Bombay High Court
Ashapura Minechem Ltd vs Armada (Singapore) Pte. Ltd. 3 Ors on 29 June, 2016
Author: R.D. Dhanuka
Bench: R.D. Dhanuka
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CONTEMPT PETITION NO.89 OF 2015
IN
ARBITRATION PETITION NO.1359 OF 2010
Ashapura Minechem Ltd. )
a Company incorporated under the )
provisions of the Indian Companies Act,1956)
and having its address at Jeevan Udyog Bldg.)
3rd floor, 278, D.N. Road, Fort, )
Mumbai -400 001.
ig ) .. Petitioner
(original Respondent)
Versus
1. Armada (Singapore) Pte.Ltd. )
6, Shenton Way # 32 - 00 DBS Tower, )
Two, Singapore, 068809 )
a company under Judicial Management )
of Mr.Tam Chee Chong, Mr.Jamil Raza Syed)
and Mr.Tay Boon Suan all of Deloitte & )
Touche LLP having its offices at 6, )
Shenton Way # 32-00 DBS Tower, )
Two, Singapore, 068809 )
2. Mr.Tam Chee Chong, Judicial Manager )
Armada (Singapore) Pte. Ltd. )
having his office at Deloitte & Touche LLP )
6, Shenton Way # 32-00 DBS Tower, )
Two, Singapore, 068809 )
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3. Mr.Jamil Raza Syed, Judicial Manager )
Armada (Singapore) Pte. Ltd. )
having his office at Deloitte & Touche LLP )
6, Shenton Way # 32-00 DBS Tower, )
Two, Singapore, 068809 )
4. Mr.Tay Boon Suan Judicial Manager )
Armada (Singapore) Pte. Ltd. )
having his office at Deloitte & Touche LLP )
6, Shenton Way # 32-00 DBS Tower,
ig )
Two, Singapore, 068809 ) .. Respondents
(original Petitioners)
---
Mr.Zal Andhyarujina a/w Mr.Hursh Meghani a/w Mr.Rushabh Sheth
i/by M/s. M.S. Bodhanwalla & Co. for the petitioner.
Mr.Rahul Narichania, Senior Advocate a/w Mr.Shrinivas Deshmukh a/w
Mr.Sunilkumar V. Neelambaran i/by M/s.Mulla & Mulla & Craigie
Blunt & Caroe for the respondents.
---
CORAM : R.D. DHANUKA, J.
DATE : 29th June 2016
Judgment :-
. By this petition filed under the provisions of Contempt of
Courts Act, 1971, the petitioner herein (original respondent in Arbitration Petition No.1359 of 2010) seeks declaration that the respondents herein (original petitioners in Arbitration Petition No.1359 of 2010) have committed willful breach and are in contempt of the order dated 8 th September 2015 passed by this Court in Arbitration Petition No.1359 ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 3 12.conp-89.15(j).doc of 2010 along with Arbitration Petition No.1360 of 2010 and seeks initiation of an action against the respondents for allegedly having committed willful breach of the said order dated 8 th September 2015 passed by this Court under the provisions of the Contempt of Courts Act, 1971.
2. The following important questions of law arise in this matter:-
(i) Whether this Court in the order dated 8th September 2015 had issued a direction in the nature of a command or authoritative instruction to the respondent no.1 herein not to take any steps in execution of the foreign awards and seek any relief in violation of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short 'SICA') without permission of the Board for Industrial and Financial Reconstruction (BIFR) or had only made its observations against the respondent no.1 not to proceed against the petitioner herein or to take steps in execution of the foreign awards without permission of the BIFR ?
(ii) Whether the respondents were bound to obtain permission of the BIFR under Section 22 of the SICA for seeking enforcement of the foreign awards and to file garnishee proceedings in respect of the properties of the petitioner judgment debtor situated outside India ?
(iii) Whether there was any genuine difference of opinion between the petitioner and the respondents on the issue whether prior permission of the BIFR was mandatory before taking any steps in execution of the ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 4 12.conp-89.15(j).doc foreign awards against the petitioner in respect of the properties of the petitioner situated outside India on the ground that provisions of the SICA cannot have extra territorial application or on the ground that in the order dated 8th September 2011, this Court had granted injunction against the respondent no.1 from executing the foreign awards without obtaining prior permission of the BIFR under the provisions of the SICA or not ?
(iv) If there was difference of opinion on interpretation of the order passed by this Court, whether any action under the provisions of Contempt of Courts Act, 1971 can be initiated against the contemnors based on the alleged willful breach of the order passed by this Court ?
(v) What is the standard of proof required for initiating the action for contempt of the orders passed by this Court against the alleged contemnors under the provisions of the Contempt of Courts Act, 1971 ?
3. Some of the relevant facts for the purpose of deciding this petition are as under :-
4. There was a dispute between the parties arising out of a Contract of Affreightment dated 12th April 2008 which was referred to arbitration. The said dispute culminated into two separate foreign awards both dated 16th February 2010. The respondent no.1 herein filed proceedings before the Queen's Bench, UK and obtained an ex parte injunction against the petitioner herein restraining the petitioner from breaching the arbitration agreement in terms of clause 28 of the said Contract of Affreightment.
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5. On 16th February 2010, the arbitral tribunal made final awards and directed the petitioner herein to make payment to the respondents in the sum of US$ 28,196,000 along with interest thereon and costs and US$ 37,353,524.10 with interest thereon and costs. Since the Corporate Head Quarter of the petitioner is in Mumbai, the bank accounts with various banks of the petitioner are in Mumbai, monies payable under the awards was at Mumbai, the respondent no.1 herein filed the Arbitration Petition Nos.1359 of 2010 and 1360 of 2010 in this Court under Sections 47, 48 and 49 of the Arbitration and Conciliation Act, 1996 (for short 'the Arbitration Act') inter alia praying for a declaration that the foreign awards dated 16 th February 2010 were enforceable as decrees of this Court and for a direction to enforce and/or execute the said two awards as decrees in favour of the respondent no.1 herein and against the petitioner herein.
6. The respondent no.1 herein commenced proceedings for enforcement and execution of the said two foreign awards against the petitioner in United State on 23rd June 2010 before District Court for Southern District of New York. It is the case of the respondent no.1 that though the petitioner was served with the said proceedings in India on 7th February 2011, the petitioner chose not to appear before the said Court. The US District Court by its order dated 29 th July 2011 granted recognition and enforcement of the two foreign awards.
7. The petitioner herein thereafter filed proceedings under Chapter 15 of the Bankruptcy Code before US Bankruptcy Court for the Southern District of New York. In the said proceedings, the petitioner sought recognition of BIFR proceedings in India and immediate ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 6 12.conp-89.15(j).doc protection against commencement or continuation of action against it or its assets in pending litigation including proceedings filed by the respondent no.1 for recognition of the awards. By an order dated 22 nd November 2011, the US Bankruptcy Court allowed the Chapter 15 proceedings filed by the petitioner. The petitioner obtained a temporary restraint order. By an order dated 5 th October 2012, the Bankruptcy Court subsequently dismissed the Chapter 15 proceedings and terminated recognition of BIFR proceedings.
8. On or about 20th May 2013, the respondent no.1 was served with a copy of the Application No.196 of 2013 filed by the petitioner before BIFR seeking suspension of the said two foreign awards. The said reference was numbered as BIFR Case No.34 of 2011. The respondent no.1 appeared before the BIFR and made it clear that the respondent no.1 intended to take steps against the assets of the petitioner which are situated outside India. It is the case of the respondent no.1 that the respondent no.1 had categorically submitted before the BIFR that it was willing to give an undertaking not to execute the awards against the assets of the petitioner only in India without the leave of the BIFR. The respondent no.1, thereafter, filed a draft undertaking in that regard before the BIFR. The respondent no.1 also started separate proceedings against the petitioner on 28th December 2012. The proceedings in the Court of First Instance at Antwerp were also initiated in April 2015. The proceedings filed before the Court at Antwerp were served upon the petitioner in July 2015. The Court at Antwerp passed an order on 10th August 2015. The respondent no.1 initiated the proceedings against M/s.Ashapura Midgulf NV, a subsidiary of the petitioner in the Court of First Instance at Antwerp in April 2015.
::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 :::ppn 7 12.conp-89.15(j).doc The petitioner and its subsidiary initially failed to contest the proceedings. In the said proceedings, the order came to be passed by the said Court to surrender the distrained amount of EUR 652,218.52.
9. On 8th September 2015, this Court declared that both the foreign awards dated 16th February 2010 are enforceable as decrees of this Court under the provisions of Chapter IV of the Arbitration and Conciliation Act, 1996. This Court held that in so far as Notices of Motion No.657 of 2014 and 656 of 2014 which were filed by the petitioner for injunction against the respondent no.1 herein from proceeding with or prosecuting with Miscellaneous Application Nos.196 of 2013 and 284 of 2013 in BIFR Case No.34 of 2011 filed by the petitioner herein against the respondent no.1 respectively do not survive and are disposed of accordingly.
10. In the said judgment, this Court observed that in view of the pendency of the proceedings before the BIFR, the petitioner would not be entitled to take steps in execution of the award and seek any relief which would be in violation of Section 22 of the SICA without permission of the BIFR. This Court also observed that there is no bar under Section 22 of the SICA to declare that the foreign awards rendered in favour of the petitioner are enforceable as decrees of this Court. In paragraph 37 of the said judgment, it was clarified that as and when any application for execution of the said award as a decree is pressed by the respondent no.1 herein and if any coercive orders are proposed to be passed which are prohibited under Section 22 of the SICA, the executing Court can consider the effect thereof. This Court also observed that this Court was inclined to accept the submission of the petitioner herein that ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 8 12.conp-89.15(j).doc no coercive orders can be passed by this Court for execution of the said foreign awards as decrees of this Court at this stage.
11. Mr.Andhyarujina, learned counsel appearing for the petitioner invited my attention to various paragraphs of the said judgment dated 8th September 2015 delivered by this Court in Arbitration Petition No.1359 of 2010 along with Arbitration Petition No.1360 of 2010 and other interlocutory proceedings therein. He submits that though this Court in the said judgment dated 8th September 2015 has held that in view of the pendency of the proceedings before the BIFR, the respondent no.1 herein would not be entitled to take steps in execution of the award and seek any relief which would be in violation of Section 22 of the SICA without permission of the BIFR, the respondent no.1 filed various proceedings in the Court of First Instance at Antwerp, Belgium to obtain an order for conversion of conservatory garnishment of the shares that the present petitioner have/own in M/s.Ashapura Midgulf NV as well as all the other funds, assets and securities or other assets that M/s.Ashapura Midgulf NV, Antwerp owned, has or will have and all that is or will be payable to the petitioner by the said company into an enforceable garnishment thereby attaching an outstanding liability on the part of the petitioner's subsidiary to the petitioner. The said order was converted into an enforceable garnishment order. He submits that on 10th August 2015, a summons to surrender the distrained amount of EUR 652,218.52 was served on the said M/s.Ashapura Midgulf NV. He submits that the petitioner has already filed an appeal against the said order on 24th August 2015.
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12. It is submitted by the learned counsel that since the petitioner company is in BIFR, all its assets including its assets with M/s.Ashapura Midgulf NV are in complete control of and within the jurisdiction of the BIFR for its revival program and the same cannot be disposed off or enforced against by any party without the prior permission of the BIFR. Learned counsel invited my attention to the letter dated 7th October 2015 issued by the petitioner through its advocate to the respondent no.1 placing various allegations on record and called upon the respondent no.1 to take steps to forthwith withdraw the proceedings filed by them in the Antwerp Courts contending that the same would amount to breach of contempt of order passed by this Court on 8 th September 2015.
13. Learned counsel for the petitioner also invited my attention to letter dated 16th October 2015 from the Advocates of the respondents in reply to the letter dated 7th October 2015 contending that the BIFR did not have extra territorial jurisdiction on the properties of the petitioner situated outside India. It is contended that none of the orders passed by the BIFR and also by this Court restricted the respondent no.1 from executing the foreign awards outside India. It is contended that the provision of SICA including Section 22 does not have any application to any proceedings which are instituted by the respondent no.1 outside India as the said provision of the SICA extends only to the territory of India.
14. Learned counsel placed reliance on the judgment of the Madras High Court in the case of Ananta Udyog Private Ltd. Vs. Cholamandalam Investment and Finance Co. Ltd., reported in (1995) ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 10 12.conp-89.15(j).doc 83 Comp Cases 498 (Mad.) and would submit that the purpose and object of the provision is clearly to await the outcome of the reference made to the BIFR for the revival and rehabilitation of the sick industrial company and thus the properties of the sick industrial company shall not be made the subject matter of a coercive action by taking any steps in execution.
15. It is submitted by the learned counsel for the petitioner that the respondent nos.2 to 4 who are Judicial Managers of the respondent no.1 company are directly responsible for the decision making process and have willfully disobeyed the order dated 8 th September 2015 passed by this Court. He submits that the action on the part of the respondents is also in direct contravention of the provisions of the SICA and thus this Court shall take an appropriate action under the provisions of the Contempt of Courts Act, 1971 against the respondents.
16. It is submitted by the learned counsel for the petitioner that in respect of the dues from the third parties payable to the petitioner even outside India being the assets and properties of the petitioner, no steps in execution could be taken by the respondents even in respect of those assets outside India without obtaining prior consent of the BIFR. He submits that the properties of the petitioner also in the hands of third party not only situated in India but also situated outside India could not be the subject matter of the execution proceedings for seeking execution of the foreign awards against the petitioner who is admittedly in BIFR.
17. Mr.Narichania, learned senior counsel appearing for the respondents, on the other hand, invited my attention to the order dated 8 th ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 11 12.conp-89.15(j).doc September 2015 passed by this Court in the Arbitration Petition No.1359 of 2010 along with Arbitration Petition No.1360 of 2010 and other connected matters and more particularly paragraphs 36, 37 and 42. He submits that this Court in those three paragraphs referred to aforesaid had merely made an observation that the respondent no.1 herein would not be entitled to take steps in execution of the award and seek any relief which would be in violation of Section 22 of the SICA without permission of the BIFR. He submits that this Court however in paragraph 44 of the said order dated 8th September 2015 has not granted any injunction against the respondent no.1 from taking any steps in execution of the said foreign awards without permission of the BIFR. He placed reliance on Section 1(2) of the SICA and would submit that in any event since the said provision of the SICA admittedly extends to the whole of India, the respondents were not required to obtain any prior consent of the BIFR for execution of the foreign awards in respect of the properties of the petitioner situated outside India.
18. It is submitted by the learned senior counsel that the petitioner was fully aware that the respondent no.1 had already initiated the proceedings in US Court against the petitioner on 23 rd June 2010 and before the Malaysian Court on 28th December 2012 i.e. much before this Court delivered the said judgment dated 8 th September 2015. He submits that the proceedings filed by the respondent no.1 in the Court at Antwerp were already served upon the petitioner on July 2015 i.e. before delivery of the said judgment dated 8th September 2015. The Court at Antwerp had already passed an order on 10 th August 2015 against the petitioner and its sister concern M/s.Ashapura Midgulf NV. He submits ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 12 12.conp-89.15(j).doc that neither the BIFR nor this Court has barred the respondent no.1 from taking any steps in execution in respect of the assets of the petitioner in other countries. It is submitted that since the petitioner and its subsidiary initially failed to contest the said proceedings filed by the respondent no.1 in the Court of First Instance at Antwerp, the said Court passed an order to surrender EUR 652.218.52. He submits that only after the said order passed by the Court at Antwerp, the petitioner has filed the present frivolous proceedings for initiating the action against the respondent no.1 for contempt.
19. It is submitted by the learned senior counsel that the respondent nos.2 to 4 are the Judicial Managers appointed by the Court at Singapore under the provisions of Singapore Companies Act. In his alternate submission, it is submitted that since in the said judgment dated 8th September 2015, this Court had not passed any order restraining the respondent no.1 from taking any steps in execution of the foreign awards without prior permission of the BIFR under Section 22 of the SICA and since this Court had made mere observations in the above referred three paragraphs of the said judgment, no violation is thus committed by the respondents.
20. In support of this submission, learned senior counsel placed reliance on the judgment of Karnataka High Court in the case of R.S. Narayan and Ors. Vs. Air India Corporation, New Delhi and Anr., reported in 2002 Cri. L.J. 1679 and in particular paragraphs 6 to 8 thereof. Learned senior counsel also placed reliance on the judgment of the Supreme Court in the case of Arun Kumar Aggarwal Vs. State of Madhya Pradesh, reported in (2014) 13 SCC 707 and in particular ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 13 12.conp-89.15(j).doc paragraphs 16 and 23 and would submit that the direction issued by the Court should be in the nature of a command or authoritative instruction which contemplates the performance of certain duty or act by a person upon whom it has been issued. He submits that since there was no such direction issued by this Court in the said judgment dated 8 th September 2015 not to take any steps for execution of the said two foreign awards without prior consent of the BIFR, the steps which were already taken by the respondent no.1 in execution much prior to the order passed by this Court or even otherwise can not constitute willful default on the part of the respondents.
21. It is submitted by the learned senior counsel for the respondents that in view of the fact that this Court had not issued any direction in the impugned order not to take any steps in execution without prior consent of the BIFR and in view of the fact that the provisions of the SICA being applicable only to this country, under a bonafide belief, the respondent no.1 pursued the proceedings already filed before the US Court at Antwerp. In his alternate submission, he submits that since the respondents had not committed any willful disobedience of the order passed by this Court, no action under Section 2(b) of the Contempt of Courts act, 1971 or under any other provisions of law can be initiated against the respondents. Learned senior counsel placed reliance on the judgment of the Supreme Court in the case of Indian Airports Employees' Union Vs. Ranjan Chatterjee and Anr., reported in (1999) 2 SCC 537 and in particular paragraph 11 thereof.
22. Learned senior counsel for the respondents submits that a proceeding under the extra ordinary jurisdiction of this Court in terms of ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 14 12.conp-89.15(j).doc the provisions of Contempt of Courts Act, 1971 is a quasi criminal and thus standard of proof required for initiating any action in a contempt proceeding is that of a criminal proceeding and breach shall have to be established beyond reasonable doubt. He submits that where there are two equally consistent possibilities open to the Court, this Court cannot hold that the offence is proved beyond reasonable doubt. In support of this submission, he placed reliance on the judgment of the Supreme Court in the case of Mrityunjoy Das & Anr. Vs.Sayed Hasibur Rahaman & Ors., reported in (2001) 3 SCC 739 and more particularly paragraph 14 thereof.
23. In support of the submission that the provisions of the SICA cannot have extra territorial application and can be extended only to this country and thus no prior permission of the BIFR was required under Section 22 of the SICA for taking steps in execution of the foreign awards in respect of the properties situated outside India, learned senior counsel placed reliance on the judgment of this Court in the case of Murablack India Limited Vs. UBS AG an establishment organised and existing under the laws of Switzerland & Ors., reported in 2001 (1) Bom. C.R. 371 and in particular paragraph 7 thereof.
24. Mr.Andhyarujina, learned counsel for the petitioner in rejoinder submits that since the petitioner company is admittedly before the BIFR and the reference filed by the petitioner is registered, the prior consent of the BIFR before taking any steps in execution of the foreign awards even in respect of the properties situated outside India also is mandatory. The respondents having committed willful disobedience of the order passed by this Court on 8th September 2015 shall be punished by ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 15 12.conp-89.15(j).doc this Court for initiating the action under the provisions of the Contempt of Courts Act, 1971.
REASONS AND CONCLUSIONS :-
25. There is no dispute that the arbitral tribunal had made two separate awards both dated 16th February 2010 in the arbitral proceedings filed by the respondent no.1 herein against the petitioner directing the petitioner to make payment of various amounts. The respondent no.1 herein had filed two separate arbitration petitions under Sections 47 to 49 of the Arbitration Act for a declaration that both those foreign awards dated 16th February 2010 were enforceable as decrees of this Court and for a direction to enforce and/or execute the said two awards as decrees in favour of the respondent no.1 herein and against the petitioner herein. Both those arbitration petitions were disposed of by this Court by an order and judgment dated 8 th September 2015 thereby declaring both the awards enforceable as decrees of this Court under the provisions of Chapter IV of the Arbitration and Conciliation Act, 1996.
26. A perusal of the record clearly indicates that the respondent no.1 had already filed proceedings against the petitioner in US Court on 23rd June 2010 and also started the proceedings before the Malaysian Court on 28th December 2012. The respondent no.1 also initiated the proceedings in the Court of First Instance at Antwerp in April 2015 which proceedings were served upon the petitioner in the month of July 2015. It is also an admitted position that the Court at Antwerp passed an order on 10th August 2015 against the petitioner in the said proceedings. The petitioner and its sister concern however initially failed to contest ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 16 12.conp-89.15(j).doc the said proceedings. The Court at Antwerp accordingly directed to surrender EUR 652,218.52.
27. The order is passed by this Court in the Arbitration Petition Nos.1359 of 2010 and 1360 of 2010 and other connected matters admittedly on 8th September 2015. A perusal of the said order and judgment dated 8th September 2015 clearly indicates that though this Court made an observation that in view of the pendency of the proceedings before the BIFR, the respondent no.1 herein would not be entitled to take steps in execution of the award and seek any relief which would be in violation of Section 22 of the SICA without permission of the BIFR, this Court did not grant any injunction restraining the respondent no.1 herein to take any coercive steps in execution of the said foreign awards against the petitioner herein without obtaining prior consent of the BIFR under Section 22 of the SICA even in respect of the properties situated outside India.
28. The question that arises for consideration of this Court is whether the respondent no.1 was required to obtain any prior consent of the BIFR under Section 22 of the SICA for taking steps in execution of the said two foreign awards in respect of the properties of the petitioner situated outside India.
29. A conjoint reading of Section 1(2) and Section 21 of the SICA clearly indicates that the provisions of the SICA are extended only to the whole of India and not outside India. The expression "any of the properties of the Industrial Company" in Section 22 of the SICA will ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 17 12.conp-89.15(j).doc have to be read with Section 1(2) of the SICA which provides for territorial jurisdiction of the BIFR which is extended only to any part of this country and not outside India. A reference to the judgment of this Court in the case of Murablack India Limited (supra) will be useful to deal with this issue raised by the learned senior counsel for the respondents. It is held by this Court in the said judgment that prima facie, provisions of Section 22 which have only territorial application would not be attracted to restrain a party from proceeding with the suit instituted outside India even before an application was moved by other party before the BIFR. It is held that the Courts would not injunct proceedings in a foreign Court unless this Court by itself would have jurisdiction to grant the relief and considering other factors.
30. In my view, the facts before this Court in the case of Murablack India Limited (supra) are identical to the facts of this case.
Though this Court had made such observation prima facie to this effect in paragraph 7 of the said judgment, on interpretation of Section 1(2) read with Section 22 of the SICA, I am of the view that prior consent of the BIFR under Section 22 was not required to be obtained by the respondent no.1 to execute the said two foreign awards against the petitioner in any country other than India. In my view, prior consent of the BIFR was required only if an application for execution of a degree, for winding up of the industrial company or for execution, distress or the like against any of the properties of the industrial company in India was made.
31. A perusal of the observations made by this Court in paragraphs 36, 37 and 42 of the said judgment dated 8 th September ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 18 12.conp-89.15(j).doc 2015 clearly indicates that the said observations are not by way of any directions or cannot be construed as an injunction against the respondent no.1 from taking any steps in execution of the foreign awards without obtaining prior consent of the BIFR under Section 22 of the SICA. Be that as it may, since the BIFR does not have territorial jurisdiction to take any steps in respect of the properties of the company in BIFR situated outside India, the respondent no.1 was not required to obtain any such consent of the BIFR. In my view, the petitioner herein cannot file contempt proceedings for initiation of an action against the respondents for not obtaining prior permission of the BIFR before filing an application for execution in respect of the properties of the petitioner situated outside India or for pursuing such application.
32. A perusal of the record clearly indicates that the respondent no.1 had already initiated proceedings in the year 2010 itself in US Court and in Malaysian Court in the year 2012. The respondent no.1 had also initiated the proceedings for execution in US Court at Antwerp prior to the order and judgment dated 8th September 2015. The said proceedings were already served upon the petitioner by the respondent no.1. The petitioner was fully aware various proceedings filed by the respondent no.1 for execution of the said two foreign awards dated 16 th February 2010.
33. It is not in dispute that since the petitioner had its Corporate Head Quarter in Mumbai, the bank accounts with various banks of the petitioner are in Mumbai, monies payable under the awards is at Mumbai and the subject matter of the awards i.e. money was located in Mumbai, ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 19 12.conp-89.15(j).doc the respondent no.1 filed the proceedings under Sections 47 to 49 of the Arbitration Act in this Court inter alia praying for a declaration of both those foreign awards dated 16th February 2010 enforceable as decrees of this Court and for a direction to enforce and/or execute the said two awards as decrees of this Court. Though both the awards were declared by the arbitral tribunal outside India, the respondent no.1 was entitled to file proceedings under Sections 47 to 49 of the Arbitration Act for the aforesaid reasons in this Court. The respondent no.1 can file an application for execution of the said two awards not only in India, but several other parts of the world wherever the properties of the petitioner are situated. This Court in the proceedings filed under Sections 47 to 49 cannot restrain the beneficiaries of the awards from executing the awards in any other country against the judgment debtor. Similarly, even BIFR under the provisions of the SICA cannot grant any injunction or issue direction in respect of such properties of the company under BIFR outside India. In my view in no circumstances, the respondent no.1 could be directed by this Court to obtain prior consent of the BIFR under Section 22 of the SICA for execution of the said two foreign awards in respect of the properties situated outside India. BIFR does not have extra territorial jurisdiction over the properties of the company in BIFR outside India.
34. Supreme Court in the case of Arun Kumar Aggarwal Vs. State of Madhya Pradesh (supra) and Karnataka High Court in the case of R.S. Narayan and Ors. Vs. Air India Corporation, New Delhi and Anr. (supra) has held that the Courts cannot initiate contempt proceedings for non-compliance with mere observations or suggestions ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 20 12.conp-89.15(j).doc made by the Court in the order in question. It is held that there must be an express direction necessary for disposal of the case which should be in the nature of a command or authoritative instruction which contemplates the performance of certain duty or act by a person upon whom it has been issued. In my view, the observations made by this Court in paragraphs 36, 37 and 42 of the said judgment dated 8 th September 2015 were ex facie not in the nature of a command, direction or instruction and were in the nature of an enforceable order and thus any alleged non-compliance of the observation made by this Court simplicitor would not attract the provisions of the Contempt of Courts Act, 1971. In my view, the judgments of the Supreme Court in the case of Arun Kumar Aggarwal Vs. State of Madhya Pradesh (supra) and of the Karnataka High Court in the case of R.S. Narayan and Ors. Vs. Air India Corporation, New Delhi and Anr. (supra) squarely apply to the facts of this case. I am respectfully bound by these judgments. I am agreement with the views expressed by this Court and the Karnataka High Court.
35. Be that as it may, I am not inclined to accept the submission of the learned counsel for the petitioner that any of the respondents have willfully disobeyed the order and judgment dated 8th September 2015 delivered by this Court in the Arbitration Petition Nos.1359 of 2010 and 1360 of 2010 and other connected matters. In my view, in view of the rival contentions of both the parties about interpretation of the order passed by this Court as to whether what was stated in paragraphs 36, 37 and 42 were the simplicitor observations or were in the nature of a command, direction or instruction which were required to be complied ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 21 12.conp-89.15(j).doc with by the respondent no.1 before taking any steps in execution of the foreign awards, such question cannot be decided in the contempt proceedings but can be decided in appropriate proceedings.
36. Supreme Court in the case of Indian Airports Employees' Union Vs. Ranjan Chatterjee and Anr. (supra) has held that where there was genuine difference of opinion between rival parties and resolution of the said difference involved interpretation of Court order, non-implementation of the Court order did not amount to a contempt. In my view, the judgment of the Supreme Court in the case of Indian Airports Employees' Union Vs. Ranjan Chatterjee and Anr. (supra) squarely applies to the facts of this case. I am respectfully bound by the said judgment. Since rival contentions raised by the parties would involve interpretation which is interpreted by this Court in this order, no action under the provisions of Contempt of Courts Act, 1971 can be initiated against the respondents. In any event, since the interpretation of the order passed by this Court by the respondents is correct interpretation, no action under the provisions of the Contempt of Courts Act, 1971 can be initiated against the respondents.
37. Supreme Court in the case of Mrityunjoy Das & Anr. Vs.Sayed Hasibur Rahaman & Ors. (supra) has quoted the judgment authored by Lord Denning in Re Bramblevale reported in (1969) 3 All ER 1062 (CA) with approval in which it was held that where there are two equally consistent possibilities open to the Court, it is not right to hold that the offence is proved beyond reasonable doubt. Supreme Court has held that since a proceeding under the extraordinary jurisdiction of the Courts in terms of the provisions of the Contempt of Courts Act, 1971 ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 22 12.conp-89.15(j).doc is quasi criminal, the standard of proof required is that of a criminal proceeding and the breach shall have to be established beyond reasonable doubt. It is held that under Section 2(b) of the Contempt of Courts Act, 1971, the burden of proof is on the person who asserts which burden is applicable to the allegations of contempt of Court. It is held that power under the provisions of the Contempt of Courts Act, 1971 should be exercised cautiously and sparingly and in the larger interest, after examining the true effect of the alleged contemptuous conduct.
38. In my view, steps taken by the respondent no.1 prior to the date of delivery of the judgment of this Court i.e. on 8 th September 2015 in execution of the foreign awards against the petitioner in respect of the properties situated outside India cannot be considered as contemptuous conduct on the part of the respondents for which an action under the provisions of the Contempt of Courts Act, 1971 can be initiated against them. In my view, the petitioner though having alleged contempt against the respondents, has failed to discharge the burden of proof which cast upon them. The principles laid down by the Supreme Court in the case of Mrityunjoy Das & Anr. Vs.Sayed Hasibur Rahaman & Ors. (supra) squarely apply to the facts of this case. The standard of proof in a contempt proceeding required is that of a criminal proceeding and must be proved beyond reasonable doubt. I am respectfully bound by the said judgment.
39. In so far as the judgment of Madras High Court in the case of Ananta Udyog Private Ltd. Vs. Cholamandalam Investment and Finance Co. Ltd. (supra) relied upon by the learned counsel for the petitioner is concerned, there is no dispute about the proposition laid ::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 ::: ppn 23 12.conp-89.15(j).doc down by the Madras High Court that the properties of the sick industrial company shall not be made the subject matter of coercive action. A perusal of the said judgment however clearly indicates that the Madras High Court has not considered the issue whether prior consent of the BIFR was necessary for taking any steps in execution against the company before BIFR in respect of the properties situated outside India.
In my view, the said judgment of the Madras High Court in the case of Ananta Udyog Private Ltd. Vs. Cholamandalam Investment and Finance Co. Ltd. (supra) relied upon by the learned counsel for the petitioner thus would not assist the case of the petitioner. The contempt petition filed by the petitioner is totally devoid of merits.
40. I therefore pass the following order :-
(a) Contempt Petition No.89 of 2015 is dismissed;
(b) There shall be no order as to costs.
R.D. DHANUKA, J.
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