Bombay High Court
Sri Sai Krishna Constructions vs Glove Infracom And Anr on 20 June, 2019
Author: G.S. Kulkarni
Bench: G.S. Kulkarni
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psv
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
COMMERCIAL CONTEMPT PETITION (L.) NO.91 OF 2019
IN
COMMERCIAL ARBITRATION PETITION NO.512 OF 2019
Sri Sai Krishna Constructions ..Petitioner
Vs.
Glove Infracom & Anr. ..Respondents
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Mr.Ankit Lohia with Mr.Purush Buttan, Mr.Bharat Jain, Ms.Anubhuti
Gandhi i/b. M/s.I.C. Legal for Petitioner.
Mr.M.S. Singh for Respondent Nos.1 and 2.
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CORAM : G.S. KULKARNI, J.
DATE : 20th JUNE, 2019 P.C.:
Heard Mr.Lohia, learned Counsel for the petitioner, and Mr.Singh, learned Counsel for the respondent Nos.1 and 2. Mr.Singh states that he has entered vakalatnama on behalf of respondent Nos.1 and 2.
2. The petitioner contends that the respondents have willfully disobeyed and are in breach of the order dated 6 December 2018 passed by this Court in Commercial Arbitration Petition (l.) No.1486 of 2018 and further order dated 14 March 2019 passed by this Court in Commercial Arbitration Petition (l.) No. 131 of 2019. ::: Uploaded on - 26/06/2019 ::: Downloaded on - 14/07/2019 11:02:38 :::
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3. The following directions were issued in the order dated 6 December 2018:-
" ORDER
(i) By consent of the parties, Mr.Arif Doctor Advocate is
appointed as a prospective sole Arbitrator to arbitrate the disputes and differences between the parties under the agreement dated 28.9.2018.
(ii) The prospective Arbitrator fifteen days before entering a reference shall make a disclosure as per requirement of section 11 (8) read with section 12(1) of the Act, and shall forward a copy to the Prothonotary and Senior Master of this Court to be placed on record of this application as also forward the same to the respective parties.
(iii) The respondent is directed to deposit Rs.75 lacs in a separate no lien account. Such deposit shall be subject to further orders which would be passed by the learned arbitrator either under proceedings under section 17 of the Act or the final adjudication in the arbitral proceedings as the learned arbitrator may deem proper and appropriate in the facts and circumstances of the case and the rival contentions.
(iv) All contentions of the parties on merits of the matter are expressly kept open.
(v) The above observations made in this order are prima facie and are relevant to the adjudication of the present petition under section 11 of the Arbitration and Conciliation Act and thus is not a reflection on the merits of the disputes between the parties."
4. The contention as urged on behalf of the petitioner is that in paragraph 3 of the above order the respondents were directed to deposit Rs.75,00,000/- in a separate no lien account is till date not complied. It is submitted that in fact before the arbitral tribunal in the meeting held on 7 March 2019 on behalf of the respondents, the following statement was recorded:-
"2. Furthermore, Mr. Rizvi, on instructions from Mr. ::: Uploaded on - 26/06/2019 ::: Downloaded on - 14/07/2019 11:02:38 ::: 3 908-cpcdl 91-19 Ahmed Ali Ayubi (Partner of the Respondent) stated that his client would comply with the order dated 6 th December, 2018 passed by the Hon'ble Bombay High Court and deposit the sum of Rs. 75,00,000/- (Rupees Seventy Five Lakhs only) into a non-lien account and give due proof/details of compliance. He however requested 15 days to do this."
5. It is therefore contended that the acceptance of the said direction and the obligation to comply with the said direction can be clearly found, only stated to be breached on the part of the respondents.
6. The next contention as urged on behalf of the petitioner is that in the subsequent order dated 14 March 2019 passed in Commercial Arbitration Petition (l.) No.131 of 2019, in regard to the bank guarantee, as furnished on behalf of the petitioner, the orders of this Court as contained in the order dated 6 December 2018 were confirmed and were directed to continue to operate. In the order dated 6 December 2018 in paragraph 5, this Court had accepted the statement as made on behalf of the respondents in the following terms:-
"5. Mr.Ansari learned counsel for the respondents though have opposed the petition, on instructions submits and confirms that the respondents are not immediately inclined to invoke bank guarantee and in the event the bank guarantee is to be invoked, the respondents shall give 15 days notice to the petitioners. Statement of Mr. Ansari is accepted."
7. It is contended that the respondents however contrary to the said statement as recorded in the above order invoked the bank guarantee ::: Uploaded on - 26/06/2019 ::: Downloaded on - 14/07/2019 11:02:38 ::: 4 908-cpcdl 91-19 without a notice to the petitioner and, hence the subsequent proceedings in commercial arbitration petition (l.) No.131 of 2019 came to be instituted by the petitioner. In adjudicating the said petition, the Court had come to a conclusion that the invocation of the bank guarantee by the respondents by letter dated 30 January 2019 was illegal and contrary to the order dated 6 December 2018 passed by this Court. The Court accordingly allowing the said petition, had passed the following order:-
"14. In the above circumstances, the interest of justice would require that the petition is disposed of by the following order:-
Order
i) The invocation of the bank guarantee by letter dated 30th January, 2019 of advocate of respondent Nos. 1 & 2 cannot be sustained as it is contrary to the observations made in paragraph No.5 of the order dated 6 th December, 2019 in Arbitration Petition (L.) No.1486 of 2018.
Respondent No.3 bank is accordingly directed not to act on the advocate's letter dated 30.01.2019.
ii) The statement as made on behalf of respondent Nos. 1 and 2 and as recorded in paragraph No.5 of the order dated 6th December, 2018 passed in Arbitration Petition (L) No.1486 of 2018 shall continue to operate.
iii) All contentions of the parties on merits are expressly kept open. The observations made in this order are no expression of any opinion on the merits of the disputes between the parties.
iv) The learned sole arbitrator shall endeavour to pronounce orders on the Section 17 Application expeditiously and preferably within 15 days from today.
vi) Petition is accordingly disposed of in the above terms. No costs."
8. The petitioner has contended that there is a clear breach for the second time of the directions as contained in clause (ii) of the said order ::: Uploaded on - 26/06/2019 ::: Downloaded on - 14/07/2019 11:02:38 ::: 5 908-cpcdl 91-19 dated 14 March 2019 in as much as the respondents after the said order, again by letter dated 30 April 2019 and without notice to the petitioner, invoked the bank guarantee when the order dated 6 December 2018 read with order dated 14 March 2019 are subsisting and in operation. The Court's attention is drawn to the letter dated 30 April 2019 addressed by respondent No.2 Mr.A. A. Ahmed to the Branch Manager, Karnataka Bank Ltd., which reads thus:-
"1. I, Mr. A.A. Ahmed, partner of M/s. Glove Infracom, GS Road Bhangadhar, Guwahati, Assam do hereby inform you that M/s.Sri Sai Krishna Constructions, having office 301, Dhruva-1, 8-3-228, Sreenivasa Village, Yousufguda, Hyderabad, Telangana, the contractor, had entered into an agreement with M/s. Glove Infracom, GS Road, Bhangadhar, Guwahati, Assam and said agreement required the contractor to furnish a performance security for due and faithful performance of its obligations, under and in accordance with the agreement during the construction period.
2. You, the bank, had unconditionally and irrevocably guaranteed the due and faithful performance of the contractor's obligations during the construction period under and in accordance with the said agreement and agreed to pay Authority, that is M.S. Glove Infracom upon first written demand and without any demur, reservation, recourse, contest or protest, and without any reference to the contractor such amount not exceeding Rs. 7,99,20,000/- as the Authority shall claim without the Authority being required to prove or to show grounds or reasons for its demand.
3. Accordingly I, the authority, hereby state that the contractor has defaulted in due and faithful performance of its obligation during and under the agreement and therefore, make a demand of a sum of Rs. 7,99,19,999/- (Rupees Seven Crores Ninety Nine Lakhs Nineteen Thousand Nine Hundred Ninety Nine only) upon you.
4. I state that there is no order of any court operating against me from issuing this demand upon you and I am legally entitled to make this demand.
5. I therefore call upon you to issue a demand draft of Rs. 7,99,19,999/- (Rupees Seven Crores Ninety Nine Lakhs ::: Uploaded on - 26/06/2019 ::: Downloaded on - 14/07/2019 11:02:38 ::: 6 908-cpcdl 91-19 Nineteen Thousand Nine Hundred Ninety Nine) in the name of M/s. Glove Infracom payable at Mirganj forthwith as being duty and obligations cast upon you in terms of the said bank guarantee."
(emphasis supplied)
9. Learned Counsel for the petitioner would lay emphasis on the contents of paragraph 4 of the said letter where the respondent No.2 has stated that there is no order of any Court operating against the respondents in making a demand to pay the amounts under the bank guarantee and stating that they are legally entitled to make the demand, suppressing the fact that there are two orders of the Court which are operating and the orders would require that a notice prior invocation be issued to the petitioner. Learned Counsel for the petitioner would contend that in fact the said letter does not even refer to any of the orders much less a reference to any notice being given in compliance of the said order. Learned Counsel for the petitioner would therefore contend that the record clearly indicates that the respondents are habitual in willfully disobeying the orders passed by this Court and accordingly required to be tried for contempt in the said proceedings.
10. Learned Counsel for the respondents though had appeared on the earlier occasion and had taken time to take instructions, today has submitted compilation of documents to contend that the original agreement between the parties which is relied upon by the petitioner is ::: Uploaded on - 26/06/2019 ::: Downloaded on - 14/07/2019 11:02:38 ::: 7 908-cpcdl 91-19 a fabricated document. He has no other arguments as on date. However, learned Counsel for the respondent has drawn my attention to the minutes of the meeting dated 27 April 2019 held by the learned arbitrator to point out that a no lien account has been opened and the amount has been deposited. However, as clear from the minutes of the meeting held by the arbitrator on 1 June 2019, till date there is nothing on record to show that a no lien account has been opened and the amount of Rs.75 Lakhs has been deposited. In regard to letter dated 30 April 2019, learned Counsel for the respondents has no explanation and he submits that he intends to take instructions.
11. From the above discussion, it prima-facie appears from the record and the orders passed by this Court as noted above and more particularly taking into consideration the conduct of the respondents as observed in the order dated 14 March 2019, the respondents have willfully breached the orders passed by this Court on 6 December 2018 and 14 March 2019.
12. Accordingly, issue notice to the respondent No.2- Mr.A.A. Ahmed to show cause as to why the contempt proceedings shall not be initiated against them for having willfully breached the orders dated 6 December 2018 and 14 March 2019 passed by this Court, returnable on 4 July ::: Uploaded on - 26/06/2019 ::: Downloaded on - 14/07/2019 11:02:38 ::: 8 908-cpcdl 91-19 2019. Reply to the notice be filed before the returnable date.
13. Respondent No.2 is directed to remain present in the Court on the adjourned date of hearing.
14. Learned Counsel for respondent shall inform the Prothonotary and Senior Master of this Court, within one week from today the names of other partners of the respondent No.1 - Glove Infracom.
15. Stand over to 4 July, 2019.
[G.S. KULKARNI, J.] ::: Uploaded on - 26/06/2019 ::: Downloaded on - 14/07/2019 11:02:38 :::