Delhi High Court - Orders
Milan Saini vs Kamal Kumar & Anr on 6 April, 2021
Author: C.Hari Shankar
Bench: C.Hari Shankar
$~31
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. (COMM) 361/2019
MILAN SAINI ..... Petitioner
Through Mr. Darpan Wadhwa, Sr.
Advocate with Mr. Varun Nischal, Mr.
Arjun Syal and Mr. Vaibhav Mishra, Advs.
versus
KAMAL KUMAR & ANR. ..... Respondents
Through Mr. Dayan Krishnan, Sr.
Advocate with briefing counsel for
Respondent No. 1 (attendance not given)
Ms. Kruttika Vijay, Ms.Aishwarya Kane and
Mr. Mukul Kochhar, Advs. for Respondent
No. 2
CORAM:
HON'BLE MR. JUSTICE C.HARI SHANKAR
ORDER
% 06.04.2021 IA 4433/2021 (direction) in O.M.P. (COMM) 361/2019
1. This is an application by Respondent No. 1, praying that the petitioner be not heard on the present O.M.P. (COMM) 361/2019 under Section 34 of the Arbitration and Conciliation Act, 1996 ("1996 Act"), as he has been found guilty, by this Court of having committed contempt, and is yet to purge the contempt.
2. Having heard Mr. Dayan Krishnan, learned Senior Counsel for the applicant/Respondent No. 1, this Court is constrained to observe that the facts of the present case, and the manner in which the petitioner has dealt with the orders passed by this Court and the orders Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI O.M.P. (COMM) 361/2019 Page 1 of 2 Signing Date:07.04.2021 15:23:27 passed by the Arbitral Tribunal, are, prima facie, shocking.
3. During the course of the proceedings pending before the learned Arbitral Tribunal, an application was preferred by the petitioner, under Section 17 of the 1996 Act. Against the order passed by the learned Arbitral Tribunal therein, the petitioner filed Arb. A. 3/2014 and the aforesaid Arb. A. 3/2014 was disposed of by the learned Single Judge of this Court vide order dated 16th January, 2014, by directing the appellants (of which, the present petitioner was Appellant No. 2) to deposit certain amounts in Account Nos. 000293300000032 and 000293300000020 maintained with Yes Bank, Fortune Global Arcade, Sikanderpur, Mehrauli Gurgaon Road, Gurgaon- 122002, and restraining the appellants (including the present petitioner), from withdrawing or dealing with, in any manner, an amount of ₹ 9.5 crores out of the said deposit.
4. This order was modified by the learned arbitrator vide order dated 27th October, 2014, while disposing of the application under Section 17 of the 1996 Act, filed by the present respondents. The concluding directions in the said order read thus:
"Taking an overall view of the facts and circumstances of the case, it will be in the interest of justice to modify the Order of the learned Single Judge dated 16.01.2014 to the effect that the respondent No. 1 and respondent No.2 shall be at liberty to withdraw the amounts lying in the fixed deposits in 'Yes Bank', Fortune Global Arcade, Sikanderpur, Mehrauli Gurgaon Road, Gurgaon-122002 and instead furnish Bank Guarantees ("BG") in the amount of Rs.4.50 crores each respectively."
(Emphasis supplied) Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI O.M.P. (COMM) 361/2019 Page 2 of 3 Signing Date:07.04.2021 15:23:27
5. It may be noted that, before the learned arbitrator, the present petitioner was Respondent No. 2.
6. Mr. Dayan Krishnan, learned counsel for the applicant, submits that, without complying with the direction for furnishing the bank guarantee for ₹ 4.5 crores, the respondents before the learned Arbitral Tribunal withdrew the amounts lying in the fixed deposits in stark violation of the afore-extracted directions passed by the learned arbitrator. The dispute with Respondent No. 1 was subsequently settled, but the dispute with Respondent No. 2, i.e. the present petitioner, remains.
7. In these circumstances, the present respondents filed O.M.P. (CONT.) 1/2017 before this Court alleging contumacious and wilful disobedience of order dated 27th October, 2014 (supra), passed by the learned arbitrator.
8. Said O.M.P. (CONT.) 1/2017 was disposed of, by a learned Single Judge of this Court vide order dated 21st January, 2020. Paras 7, 8 and 32 to 38 of the said order merit reproduction, thus:
"7. The Tribunal issued notice to the bank and on appearance before the Tribunal on 06.05.2015, a statement was made by the bank that the respondent had withdrawn the amount in the month of November, 2014 without any bank guarantee. No reply was filed by the respondent. After hearing the parties on 15.09.2015, the Tribunal returned a categorical finding that the respondent was in default and willful contempt of the order passed by the Tribunal and made representation to this Court for appropriate orders. The Tribunal further recorded that insofar as the matter between the petitioner herein and Deepak Marda was concerned, the Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI O.M.P. (COMM) 361/2019 Page 3 of 4 Signing Date:07.04.2021 15:23:27 same was settled between the parties and hence, no reference was required.
8. The petitioner, thereafter, filed contempt case being Cont. Cas(C) No. 982/2015 in this Court in 2015. On 15.12.2015, a notice was issued to the respondent, who, however, failed to appear despite having been served. On 12.05.2016 bailable warrants were issued by the Court in the sum of Rs.10,000/-. The same could not be executed and fresh warrants were issued on 19.07.2016.
*****
32. As regards the contention of the respondent that since a final award has been passed, the interim orders have merged in the same and therefore no contempt lies, the same only deserves to be rejected, If this interpretation is given, then the learned counsel for the petitioner is right that it would render Section 27(5) of the Act redundant. Besides, it would actually give a free hand to the contemnor to flout the orders of the Court till such time his objections to the award are not decided and the challenge does not attain finality. A party who willfully disobeys the orders of the Court has to be strictly dealt with.
33. From the totality of facts which emerge in this case, it is clear that initially the Tribunal has restrained the respondent herein from receiving the amount deposited with the escrow agent. The aid order was challenged by the respondent along with Deepak Marda in this Court. An agreement was entered between the parties that the amount lying with the escrow agent would be released to the respondent and Deepak Marda which would be deposited by them with the Yes Bank and kept in a fixed deposit with lien marked thereon. From the amount so realized, the respondent herein was directed to place Rs.9.5 Crores in a fixed deposit with a lien marked on it. The FDR was to be renewed till further orders of the Tribunal. The Tribunal thereafter, modified the earlier orders and permitted the respondent along with Deepak Marda to withdraw the sum of Rs.9.5 Crores subject to furnishing a bank guarantee of 4.5 Crores each. This was on the ground that the respondent wanted to clear his statutory liabilities. The respondent has admittedly withdrawn the amount without furnishing a bank guarantee.Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI O.M.P. (COMM) 361/2019 Page 4 of 5 Signing Date:07.04.2021 15:23:27
34. In my view, there is a clear and wilful disobedience of the order passed by the Tribunal on 27.10.2014. The record of this Court shows that several notices including bailable warrants were issued for production of the respondent but he had evaded service. In one of the orders, this Court prima facie had noticed the willful evasion of the service by the respondent and on an application filed by the petitioner, direction was issued to the EOW Cell to open a look out circular. It was only after the LOC was issued that an advocate appeared on behalf of the respondent.
35. After the respondent was represented, opportunity was given by this Court to appear in this Court or at least to deposit some amount to show his bona fide. Despite this, the respondent remained defiant and a categorical statement was made on his behalf that he is refusing to appear in the Court. The ground set up for non-appearance was that he feared for his safety and security. This ground, in my opinion, also has no legs to stand. The petitioner has rightly pointed out that the respondent had visited India in July, 2019 to sign Special Power of Attorney on the basis of which he had filed objections in this Court under Section 34 of the Act. This was very close to the application being filed for opening of a lookout circular. Given the gamut of these facts, the non- appearance of the respondent is not justified and neither is his apprehension that he is not safe in this country. The Court had even given an alternative to the counsel for the respondent to deposit some amount. But even that was not accepted and the offer made was only to deposit Rs.33 lakhs out of a liability of Rs. 4.5 crores with interest thereon.
36. The Supreme Court in the case of Rama Narang v. Ramesh Narang (2006) 11 SCC 114 has held that in order to maintain sanctity of the orders of the Court, it has become imperative that those who are guilty of deliberately disregarding the orders of the Court in a clandestine manner should be appropriately punished. It was further held that the Majesty of the Court and the Rule of Law can never be maintained unless this Court ensures meticulous compliance of the orders. A Division Bench of this Court in Mohan Nair vs. Rajiv Gupta (2015) DLT 332, held that to say that the orders of the Court are not implementable or unenforceable will make the law and the Court a laughing stock and Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI O.M.P. (COMM) 361/2019 Page 5 of 6 Signing Date:07.04.2021 15:23:27 therefore, it is the duty of every Court to prevent its machinery from being made a sham, thereby running down the Rule of Law and rendering itself an object of ridicule. The Supreme Court in Sukhdev Singh vs. Hon'ble C.J.S. Teja Singh & Ors. AIR (1954) SCR 454 while recognizing that the power of the High Court to institute proceedings for contempt and punish the contemnor when found necessary is a special jurisdiction which is inherent in all Courts of Record.
37. The respondent has clearly violated order dated 27.10.2014 passed by the Arbitral Tribunal. Respondent is held guilty of contempt of the order of the Tribunal.
38. To come up on 14.05.2020 for order on sentence."
(Emphasis supplied)
9. It is in these circumstances that the Respondent No.1 has moved the present application before this Court, praying that the petitioner be heard on this petition under Section 34 of the 1996 Act, only after he purges the contempt committed, in respect of which this Court has already pronounced orders on 21st January, 2020.
10. I am, prima facie, inclined to agree with Mr. Dayan Krishnan. It does appear that the petitioner is taking this Court for granted and had resorted to playing ducks and drakes with the Court possibly complacent in the knowledge that he is in the U.S.
11. Without having blatantly and with no reasonable justification whatsoever, the petitioner flouted the orders passed by the learned Arbitral Tribunal under Section 17 of the 1996 Act, and of which he has been found guilty of contempt, I see, prima facie, no justification for permitting the petitioner to prosecute the prayer for stay of Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI O.M.P. (COMM) 361/2019 Page 6 of 7 Signing Date:07.04.2021 15:23:27 operation of the impugned award, or even to stay such operation, till he purges himself of the contempt. In this context, the observations of the learned Single Judge in para 36 of the order dated 21st January, 2020 in OMP(CONT.) 1/2017 are significant. As has been observed by the learned Single Judge, if this Court is to take up the present challenge under Section 34 of the 1996 Act on merits, it would amount to reducing the authority of this Court to a laughing stock. It would mean that the petitioner could wilfully flout the orders passed by the learned Arbitral Tribunal at the interlocutory stage, withdraw the amounts deposited in this Court without furnishing the bank guarantee as directed by the learned Arbitral Tribunal, refused to purge the contempt even having been found guilty in respect thereof and, nevertheless, maintain a challenge against the final award passed by the learned Arbitral Tribunal on merits. This, to me, appears, prima facie, to be unquestionable.
12. However, Mr. Darpan Wadhwa, learned Senior Counsel appearing for the petitioner, submits that he would like to file a response to this application. In view thereof, issue notice. Notice is accepted by Mr. Arjun Syal, learned counsel for the petitioner, who is an instructing counsel to Mr. Darpan Wadhwa.
13. Let a response to this application be filed within a period of four weeks from today with advance copy to learned counsel for the applicant/Respondent No. 1, who may file rejoinder thereto, if any, within a period of two weeks thereof.
Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI O.M.P. (COMM) 361/2019 Page 7 of 8 Signing Date:07.04.2021 15:23:2714. It is stated that OMP (CONT.) 1/2017, which was to be listed for passing Orders on Sentence, has not been listed owing to the intervention of the COVID 2019 pandemic.
15. Let the present matter be listed alongwith OMP (CONT.) 1/2017 before one Bench, subject to orders of Hon'ble the Judge Incharge (Original Side) on 8th July, 2021.
16. It is made clear that this Court has not passed any interlocutory orders interdicting the enforcement of the impugned arbitral award.
C.HARI SHANKAR, J APRIL 6, 2021 r.bararia Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI O.M.P. (COMM) 361/2019 Page 8 of 8 Signing Date:07.04.2021 15:23:27