Bombay High Court
Actis Consumer Grooming Products ... vs Rakesh Malhotra And 9 Ors on 20 October, 2021
Author: A.K. Menon
Bench: A. K. Menon
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
[ COMMERCIAL DIVISION ]
INTERIM APPLICATION (LODGING) NO.19689 OF 2021
IN
COMMERCIAL ARBITRATION PETITION (LODGING) NO.306 OF 2020
Actis Consumer Grooming Products Ltd. ] .. Applicant-Petitioner
Vs.
1. Rakesh Malhotra ]
2. Super-Max Mauritius ]
3. Arvee Family Foundation ]
4. Tigaksha Metallics Pvt. Ltd. ]
5. Subhash Chaudhuri ]
6. Sameer Khan ]
7. Chanchal Sharma ]
8. RKRM International Pvt. Ltd. ]
9. Super-Max Offshore Holdings ]
10. Supermax Personal Care Pvt. Ltd. ] .. Respondents
Mr. Ashish Kamat, with Mr. Rajendra Barot, Ms. Anusha Jacob, Ms. Trisha
Sarkar, Mr. Vedant Jalan and Mr. Mitansh Shah, i/by AZB & Partners, for the
Applicant-Petitioner.
Mr. Waseem Pangarkar, with Ms. Aakanksha Luhach, i/by MZM Legal, for
Respondent Nos.1 to 3 and 8.
Mr. Vipul Dharmani, with Mr. Mohit J. and Mr. Sagar Wagle, i/by Ms. Riddhi
A. Pandit, for Respondent Nos.4 to 7.
Mrs. Rekha Rane, 2nd Assistant to Court Receiver, is present.
CORAM : A. K. MENON, J.
DATE : 20TH OCTOBER, 2021.
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2-IAL-19689-2021-Order dt. 20-10-2021.doc
Dixit
P.C. :
1. In this post-award Section 9 petition and an interim application filed therein, the petitioner seeks urgent ad-interim reliefs. In the Section 9 petition, the petitioner seeks an order directing respondents 1 to 8 to disclose on oath all particulars of acts done and agreements executed from February 2018 till date in relation to purchase of raw materials and manufacture and sale by respondent no.4 of products impugned bearing the trademark "RK". The petitioner also seeks location of unsold stock, financial statements of respondent no.4 from February 2018 till date including the provisional Balance Sheets, Profit & Loss Accounts, bank statements, statutory filings, EPF filings. The petitioner also seeks appointment of a firm of Chartered Accountants to conduct a forensic audit of the books of accounts of the 4 th respondent.
2. Vide an order dated 5 th March 2020, the Court Receiver, High Court, Bombay has already been appointed as Receiver in terms of prayer clauses (d)
(i) to (d)(iv), both inclusive. There is also an ad-interim injunction granted in terms of prayer clause (e), which restrains respondents 1 to 3 and 5 to 7 from parting with possession, alienating or creating third party rights in assets and properties of respondents 4 to 10, except in the ordinary course of business. The order noted that the 4 th respondent's plants were at two locations in Himachal Pradesh; one at Gagret, Dist. Una, Himachal Pradesh and the other at Shoghi, District 7, Shimla, Himachal Pradesh. The order further recorded 2/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit that the machinery lying at these locations were already subject matter of previous orders dated 16th February 2018, 21st February 2018, 5th March 2018, 27th March 2018 and 16th May 2018. The Court Receiver was then to fix his seals on the machines of respondent no.10 lying at these locations.
3. When the order was passed, the respondents 1, 4, 5 and 7 were represented and the counsel assured the court that there would be no obstructions whatsoever to the Receiver performing his duty. Superintendents of Police at Gagret and Shoghi were requested to render assistance, if so required. The order also records the manner in which the Receiver is to take photographs, retain the original digital files and make a video recording bearing a date and time stamp of the Receiver's visit. The representatives of the respondents present at site were directed to sign without protest the Receiver's site visit report. It was clarified that signatures affixed will not convey acceptance of contents of the site visit report. In the meantime, an injunction was granted in terms of prayer clause (e).
4. The visit of the Court Receiver came to be postponed on account of pandemic. On 12th August, 2021 the applicant-petitioner moved an urgent application in the arbitration petition ex-parte. While relying on an affidavit sworn by an employee, the learned counsel pointed out that employees and ex-employees had addressed correspondence to the Chief Executive Officer of the company indicating that certain working parts of the machinery were being removed and were being replaced with faulty parts. No notice was 3/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit given of the application on that date since the petitioner believed that service of notice was likely to speed up the process of tampering with sealed machines. One representative each of the petitioner was permitted to accompany the Receiver and the Receiver was to allow two of his representatives to visit the plants simultaneously in two different locations. The visit was accordingly made. On 14 th September 2021, the petitioner sought leave to amend the Interim Application (Lodging) No.19689 of 2021 to incorporate paragraph 5.20 and prayer 12(f), essentially to bring on record the findings of the Court Receiver upon the visit carried out pursuant to the order passed on 12th August 2021. The amendment having been allowed, the respondents were duly served with the amendments and on 20 th September 2021, respondents 1, 2, 3 and 8 and respondents 4, 5 and 7 were represented by different counsel. They undertook to enter appearance on or before 30 th September 2021 and file a reply. Time was accordingly granted. The matter was then listed on 5th October, 2021 when it was adjourned to the following day. The applicant-petitioner pressed for further reliefs in terms of the interim application that was then filed.
5. It would be appropriate to consider the reliefs that were sought in the interim application. In the interim application, the applicant-petitioner sought urgent reliefs in terms of prayer clauses (a)-(i), (a)-(iii), (a)-(iv) and
(a)-(v) requiring the Court Receiver to forthwith reseal the machines of respondent no.10 lying at the Gagret plant of respondent no.4, to take charge 4/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit and custody of all the factory records of the 4 th respondent from February 2018 onwards and copies thereof and secure the original record. The applicant-petitioner also seeks a direction for the Receiver to make regular visits, along with the police authorities, to the factory premises of respondent no.4 at Gagret and Shoghi to observe the activities at the factory and take copies of production, GST and other factory records and to ensure that the machines are safe and secured and not being tampered with. Court Receiver is then expected to file a report. The applicant-petitioner also seeks affixation of seal of this court on the notice at Exhibit-F to the IA and to maintain such notice along with the seal of this court at appropriate locations of the factory premises at Shoghi. Mr. Kamat restricts his relief in terms of prayer clause (c) to the plant at Shoghi. The applicant-petitioner also seeks to restrain and prohibit respondents 1 to 7 from threatening or coercing the 4 th respondent's current employees and personnel and from interfering with and obstructing the entry of the Court Receiver and petitioner's representatives at the factory premises at Gagret and Shoghi. In support of these reliefs, Mr. Kamat relies upon the fact that the report of the Court Receiver, after his visit post the ex- parte order of 12th August 2021, reveals that despite an order passed under Section 9 petition in 2018, to which the order dated 5 th March 2020 makes specific reference, the respondent no.4 has tampered with the seals on the machines of respondent no.10. It is alleged that the seals affixed by the Court Receiver of this court have been broken and tampered with. Some of these machines of respondent no.10 have been subjected to alterations, parts have 5/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit been removed and replaced. Machines are apparently being utilized by respondent no.4 for manufacture of safety razor blades for brands that compete with the Super-Max Group.
6. This conduct, Mr. Kamat submits, is in violation of the orders of this court. It seeks to alter the status-quo as on date, i.e. the Receiver affixed his seals on the machines, and amounts to willful disobedience with the orders of the court. He submits that the conduct of the 4 th respondent is defined and obstructive. The entire factory premises at Gagret, along with machinery, fixtures & fittings and assets, be locked and sealed and be placed under the custody of the Receiver till final disposal of the Arbitration Petition No.423 of 2021 seeking enforcement of the Foreign Award. This alone will have an effect of ruining the respondent no.4. Mr. Kamat submits that such orders, as are now sought, are necessary in order to ensure that the machines of respondent no.10 lying and being at the respondent no.4's factory premises at Gagret ought not to be tampered with and are retained in its original condition when the Court Receiver sealed these machines. My attention is invited to Exhibit-C to the interim application, which is a Site Report of the Court Receiver prepared on 17 th and 18th August 2021 pursuant to the order passed on 12th August 2021. It reveals that when the visit was made, the respondents were represented by one Rakesh Sharma, Head Development and Mr. Chanchal Sharma, Plant Head of the respondent no.10 and Mr. Mohit Jaitak, Advocate for respondent no.10. The report indicates that plant and 6/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit machinery were found to be in running condition. The Court Receiver, upon inspection, when found that the seals on the machines, which had been affixed as per the earlier inventory upon comparison, were found to have been tampered with, a Site Report providing details of the aforesaid inspection was prepared. Photographs were also taken and the entire visit was videographed. Court Receiver's report is signed by the representative of the Receiver, the said Mr. Chanchal Sharma and Mr. Mohit Jaitak, learned Advocate, for the respondent no.10.
7. Mr. Kamat submitted that the report reveals that in many of the machines, the boards affixed by the Court Receiver were not found to be intact. The Receiver's representative called upon the 10 th respondent's representatives to furnish a copy of the Fixed Assets Register as per the order passed by this court, but the same was not forthcoming. It was contended then that the list of fixed assets was not having a signature or a title to it, since this was submitted by the 10th respondent and the Court Receiver has accepted the same. After completion of the visit, a formal report has been filed. Mr. Kamat then invited my attention to Annexure-A to the Court Receiver's report, which contains the handwritten entries of the inventory of the plant and machinery at Gagret. Mr. Kamat submitted that scrutiny of these would reveal that many of these machines had been tampered with, seals were not intact. Annexed to the site report is what is described as "Compared List" of items of plant and machinery, quantity, unit and remarks. My attention was invited to 7/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit several of the items in this tabulated form in support of the application that several of the seals had been tampered with. My attention was also invited to an affidavit of one Kenny Abraham, Chief Executive Officer in India of the Super-Max Group of Companies and duly employed by respondent no.10 since July, 2015. Mr. Kamat urged before me to consider the contentions of this affidavit, which clearly reveals the dishonest intentions of the respondent no.4. Mr. Kamat has relied upon the following decisions in support of his case:-
(i) Trammo DMCC (Formerly known as Transammonia DMCC) Vs. Nagarjuna Fertilizers and Chemicals Ltd.1
(ii) Atul D. Sohni and Anr. Vs. B.M. Choksey and Ors.2
8. Today, in the interim application and in support of the reliefs prayed for in Section 9 petition, Mr. Kamat has taken me through the averments in the IA, the description of the parties and also the fact that respondents 5, 6 and 7 have held themselves out to be directors of respondent no.4. The respondent no.5 is, in fact, not a director although an affidavit is being filed on behalf of respondent no.4, as if representing, to this court that he is a director of respondent no.4 and therefore authorized to file the affidavit. Mr. Kamat submitted that respondent no.5 has made false statements on oath pretending to be a director, but, in fact, respondent no.5 was never appointed lawfully as a director of respondent no.4. It is pointed out that respondent 1 2017 SCC OnLine Bom 8676 2 1998 (3) Mh.L.J. 258 8/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit no.5 has, in fact, been disqualified under Section 164(2)(a) of the Companies Act, 2013 from being appointed as a director in any company from 1st November 2016 till October 2021. This has been concealed from this court and therefore the submission is that the court is being misled by the deponent of this affidavit. In the opening paragraph no.1, he states that he is one of the directors of Tigaksha Metallics Pvt. Ltd. (TMPL) and that he is filing the affidavit on behalf of the 4 th respondent-company. He has adverted to the merits of the case inter alia making a grievance that final copy of Court Receiver's report regarding sealing of the machinery at a unit of TMPL was not available. He denies the contentions in the interim application. He admits to none of the statements in the interim application made by the petitioner, although there is no denial of the fact that the tribunal constituted under the London Court of International Arbitration (LCIA) has passed the Partial Award. It is inter alia contended that the petitioner has already submitted itself to the jurisdiction of the High Court of Himachal Pradesh having filed a Section 9 petition and that having so opted, cannot now file the present petition in this court. It is contended that the petitioner has concealed and misstated various facts and has obtained orders in 2018, as listed above. It is his contention that there was a separate agreement, viz. Job-Work Agreement, executed between Supermax Personal Care Ltd. and Tigaksha Metallics Pvt. Ltd., which has led to the filing of a separate arbitration petition and this is an aspect that Mr. Vipul Dharmani, the learned counsel for respondent no.4 has canvassed.
9/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit
9. It is contended by Mr. Dharmani in support of his client's case that pursuant to an order dated 15 th June, 2018, a Sole Arbitrator Shri Justice S.J. Vazifdar, Former Chief Justice (Retd.) was appointed and upon consent of the parties, certain modifications were agreed upon and Notice of Motion filed in that arbitration petition was treated as an application under Section 17 of the Arbitration and Conciliation Act, 1996. This order dated 15 th June 2018 was passed by a Division Bench of this court in Commercial Appeal (Lodging) No.245 of 2018. A reference is made to the order and to the fact that the petitioner's endeavor in the present case is to somehow stop functioning of the respondent no.4 and render its employees jobless. A copy of the Job-Work Agreement dated 1st April 2015 (JWA) between Supermax Personal Care Private Limited (SPCPL) and Tigaksha Metallics Private Limited (TMPL) has been annexed, to the affidavit-in-reply filed on behalf of the 4 th respondent by one Mr. Anil Patial dated 2nd October 2021, in support of his contention that the arbitration between the aforesaid two entities has nothing to do with the present disputes. Reliance is also placed on an order dated 17 th October 2018 passed by the Sole Arbitrator in that reference. The attempt of Mr. Dharmani is to separate the disputes and to attempt to demonstrate that the Receiver appointed pertaining to that dispute has nothing to do with the present petition under Section 9 and the Interim Application filed therein. However, in view of the obvious fact that the respondent no.5 was not and is not a director of the 4th respondent, it is a clear case of attempting to mislead 10/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit this court. The petitioner, in my view, has established in no uncertain terms that the respondent no.5 was not a director and is not a director of the 4 th respondent and hence all submissions made on the basis of the affidavit of respondent no.5 cannot be taken into account. My attention has been invited to an additional affidavit filed by Suresh Rajaram Suryavanshi, who has annexed copies of the extract from the website of the Ministry of Corporate Affairs pertaining to TMPL and that clearly shows that the disqualification of Mr. Subhash Datta Chaudhari, deponent of the affidavit dated 28 th September 2021, is a fact. The name of Mr. Chaudhari does not appear in the list of directors, as seen in the extract, and indeed cannot in view of the disqualification that is operative at-least till end of October 2021.
10. Mr. Dharmani has also placed reliance on the affidavit of one Anil Patial dated 2nd October 2021, who is said to be the authorized signatory and Senior Executive - HR and Admin of TMPL. In this affidavit, the 4 th respondent has assailed contention of the petitioner to seek interim relief. Mr. Dharmani has placed reliance on the fact that the petitioner has concealed and misstated various facts. In support, he states that in paragraph 3.4, 3.5 and 3.6 of the petition, wrong statements have been made. In particular, my attention is invited to paragraph 5.20 of the amended IA, which according to Mr. Dharmani is an incorrect statement, but I must bear in mind here that despite time being granted to the respondents, including respondent no.4, to file an affidavit-in-reply in the petition, no affidavit is forthcoming. The request for 11/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit time to file reply was made on 20 th September 2021 and replies were to be filed by 28th September 2021. However, even on 5 th October, 2021, no reply was forthcoming. The court adjourned the matter to 6 th October 2021, when the matter was heard. Once again, time to file reply was extended upto 8 th October 2021, at the request of respondent no.4; yet no affidavit-in-reply has been filed. Thus, the contents of the petition under Section 9 today stand uncontroverted.
11. What is relied upon in opposition to the petition and the IA are the statements made in the affidavit-in-reply of respondent no.5 and the said Anil Patial, once again on behalf of respondent no.4. This affidavit of Mr. Anil Patial was obviously necessitated in view of the petitioner having asserted the fact that Mr. Subhash Datta Chaudhari is not a director of respondent no.4. The fact that Mr. Chaudhari was not a director was highlighted and established by the additional affidavit of Mr. Suresh Rajaram Suryavanshi dated 29th September 2021 and soon thereafter, the additional affidavit of Mr. Anil Patial is seen to be affirmed on 2 nd October 2021. The affidavit states that the petitioner's attempt to seek relief on the basis of the Partial Arbitral Award dated 12th February 2020 is not sustainable. It is contended that the Subscription and Shareholder's Deed dated 4 th November 2010 (SSD) includes the present petitioner, but had impliedly excluded applicability of Indian Law. Mr. Dharmani has therefore objected to this court exercising jurisdiction. Furthermore, the deponent states that in view of the provisions of English Law 12/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit being applicable, this court has no jurisdiction and no court in India has jurisdiction. This however runs contrary to the other contention of the 4 th respondent that once having moved the court in Himachal Pradesh, this court cannot be moved, reference being had to Section 42 of the Arbitration and Conciliation Act, 1996.
12. Inviting my attention to Section 2(2) of the Arbitration and Conciliation Act, 1996, Mr. Dharmani has invited me to hold that there is an implied exclusion by virtue of the said definition and the proviso thereto and hence this court has no jurisdiction to pass any order. The order appointing the Receiver is therefore invalid and hence there is no question of granting any further relief since the petition itself is not maintainable. Without prejudice, Mr. Dharmani has contended that the court in Himachal Pradesh has already been moved and hence this court need not entertain the petition. But the fact remains that several orders have already been passed in February, March and May 2018 and those orders found the basis of the Receiver's report. The attempt of the learned counsel for the respondent no.4 is to identify the Job- Work Agreement between SPCPL and TMPL (JWA) as an independent one with an independent arbitration clause as against the Subscription and Shareholder's Deed (SSD). It is contended that SPCPL is not a party to the SSD and the Partial Award and TMPL is carrying on business pursuant to aforesaid JWA. That JWA is subject to a separate arbitration clause and several reliefs granted by this court under Section 9 were thereafter subject matter of an 13/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit application under Section 17 under the Arbitration and Conciliation Act, 1996 before a Sole Arbitrator, which had passed an order on merits. The present attempt to get the Receiver to reseal machinery is a dishonest attempt on the part of the applicant-petitioner to stop manufacturing activities of respondent no.4 and render its employees jobless. The contentions of the petitioner, as canvassed by Mr. Dharmani, not entitle the petitioner to any relief. Mr. Dharmani has relied upon the deposition in the affidavit of Mr. Anil Patial to contend that several employees of TMPL were misled and coxed into signing affidavits in support of the petitioner's case that these were false affidavits and procured at the instance of one Kenny Abraham. The respondent no.4 holds cogent evidence and documents to support its contention that the applicant-petitioner is seeking to create unrest amongst the employees, procuring false affidavits by using undue influence and illegal gratification, the intention being to shut-down the factory. Allegations have been made against Kenny Abraham, Uday Desai and Anindo Mukherjee and other senior management people of respondent no.10, who are allegedly misleading and using undue influence over employees of the respondent no.4. It is stated that several of these employees were called for a meeting at a resort in Himachal Pradesh, whereat the employees were offered liquor and under the influence of liquor, these employees were made to sign blank papers containing allegations against the 4th respondent-company.
13. My attention has been invited to the contents of paragraph 11 of the 14/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit affidavit of Mr. Patial, on which Mr. Dharmani places reliance in support of the contentions that none of the seals affixed by the Court Receiver in the year 2018 have been broken, nor have any such machines been put into operation by the respondent no.4-TMPL. It is reiterated that TMPL is obliged to follow the directions of the Hon'ble Court and further orders passed by the Sole Arbitrator. As a supporting argument, it is submitted that the Court Receiver's report of 2018 is not correct. It was not signed by the representatives of respondent no.4-TMPL and the report of sealing was also not accurate. Complete copies of the reports are allegedly still awaited and the applicant- petitioner is now making false statements. Mr. Dharmani submitted that at the time of sealing the machines, the machines were not sealed upon any identification made by the parties, but only at the instance of the respondent no.10. There were various machines that were not sealed and this fact is evident from the photographs and the video footage.
14. Pausing here for a moment, I have not been able to appreciate the contentions of the respondent no.4 that the Receiver's report in its complete form has not been received till now. It was always open for the respondent no.4 to apply and obtain a copy of the Receiver's reports and that argument can hardly be countenanced today. What we have here is an admitted position that some machines had indeed been sealed and that the respondent no.4 has honoured the orders of this court and that of the Sole Arbitrator and has not indulged in any acts causing the seals to be damaged or removed or 15/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit the machines to be altered or cannibalized, as suggested by the applicant- petitioner. Mr. Dharmani has also taken serious objection to the use of the word "cannibalized" and denied all allegations as contained in the affidavits. Thus, what we have here is a Court Receiver's report, which is self- explanatory.
15. Prima facie, I am of the view that the contents of the Receiver's report, read with the depositions in the affidavits now made, does establish attempts to tamper with the seals and use some machines. No doubt, the respondent no.4-TMPL has, in support of its contentions, annexed to the affidavit of Mr. Anil Patial certain affidavits of the persons claiming to be employees, who were misled into giving supporting affidavits at the instance of the said Kenny Abraham. There is also correspondence between TMPL and such employees, who have been subjected to show cause notices for dereliction of duty etc., but what is also material to note is that in an Exhibit-M to the affidavit of Mr. Anil Patial dated 2nd October 2021, there is a comparison chart of machinery.
16. Perusal of this Exhibit-M and the comparison chart of machinery shows that in some of these items, including the Punch Press at item (b-1), out of the total quantity of 4 presses, 3 presses were sealed as per the Court Receiver's report dated 24th May 2018. Subsequently, this aspect has been reiterated in the Machine Status Comparison but as of 19 th August, 2021, he has contended that there are total quantity of 6 machines, of which 4 were sealed and 2 were not sealed. This indicates an increase in the number of 16/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit machines sealed. When, in fact, only 3 machines were sealed in 2018, it is not understood on what basis 4 machines are found to be sealed now. This could only mean that either the Receiver made a mistake in May 2018 or seals have been attempted to be affixed on an additional machine prior to 19 th August 2021. My attention has also been invited to certain photographs. A certain amount of emphasis is laid on item L-13 to show that the cooling tower was exposed to the elements and that the Court Receiver's board was stuck on the external surface and would have probably deteriorated and fallen away. This, no doubt, cannot be discounted and it is quite possible that being exposed to the elements, the so called "board", being a printed piece of paper, may have fallen away.
17. The Receiver in such cases should ensure that his possession and custody should be identified by using appropriate means including, if necessary, by affixing a painted notice, by affixing appropriate methods, including by using permanent markers or paints, such that it is unaffected by the external elements. The sealing techniques used also appear to be very basic and rudimentary, but that cannot justify the tampering with the seals by the respondent no.4-TMPL. The appointment of the Receiver has rendered the machinery custodia legis and once the property is custodia legis, it is the duty of the parties, respondents and the petitioners included, to ensure that the custody of the court is not altered or in any manner changed. The respondent no.4-TMPL, being in use and occupation of the factory, is enjoined to ensure 17/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit that the Receiver's possession, as reflected by the seals, is not deteriorating. If the seals were deteriorating, it was a duty of the 4 th respondent to have informed the Court Receiver or the applicant-petitioner's Advocate of the same so that the seals would be maintained. After all, it is in the custody of the court and parties are bound to ensure that the custody of the court is not disturbed without leave of the court.
18. In my view, a prima facie case is made out of an attempt to alter the condition of the sealed machines and do not deal with the factual aspects set out in paragraph 5.20 of the IA. The affidavit of respondent no.5 ought not to be considered as a deposition on behalf of the TMPL, since he has held out to be a director, when in fact he was not and is not. The contention of the respondent no.4-TMPL and as canvassed by Mr. Dharmani that the report of sealing was not signed by representative of TMPL is not believable. The copies of the Site Report would always have been signed as otherwise an appropriate remark would have been made. What is material to note is that the grievance that a copy of the Receiver's report has not been made available, is coming for the first time in October, 2021, when all along the 4 th respondent-TMPL has asserted that it has not handled the seals or caused the seals to be damaged or altered in any way. Thus, the deposition of Mr. Anil Patial to the effect that the final report of the Court Receiver was never made available, cannot be believed. It was always open for the 4 th respondent-TMPL to seek copies of the final report, if it so desired.
18/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit
19. Mr. Dharmani had invited my attention to examine the report on sealing in respect of items I-3, I-4 and L-13 in support of his contention that there are contrary findings. Adverting to the affidavit of respondent no.5- Subhash Chaudhari, the learned counsel submitted that the 4 th respondent has joined Mr. Chaudhari only for the sake of convenience, but that is no reason for Mr. Chaudhari having filed an affidavit incorrectly declaring himself to be a director of the 4th respondent-TMPL. According to Mr. Dharmani, the prayers are not directed against TMPL and TMPL is nowhere in the picture as regards the disputes and the award that the petitioner has secured. The Receiver is also present and has pointed out that in several of the items, such as item (b-1) - the Punch Press, the seal was found to be broken from the control panel and certain parts seem to be missing or replaced from the press. The item (b-3) - the Punch Press was found to be in running condition. In item (b-4) - Four Tube Heat Treatment Furnace, seals have been broken. In item (b-7) - Coil Joining, the seals were found to be missing and in item (b-9)
- Hot Chamber, the seals were found to be broken. As far as QC Lab-1 and QC Lab-2 are concerned, no seals were found on Micro Hardness Tester and Coating Micro Scope and some paper-tape was found affixed. So also in QC Lab-3, the projector did not have a seal. The Coating Adhesion Tester, Gonio Meter and Chop Tester as also the Visco Meter, all of which are said to be installed in QC Labs 4 to 10 also did not bear any seals. Likewise, several other items, the Receiver has found that no seals were noticed, despite these having been sealed by the Receiver in 2018.
19/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit
20. I see no reason why the report of the Receiver should be disbelieved. The Receiver is an officer of this court. Nothing has been shown to me to contradict the report of the Receiver. In the course of submissions, Mr. Dharmani has placed reliance on a note showing the differences between a comparative chart of the SSD and the JWA. He has relied upon these to show the array of parties under the SSD and the JWA highlighting the fact that under the SSD of 2010, the petitioner was a party whereas under the JWA, the petitioner was not a party. Analysis of this shows that TMPL was indeed a party to the SSD and is therefore arrayed as respondent no.4 in the present petition. The attempt on behalf of Mr. Dharmani was to show that the Section 9 petition is filed pursuant to the Partial Award dated 12 th February 2020 passed by the LCIA, but SPCPL is not a party to the Partial Award but has been made a party-respondent no.10 in the present petition. Ad-interim reliefs are being sought in relation to machinery which was sealed pursuant to an order in an application under Section 9 filed in 2018 by SPCPL arising out of the Job-Work Agreement and that led to the application under Section 9 being converted to one under Section 17, which was then heard and decided by the Sole Arbitrator. Whereas, the Job-Work Agreement is between TMPL and SPCPL and is an independent contract. The machines in question were sealed pursuant to orders passed in 2018, when the Court Receiver was appointed and the tribunal constituted under the order dated 15 th June 2018 has since heard and disposed the application under Section 17. No doubt, the 20/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit application of TMPL requesting for permission to use the machines was rejected. Furthermore, the claimant's application for permission to use the machinery was also rejected. After passing of the Partial Award by the LCIA, SPCPL has filed an application before the tribunal seeking to place on record the award and to adjourn the proceedings sine die till the award is set aside. The said application was also disposed vide order dated 20 th February 2020 holding that it is not open for the tribunal to adjourn the proceedings sine die since the LCIA Arbitral Award does not result in the arbitration proceedings before the tribunal being terminated. The attempt is to show that the applicant-petitioner under the guise of the LCIA Award is seeking to further implement an order passed under Section 9 which culminated in an order under Section 17 by alleging that the status of the machinery sealed and lying there at the factory premises of TMPL was being altered and that the petitioner is therefore entitled to reliefs in the present Section 9 petition. Subject matter of this petition, Mr. Dharmani suggested, is materially different under two different contracts and hence cannot be the subject matter of any further orders of this court. The learned counsel for the respondent no.4- TMPL also sought to impress upon this court the fact that there is no occasion to seek any further order in the facts of the case. On behalf of TMPL, he has suggested that the Receiver's observations, after the last visit of August, 2021, are not accurate. Alluding to such inaccuracies, he submits that there is no occasion to now pass a further order, as sought.
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21. I have heard learned counsel for the parties at length to the extent it concerns the ad-interim application. The enforcement petition is still pending and in the circumstances, the court has to consider a prima facie case in the background of the Partial Award dated 12 th February 2020 passed in the LCIA arbitration. Copy of that award is at Exhibit-A to the Section 9 petition. The averments in Section 9 petition have not been denied. Absent a denial, I proceed on the basis of statements in the petition, which are uncontroverted today. The case of the respondent no.4-TMPL will have to be considered on the basis of the affidavits filed in the interim application. The Partial Award, in paragraph 545, contains all operative directions. They are comprehensive, holds the 1st respondent in breach and liable for a tort of inducement, all of which directions and obligations are prima facie required to be complied and all that remains was the LCIA is to pass final orders on the aspect of quantification. There are directions which have been issued alluding to unlawful takeover of respondent no.4-TMPL, making appointments to director's posts in breach and excluding the petitioner's nominees and the Super-Max Group Senior Management's people from effective management and control of TMPL. They have caused TMPL, prima facie, to undertake competing business activities and also initiate insolvency proceedings against respondent no.10. All of these are subject matter of the Partial Award. The respondents 1 to 3 in the Section 9 petition have been adjudged to be in violation of contractual obligations. The respondent no.1 is said to have exercised control over respondent no.4-TMPL unlawfully, despite restraint on 22/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit competition. The Court Receiver's reports indicate that there have been attempts at altering the custody of the court as far as some of the machines are concerned and notwithstanding the attempts of the respondent no.4- TMPL to demonstrate that the operations at the plants are subject matter of a Job-Work Agreement.
22. I am not persuaded to hold that the Receiver's custody has not been tampered with or interfered with. TMPL was earlier said to be functioning under the Super Max Group and employees of TMPL were directly reporting to members of that group management. In view of the fact that the Partial Award has dealt with all these aspects and is now up for enforcement, the question is whether pending such enforcement, the reliefs prayed for in Section 9 petition and the Interim Application are required to be granted. At the cost of repetition, I may state that no reply has been filed to the Section 9 petition, despite ample opportunities having been provided. The only affidavits that have come forth are in the interim application. The first of such affidavits filed by one Subhash Chaudhari - respondent no.5, is found to be unacceptable as being in support of the case of respondent no.4-TMPL for want of authority. The second affidavit is that of Mr. Anil Patial, to which I have made reference and that affidavit concentrates on the alleged attempt to interfere with the employees of respondent no.4-TMPL, alluding to affidavits in support of the applicant-petitioner's case being "procured" at the instance of one Kenny Abraham - the India Chief Executive Officer of the Super Max 23/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit Group of Companies. Mr. Abraham has also filed an affidavit in support of the petition and that affidavit is dated 1 st September 2021. I am of the view that a prima facie case has been made out for grant of reliefs. The attempt in the second affidavit of Anil Patial is all indicative of alleged attempts to interfere with the employees' conduct and to procure evidence in support of the applicant-petitioner and the actions taken by respondent no.4-TMPL against those employees. Mr. Patial's affidavit is filed in his capacity as Senior Executive - Human Resources and Administration of TMPL. Thus, his knowledge would be restricted to the aspects concerning his areas of work. I do not find any justification in the contentions raised on that affidavit pertaining to the alleged acts of sabotage and indeed the Court Receiver's report and the comparative analysis. However, as an authorized signatory, the deponent-Anil Patial has deposed to various aspects in paragraph 11 of his affidavit, but I am not persuaded to hold that the Receiver's reports are incorrect. The property in question and forming subject matter of the Receiver's report is custodia legis and enjoins upon the Receiver with certain duties. Nothing has been shown to me that would lead me to believe that the Receiver has not done his / her duties in pursuance of the appointment as Receiver. Once the Receiver is appointed, the subject matter of appointment is under the control of the court. Upon appointment of the Receiver, his nature of duties and tasks to be undertaken are subject to the orders of this court and these orders are presently being complied by the Receiver. Although Mr. Dharmani has alluded to contradictions in the Receiver's reports, these are 24/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit matters that will be ultimately taken up for consideration at the final hearing stage. The question now is whether a prima facie case is made out for grant of reliefs and in material terms, the only arguments that I have heard are on behalf of the respondents in opposition to the grant of reliefs is on the basis of a distinction between the SSD and Job-Work Agreement i.e. the existence of separate arbitration clauses; one leading to a Partial Award under the LCIA and the other of a tribunal appointed by this court in Commercial Appeal (Lodging) No.245 of 2018. The contention being that the parties are different, the scope of the references are different and therefore the Receiver having been appointed in the dispute between TMPL and Supermax Personal Care Pvt. Ltd. cannot be subjected to an order under Section 9 in support of the Partial Award.
23. The fact remains that these are but oral submissions across the bar. Nothing is stated on oath to contradict the contentions in the petition. I do not find that there is a case for refusing ad-interim reliefs sought, that has been made out by the respondents. The allegations of having manipulated employees and having interfered with the employees is a matter that can be considered at the appropriate stage. The other aspect which has been pressed into service is the aspect of jurisdiction, where Mr. Dharmani has placed reliance on the decision of the Supreme Court in Harmony Innovation Shipping Ltd. Vs. Gupta Coal India Ltd. and Anr. 3, wherein Mr. Dharmani has invited my attention to the fact that Part-1 of the Arbitration and Conciliation 3 (2015) 9 SCC 172 25/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit Act, 1996 would not apply to international commercial arbitrations and therefore cannot apply in the facts of the present case since the award is one passed by the LCIA. The submission overlooks the fact that the judgment in Harmony (Supra) is clearly pre 2015 amendment and post amendment, the legal position is fairly clear. This court has also taken a view on the applicability of Part-I, including Section 9 in the case of Trammo DMCC Vs. Nagarjuna Fertilizers and Chemicals Ltd 4. Therefore, there is no occasion to hold differently in the facts of the present case. The allegations in the present case are that, on the instructions of the 1 st respondent in the arbitration petition, respondents 5 and 6 gained entry into the facilities of respondent no.4 at Gagret and Shoghi and took forcible control of these facilities and in the year 2018, that led to the appointment of Court Receiver on 16 th February 2018. The resulting reference to arbitration has led to the arbitral tribunal consisting of a Sole Arbitrator declining to permit unsealing / de-sealing of the machines. Thus, the machines continues to be sealed. In view of the applicability of Section 42 of the Arbitration and Conciliation Act, 1996 and the prior petition having filed at the Himachal Pradesh High Court, I am not inclined to hold in favour of the respondents, especially given the fact that the LCIA tribunal is constituted post that order. The present petition is filed on 28th February 2020 to seek enforcement of the Partial Award dated 12 th February 2020. The reference made to the jurisdiction clause by Mr. Dharmani inviting me to hold that this court has no jurisdiction, do not 4 2017 SCC OnLine Bom 8676 26/30 2-IAL-19689-2021-Order dt. 20-10-2021.doc Dixit commend itself to me. In any event, these are not aspects that can be decided at the ad-interim stage. The affidavit of Kenny Abraham dated 1 st September 2021 and the additional affidavit of Ravindranath Santosh Kumar Hazareesing filed in support of the application, read with the Court Receiver's report of his visit of 2008, the LCIA has found that the takeover of TMPL in February 2018 and in particular the 1st respondent's appointment before the tribunal, who is also the 1st respondent in the present petition under Section 9, of new directors to TMPL on 6 th and 7th February 2018 constituted a breach of Reserved Matters under clause 5.1 of the SSD's Schedule-2 and thus of respondent's obligations under the SSD. 1 st respondent's right to remove and appoint directors on TMPL's board was held to be a "Reserved Matter" and he was found to have failed to comply with his obligations under clause 16.1 of the SSD.
24. The affairs of TMPL were therefore clearly a subject matter of the arbitration and was an aspect that was before the tribunal and up for consideration. The principal plea on behalf of respondents 4 to 7 before me and as canvassed by Mr. Dharmani that the two contracts are separate with two separate arbitration clauses, one being the Job-Work Agreement and one being the SSD, do not persuade me to hold in favour of the respondents and in that view of the matter and being conscious of the fact that the Receiver has found several instances of tampering of seal of its pattern and as recorded in the tabulated statement.
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25. I am of the view that prima facie case is made out for grant of ad- interim reliefs, as prayed for. Once the equipment and machinery are custodia legis, under the control of the Court Receiver, there is no occasion for the same to be tampered with without leave of the court and considering the nature of reliefs sought, it is appropriate that the Court Receiver is directed to take steps to ascertain whether continuous monitoring is feasible within the premises and therefore it may be necessary to install video equipment to record the activities thereat. Although this is not a specific prayer that has been sought in the interim application, I am of the view that once the Court Receiver is appointed, the property and the subject matter being custodia legis, the Receiver being under the supervision of the court, the court can exercise a suitable discretion in a fit case for extra-ordinary measures that may have to be taken to ensure that the orders of the court are not violated and to act as a deterrent to prevent violation. Prima facie, having been satisfied that there have been attempts to tamper and, in fact, alter the state of the machinery after possession was taken and when the Receiver has put its seals, I am of the view that suitable directions will be justified and accordingly, I pass the following order :-
(i) There will be an ad-interim order in terms of prayer clauses (a)-(i) to (a)-(iv), both inclusive, of the IA.
(ii) Receiver shall make a report in compliance within a period of four weeks from today.
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(iii) The Receiver is entitled to appoint such technical expert, as may be necessary, including an agency for installation of cameras and video recording equipment, duly connected to the internet, to enable remote monitoring of the site by the Receiver and by the parties.
(iv) Additionally, there will be an ad-interim order in terms of prayer clause (c) of the IA, by affixing a notice in terms of Exhibit-F to the IA on the notice board of the 4th respondent-TMPL at its entrance.
(v) Contents of the notice shall also be communicated to all the employees of respondent no.4-TMPL by SMS and WhatsApp so that all are made aware of this notice.
(vi) There will also be an ad-interim relief in terms of prayer clause (d)-(ii) of the IA.
(vii) The Receiver shall obtain suitable quotations for installation of video monitoring equipment at site within a period of two weeks from today and place the same before the court.
(viii) In addition to the above, considering the developments and the conduct of the contesting respondents, there will be an ad-interim order in terms of prayer clauses
(b)-(i) to (b)-(iii) and prayer clause (e) of the petition under Section 9.
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(ix) Time to file affidavit-in-reply to the Section 9 petition stands extended till 10th November 2021.
(x) Affidavit-in-rejoinder, if any, to be filed on or before 15th November 2021.
(xi) Liberty to apply after the Receiver prepares his first report.
26. At this stage, Mr. Dharmani seeks stay of this order. Request for stay is declined.
27. List the IA on 17th November 2021.
(A.K. MENON, J.)
Digitally signed
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ABHAY
ABHAY DIXIT
Date: 2-IAL-19689-2021-Order dt. 20-10-2021.doc
2021.10.21
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