with specific observations of the Court also vide paras 6 & 6.1 thereof, which read to the effect:
"6. Given the statement made by Mr. Sharma, I am of the view that defendant nos. 1 to 5 and 7 should place on record comfort letter(s) of the concerned bank(s) which would indicate that the said bank(s) are aware of the statements made before the Court on behalf of the said defendants that they are required to retain with them, at any point in time, jointly and/or severally, an amount equivalent to Rs. 1,000/- crores. 6.1 The comfort letter(s) will be filed with this Court before the next date of hearing."
to submit to contend that in fact the Court even directed that comfort letters would be filed before the Court before the next date of hearing. One of the comfort letters has been put forth on to the screen through video conferencing dated 09.05.2021 as issued by the Standard Chartered Bank to the Registrar General of this Court, as per which it is recorded to the effect:
"This is to confirm that our client M/s Xiaomi Technology India Pvt. Ltd. with its registered business address at Orchid, Block E, Embassy Tech Village Marathahalli Outer Ring Road, Devarabisanahalli, Bengluru 560103, maintains bank account with us and is in good standing with out bank. We hereby confirm that our client currently maintains an amount of Rs.1000 crores (Rs.10,00,00,00,000) in a deposit Signature Not Verified Digitally Signed By:SUMIT GHAI Signing Date:03.06.2021 19:35:12 This file is digitally signed by PS to HMJ ANU MALHOTRA.
with us and has provided assurance to us that such deposit will be retained, at all times, till July 31, 2021 in respect of the matter CS (COMM) No.502/2020 in the Delhi High Court."
which indicates thus to the effect that there is assurance that the applicants have given to the Standard Chartered Bank that they would keep the amount of Rs.1,000 crores retained at all time till July 31, 2021 in respect of the matter CS (COMM) No.502/2020 in the Delhi High Court.
The submission that has been made on behalf of the plaintiff by learned senior counsel for the plaintiff whilst vehemently opposing the prayer for substitution of the amount of Rs.1,000 crores in the account of the defendant no.2, a bank guarantee as sought to be submitted on behalf of the applicants with the Registrar General of this Court relate to submissions that had been made pursuant to proceedings dated 27.11.2020 whereby qua IA 10600/2020, it was observed vide paras 2 & 3 thereof to the effect:
2. Notice. Mr.Ravi Sharma, Advocate, accepts notice for the defendants. I take on record the submission made by Mr. Sharma that till the next date of hearing the defendants shall maintain in their bank accounts operated in India an amount of Rs. 1000 crores. The said statement is taken on record .It is made clear that the defendants are bound by the statement given by their counsel.
3. The defendants shall file the details of the bank accounts operated in India where the amount of Rs.1000 crores is being maintained, on or before December 02, 2020."
and it is thus submitted on behalf of the plaintiff that in as much as the observations in paras 2 & 3 of the order dated 27.11.2020 were based on consent, the same cannot be modified without the consent of the plaintiff, which is opposed on behalf of the applicants/ defendants submitting to the Signature Not Verified Digitally Signed By:SUMIT GHAI Signing Date:03.06.2021 19:35:12 This file is digitally signed by PS to HMJ ANU MALHOTRA.
effect that the observations in paras 2 & 3 are the submissions that were made on behalf of the defendants themselves and were not on the basis of any consent between the plaintiff and the defendants, which is made apparent also to the Court through observations in paras 2 & 3 of the order dated 27.11.2020.
Thus, the contentions that the observations in paras 2 & 3 of order dated 27.11.2020 were based on any consent between the parties cannot be accepted.
As regards the submission that has been made on behalf of the plaintiff that the reply to Order 39 Rule 4 of the CPC needs essentially to be considered, the same has already been so directed and the Court has categorically observed hereinabove that prayer clause (a) is presently not being dealt with.
A further submission has been made on behalf of the plaintiff that even qua the prayer clause (b) seeking to submit a bank guarantee favouring the Registrar General for the sum computed in line with internationally accepted principles for computation of royalty in lieu of jointly and/or severally maintaining a cash balance in their bank accounts would have to be considered in accordance with internationally accepted principles as sought to be submitted by the applicant even qua which, the amount of the bank guarantee would necessarily have to be a sum of Rs.1300 crores. It has also been submitted on behalf of the plaintiff by learned senior counsel for the plaintiff that as per judicial proceedings conducted in CS(COMM) 295/2020, it has been categorically observed inter alia to the effect that there have been frauds perpetuated by the applicants. It has also been submitted on behalf of the plaintiff that it would be detrimental to the applicants if a Signature Not Verified Digitally Signed By:SUMIT GHAI Signing Date:03.06.2021 19:35:12 This file is digitally signed by PS to HMJ ANU MALHOTRA.
bank guarantee is allowed to be substituted in place of sum of Rs.1,000 crores being maintained in the bank account of the applicants.
On a considerations of the submissions that have been made on behalf of either side, it is essential to observe that the comfort document that has been put forth by the defendants/ applicants as put forth by the Standard Chartered Bank is only an indication of an assurance of the applicants/ defendants that a cash balance of Rs.1,000 crores would be maintained in the account of the defendants/ applicants till 31.07.2021, which according to the Court does not suffice to meet the ends of justice and to safeguard the rights of the plaintiff as well. Though whilst already observing as has been observed also hereinabove at least twice that the prayers in relation to seeking the of the orders dated 27.11.2020 & 08.12.2020 would be considered on their own merits after response of the plaintiff is taken into account and as presently the implicit contents of the prayers made in the IA 7191/2021 under consideration relate in relation to the substitution of the amount of Rs.1,000/- crores in the bank account of the applicants/ defendants to the sum or to a bank guarantee, which according to the Court would be greater safeguard than the comfort letter that has been put forth on behalf of the defendants.
It is considered appropriate that in place of maintaining a sum of Rs.1,000/- crores in the bank account of the defendants/ applicants, a bank guarantee for a sum of Rs.1,000/- crores of one or more nationalised Indian banks of this country is submitted to the satisfaction of the Registrar General of this Court, which bank guarantee shall continue till further direction of this Court qua CS(OS) 502/2020. It is further directed that till acceptance of the bank guarantee submitted to the satisfaction of the Registrar General of Signature Not Verified Digitally Signed By:SUMIT GHAI Signing Date:03.06.2021 19:35:12 This file is digitally signed by PS to HMJ ANU MALHOTRA.
this Court for a sum of Rs.1,000/- crores of one or more nationalized Indian banks, the amount of Rs.1,000/- crores in account bearing No.05398673 of the defendants is not permitted to be withdrawn by the defendants/ applicants and direction to this effect be sent to the Standard Chartered Bank, Koramangala, Bangalore560095.
Renotify for 11.08.2021.
ANU MALHOTRA, J JUNE 3, 2021 vm Signature Not Verified Digitally Signed By:SUMIT GHAI Signing Date:03.06.2021 19:35:12 This file is digitally signed by PS to HMJ ANU MALHOTRA.