Delhi High Court - Orders
Milan Saini vs Kamal Kumar & Anr on 11 February, 2022
Author: C. Hari Shankar
Bench: C.Hari Shankar
$~10 (Original)
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ O.M.P. (COMM) 361/2019 & I.A.12457/2019, I.A.4433/2021
MILAN SAINI ..... Petitioner
Through: Mr. Arjun Sayal, Adv.
versus
KAMAL KUMAR & ANR. ..... Respondents
Through: Mr.Anirudh Bakhru, Mr.Ayush
Puri, Mr. Umang Tyagi, Ms.Tejaswini
Chandrasekhar, Advs. for R-1
Ms. Kruttika Vijay, Ms.Aishwarya Kane and
Mr. Mukul Kochhar, Advs. for R-2
CORAM:
HON'BLE MR. JUSTICE C.HARI SHANKAR
JUDGEMENT (O R A L)
% 11.02.2022 (By Video Conference on account of COVID-19)
1. By order dated 9th December, 2021, this Court had noted the fact that it had received a letter from the learned Arbitrator in the present matter, to the effect that the petitioner was in default of fees payable to the learned Arbitrator to the tune of ₹ 19,56,500/-. It was made clear that, were the fees not paid to the Arbitrator before the next date of hearing, this petition would be dismissed on that sole ground.
Signature Not Verified Digitally Signed OMP (I) (COMM) 361/2019 Page 1 of 14 By:SUNIL SINGH NEGI Signing Date:16.02.2022 15:152. This order has not been challenged or disturbed till date. Mr. Sayal, learned Counsel for the petitioner does not dispute the fact that till date, the aforesaid amount of ₹ 19,56,500/- has not been paid to the Arbitrator.
3. Today, Mr. Sayal seeks to advance a submission that the aforesaid amount was not payable by his client, but was payable by the respondent-Kamal Kumar. For this purpose, he has sought to draw my attention to para 123 of the Award, which reads thus:
"123. The claimant as well as the respondent were in default of payment of expenses / fees of the Tribunal, and the amounts due from them were as follows;
Claimant: Rs. 7,85,000/-
Respondent: Rs. 22,27,500/-
The claimant has now paid his share and in addition to the same, he has also paid a sum of Rs. 3,01,000/- (Rupees Three Lac One Thousand) of the respondent's share. Therefore, the claimant is not in arrears of payment and has already cleared his outstanding amount as well as the amount as referred to above as respondent's part share. He has also moved an application under Section 39 of the Arbitration and Conciliation Act, 1996 for delivering the award subject to the lien on arbitral award in respect of the outstanding amount as referred to be deposited by the respondent. In this view of the matter and in the interest of justice, the award is pronounced and the balance fee / expenses as due from the respondent for the amount of Rs. 19,56,500/- (Rupees Nineteen Lac Fifty Six Thousand Five Hundred only) which has been added as costs. This tribunal shall continue to hold lien of this amount under section 39 (1) of the Arbitration and Conciliation Act, 1996, which shall be paid by the claimant at an appropriate stage. Taking an overall view of the facts and circumstances of the case, Signature Not Verified Digitally Signed OMP (I) (COMM) 361/2019 Page 2 of 14 By:SUNIL SINGH NEGI Signing Date:16.02.2022 15:15 the claimant is held entitled to costs of present proceedings quantified as Rs. 60,00,000/- (Rupees Sixty Lac only)."
4. Mr. Sayal's contention is that para 123 of the Award read with Section 38 of the Arbitration and Conciliation Act, 1996, makes the aforesaid amount payable, not by his client Milan Saini, but by the respondent-Kamal Kumar.
5. At a plain reading, this contention is thoroughly misconceived.
6. The learned Arbitrator has, in para 123, clearly noted that Milan Saini was liable to pay ₹ 22,27,500/-. The para further goes on to state that in the interests of justice, the Award was being pronounced and the balance fee expenses as due from the respondent before the learned Arbitral Tribunal (i.e. Milan Saini) for an amount of ₹ 19,56,500/-, which was added as costs. It is further noted that the Tribunal would continue to hold lien of this amount under Section 39(1) of the 1996 Act, to be paid by the claimant at an appropriate stage.
7. Mr. Sayal's interpretation of this paragraph is that the amount of ₹ 22,27,500/- was payable by Kamal Kumar and not by his client.
8. This goes contrary to the expressed wording of para 123 of the Award and is, therefore, clearly misconceived.
9. Section 38 of the 1996 Act reads thus:
Signature Not Verified Digitally Signed OMP (I) (COMM) 361/2019 Page 3 of 14 By:SUNIL SINGH NEGI Signing Date:16.02.2022 15:15"38. Deposits.--
(1) The arbitral tribunal may fix the amount of the deposit or supplementary deposit, as the case may be, as an advance for the costs referred to in sub-section (8) of section 31, which it expects will be incurred in respect of the claim submitted to it: Provided that where, apart from the claim, a counter-claim has been submitted to the arbitral tribunal, it may fix separate amount of deposit for the claim and counter-claim.
(2) The deposit referred to in sub-section (1) shall be payable in equal shares by the parties:
Provided that where one party fails to pay his share of the deposit, the other party may pay that share:
Provided further that where the other party also does not pay the aforesaid share in respect of the claim or the counter- claim, the arbitral tribunal may suspend or terminate the arbitral proceedings in respect of such claim or counter-claim, as the case may be.
(3) Upon termination of the arbitral proceedings, the arbitral tribunal shall render an accounting to the parties of the deposits received and shall return any unexpended balance to the party or parties, as the case may be."
10. Section 38(2) clearly requires the deposit to be made in equal shares by both parties. The use of the word "shall" in Section 38(2) indicates that this requirement is mandatory and not dispensable. The first proviso to Section 38(2) states that where one party fails to pay his share of the deposit, the other party may pay that share. The use of the word "may" in the first proviso vis-a-vis the word "shall" in the main part of Section 38(2), indicates that, as against the mandatory requirement in Section 38(2) on each party to pay his share of the deposit - which includes the fees of the learned Arbitrator - if one Signature Not Verified Digitally Signed OMP (I) (COMM) 361/2019 Page 4 of 14 By:SUNIL SINGH NEGI Signing Date:16.02.2022 15:15 party were default in that regard, the other party could pay the share of the defaulting party. This requirement is, however, not mandatory as is clear from the use of the word "may". The second proviso to Section 38(2) makes this clearer by providing for the sequitur, in the event the other party did not pay the share of the defaulting party under the first proviso. In such event, the second proviso provides that the Arbitral Tribunal could suspend the arbitral proceedings in respect of the claim of the defaulting party.
11. In this scenario, it can hardly lie in the mouth of the petitioner to contend that he was not liable to pay the amount of ₹ 19,56,500/-. That apart, this contention would fly in the face of the express recital in the letter dated 11th December, 2021 received from the learned Arbitrator, the second paragraph of which reads thus:
"This letter may be placed before the Hon'ble Court to request that the petitioner shall not henceforth communicate directly to the Arbitrator when he is duly represented. It may also be stated that the petitioner has not deposited / paid his share of fees amounting to Rs. 22,57,500/- from which an amount of Rs. 3,01,000/- is deposited by the respondent leaving balance amount of Rs. 19,56,500/- due from the petitioner, Mr. Milan Saini, as is evident from the Award dated 14th May, 2019, which is still outstanding."
12. The recalcitrant attitude of Mr. Milan Saini, to the present proceedings, as well as to the authority of this Court, has come up for adverse notice by this Court in the present proceedings on more occasions than one. Mr. Milan Saini already stands convicted for having committed contempt of this Court, by order dated 21st January, 2020. Mr. Milan Saini has not chosen to challenge the said order Signature Not Verified Digitally Signed OMP (I) (COMM) 361/2019 Page 5 of 14 By:SUNIL SINGH NEGI Signing Date:16.02.2022 15:15 which has attained finality. The matter was, in fact, directed to be listed for orders to be passed on sentence, but, owing to the intervening COVID-2019 pandemic, that could not take place and the matter was listed today. Even as on date, Mr. Milan Saini has not purged the contempt though this Court has, as a matter of indulgence, granted him ten days' time to do so.
13. That apart, this Court has also expressed its shock, in unequivocal terms, with the attitude of Mr. Milan Saini in the present proceedings. I deem it appropriate to reproduce the order dated 6th April, 2021, earlier passed in these proceedings, in extenso thus:
"IA 4433/2021 (direction) in O.M.P. ICOMM) 361/2019
1. This is an application by Respondent No. 1, praying that the petitioner be not heard on the present O.M.P. (COMM) 361/2019 under Section 34 of die Arbitration and Conciliation Act, 1996 ("1996 Act"), as he has been found guilty, by this Court of having committed contempt, and is yet to purge the contempt.
2. Having heard Mr. Dayan Krishnan, learned Senior Counsel for the applicant/Respondent No. 1, this Court is constrained to observe that the facts of the present case, and die manner in which die petitioner has dealt with the orders passed by this Court and the orders passed by the Arbitral Tribunal, are prima facie, shocking.
3. During the course of the proceedings pending before the learned Arbitral Tribunal, an application was preferred by the petitioner, under Section 17 of the 1996 Act Against the order passed by the learned Arbitral Tribunal therein, the petitioner filed Arb. A. 3/2014 and the aforesaid Arb. A. 3/2014 was disposed of by the learned Single Judge of this Court vide order dated 16*'' January, 2014, by directing the appellants (of which, the present petitioner was Appellant No. Signature Not Verified Digitally Signed OMP (I) (COMM) 361/2019 Page 6 of 14 By:SUNIL SINGH NEGI Signing Date:16.02.2022 15:15
2) to deposit certain amounts in Account Nos.
000293300000032 and 000293300000020 maintained with Yes Bank, Fortune Global Arcade, Sikanderpur, MehrauU Gurgaon Road, Gurgaon- 122002, and restraining the appellants (including the present petitioner), from withdrawing or dealing with, in any manner, an amount oft 9.5 crores out of the said deposit
4. This order was modified by the learned arbitrator vide order dated 27th October, 2014, while disposing of the application under Section 17 of the 1996 Act, filed by the present respondents. The concluding directions in the said order read thus:
"Taking an overall view of the facts and circumstances of the case, it will be in the interest of justice to modify the Order of the learned Single Judge dated 16.01.2014 to the effect that the respondent No. 1 and respondent No.2 shall be at liberty to withdraw the amounts lying in the fixed deposits in 'Yes Bank', Fortune Global Arcade, Sikanderpur, Mehrauli Gurgaon Road, Gurgaon-122002 and instead furnish Bank Guarantees ("EG") in the amount of Rs.4.50 crores each respectively.'' (Emphasis supplied)
5. It may be noted that, before the learned arbitrator, the present petitioner was Respondent No. 2.
6. Mr. Dayan Krishnan, learned counsel for the applicant, submits that, without complying with the direction for furnishing the bank guarantee for ₹ 4.5 crores, the respondents before the learned Arbitral Tribunal withdrew the amounts lying in the fixed deposits in stark violation of the afore-extracted directions passed by the learned arbitrator. The dispute with Respondent No. 1 was subsequently settled, but the dispute with Respondent No. 2, i.e. the present petitioner, remains.
7. In these circumstances, the present respondents filed O.M.P. (CONT.) 1/2017 before this Court alleging Signature Not Verified Digitally Signed OMP (I) (COMM) 361/2019 Page 7 of 14 By:SUNIL SINGH NEGI Signing Date:16.02.2022 15:15 contumacious and willful disobedience of order dated 27th October, 2014 (supra), passed by the learned arbitrator.
8. Said O.M.P. (CONT.) 1/2017 was disposed of, by a learned Single Judge of this Court vide order dated 2nd January, 2020. Paras 7, 8 and 32 to 38 of the said order merit reproduction, thus:
"7. The Tribunal issued notice to the bank and on appearance before the Tribunal on 06.05.2015, a statement was made by the bank that the respondent had withdrawn the amount in the month of November, 2014 without any bank guarantee. No reply was filed by the respondent. After hearing the parties on 15.09.2015, the Tribunal returned a categorical finding that the respondent was in default and willful contempt of the order passed by the Tribunal and made representation to this Court for appropriate orders. The Tribunal further recorded that insofar as the matter between the petitioner herein and Deepak Marda was concerned, the same was settled between the parties and hence, no reference was required.
8. The petitioner, thereafter, filed contempt case being Cont. Cas(C) No. 982/2015 in this Court in 2015. On 15.12.2015, a notice was issued to the respondent, who, however, failed to appear despite having been served. On 12.05.2016 bailable warrants were issued by the Court in the sum of Rs. 10,000/-. The same could not be executed and fresh warrants were issued on 19.07.2016.
*****
32. As regards the contention of the respondent that since a final award has been passed, the interim orders have merged in the same and therefore no contempt lies, the same only deserves to be rejected. If this interpretation is given, then the learned counsel for the petitioner is right that it would render Section 27(5) of the Act redundant. Besides, it would actually give a free hand to the contemnor to flout the orders of the Signature Not Verified Digitally Signed OMP (I) (COMM) 361/2019 Page 8 of 14 By:SUNIL SINGH NEGI Signing Date:16.02.2022 15:15 Court till such time his objections to the award are not decided and the challenge does not attain finality. A party who willfully disobeys the orders of the Court has to be strictly dealt with.
33. From the totality of facts which emerge in this case, it is clear that initially the Tribunal has restrained the respondent herein from receiving the amount deposited with the escrow agent. The aid order was challenged by the respondent along with Deepak Marda in this Court. An agreement was entered between the parties that the amount lying with the escrow agent would be released to the respondent and Deepak Marda which would be deposited by them with the Yes Bank and kept in a fixed deposit with lien marked thereon. From the amount so realized, the respondent herein was directed to place Rs.9.5 Crores in a fixed deposit with a lien marked on it. The FDR was to be renewed till further orders of the Tribunal. The Tribunal thereafter, modified the earlier orders and permitted the respondent along with Deepak Marda to withdraw the sum of Rs.9.5 Crores subject to furnishing a bank guarantee of 4.5 Crores each. This was on the ground that the respondent wanted to clear his statutory liabilities. The respondent has admittedly withdrawn the amount without furnishing a bank guarantee.
34. In my view, there is a clear and wilful disobedience of the order passed by the Tribunal on 27.10.2014. The record of this Court shows that several notices including bailable warrants were issued for production of the respondent but he had evaded service. In one of the orders, this Court prima facie had noticed the willful evasion of the sei-vice by the respondent and on an application filed by the petitioner, direction was issued to the EOW Cell to open a look out circular. It was only after the LOC was issued that an advocate appeared on behalf of the respondent.Signature Not Verified Digitally Signed OMP (I) (COMM) 361/2019 Page 9 of 14 By:SUNIL SINGH NEGI Signing Date:16.02.2022 15:15
35. After the respondent was represented, opportunity was given by this Court to appear )n this Court or at least to y deposit some amount to show his bonafide. Despite this, the respondent remained defiant and a categorical statement was made on his behalf that he is refusing to appear in the Court. The ground set up for non-appearance was that he feared for his safety and security. This ground, in my opinion, also has no legs to stand. The petitioner has rightly pointed out that the respondent had visited India in July, 2019 to sign Special Power of Attorney on the basis of which he had filed objections in this Court under Section 34 of the Act. This was very close to the application being filed for opening of a lookout circular. Given the gamut of these facts, the nonappearance of the respondent is not justified and neither is his apprehension that he is not safe in this country. The Court had even given an alternative to the counsel for the respondent to deposit some amount. But even that was not accepted and the offer made was only to deposit Rs.33 lakhs out of a liability of Rs. 4.5 crores with interest thereon.
36. The Supreme Court in the case of Rama Narang v.Ramesh Narang (2006) 11 SCC 114 has held that in order to maintain sanctity of the orders of the Court, it has become imperative that those who are guilty of deliberately disregarding the orders of the Court in a clandestine manner should be appropriately punished. It was further held that the Majesty of the Court and the Rule of Law can never be maintained unless this Court ensures meticulous compliance of the orders. A Division Bench of this Court in Mohan Nair vs. Rajiv Gupta (2015) DLT 332, held that to say that the orders of the Court are not implementable or unenforceable will make the law and the Court a laughing stock and therefore, it is the duty of every Court to prevent its machinery from being made a sham, thereby running down the Rule of Law and rendering itself an object of ridicule. The Supreme Court in Sukhdev Singh vs Hon'ble QJ.S, Teja Singh Signature Not Verified Digitally Signed OMP (I) (COMM) 361/2019 Page 10 of 14 By:SUNIL SINGH NEGI Signing Date:16.02.2022 15:15 & Ors. AIR (1954) SCR 454 while recognizing that the power of the High Court to institute proceedings for contempt and punish the contemnor when found necessary is a special jurisdiction which is inherent in all Courts of Record.
37. The respondent has clearly violated order dated 27.10.2014 passed by the Arbitral Tribunal. Respondent is held guilty of contempt of the order of the Tribunal.
38. To come up on 14.05.2020 for order on sentence."
(Emphasis supplied)
9. It is in these circumstances that the Respondent No. 1 has moved the present application before this Court, praying that the petitioner be heard on tins petition under Section 34 of the 1996 Act, only after he purges the contempt committed, in respect of which this Court has already pronounced orders on 21st January, 2020.
10. I am, prima facie, inclined to agree with Mr. Dayan Krishnan. It does appear that the petitioner is taking this Court for granted and had resorted to playing ducks and drakes with the Court possibly complacent in the knowledge that he is in the U.S.
11. Without having blatantly and with no reasonable justification whatsoever, the petitioner flouted the orders passed by the learned Arbitral Tribunal under Section 17 of the 1996 Act, and of which he has been found guilty of contempt, I see, prima facie, no justification for permitting the petitioner to prosecute the prayer for stay of operation of the impugned award, or even to stay such operation, till he purges himself of the contempt. In this context, the observations of the learned Single Judge in para 36 of the order dated 21st January, 2020 in OMP(CONT.) 1/2017 are significant. As has been observed by the learned Single Judge, if this Court is to take up the present challenge under Section 34 of the 1996 Act on merits, it would amount to reducing the authority of Signature Not Verified Digitally Signed OMP (I) (COMM) 361/2019 Page 11 of 14 By:SUNIL SINGH NEGI Signing Date:16.02.2022 15:15 this Court to a laughingstock. It would mean that the petitioner could willfully flout the orders passed by the learned Arbitral Tribunal at the interlocutory stage, withdraw the amounts deposited in this Court without furnishing the bank guarantee as directed by the learned Arbitral Tribunal, refused to purge the contempt even having been found guilty in respect thereof and, nevertheless, maintain a challenge against the final award passed by the learned Arbitral Tribunal on merits. This, to me, appears, prima facie, to be unquestionable.
12. However, Mr. Darpan Wadhwa, learned Senior Counsel appearing for the petitioner, submits that he would like to file a response to this application. In view thereof, issue notice. Notice is accepted by Mr. Arjun Syal, learned counsel for the petitioner, who is an instructing counsel to Mr, Darpan Wadhwa.
13. Let a response to this application be filed within a period of four weeks from today with advance copy to learned counsel for the applicant/Respondent No. 1, who may file rejoinder thereto, if any, within a period of two weeks thereof.
14. It is stated that OMP (CONT.) 1/2017, which was to be listed for passing Orders on Sentence, has not been listed owing to the intervention of the COVID 2019 pandemic.
15. Let the present matter be listed alongwith OMP (CONT.)1/2017 before one Bench, subject to orders of Hon'ble the Judge Incharge (Original Side) on 8th July, 2021.
16. It is made clear that this Court has not passed any interlocutory orders interdicting the enforcement of the impugned arbitral award."
14. Four weeks were granted, by the aforesaid order dated 6th April, 2021 to Mr. Milan Saini to file a reply to IA 4433/2021, by which the applicants in the said application (Kamal Kumar and another) had Signature Not Verified prayed that Mr. Milan Saini be heard in OMP (Comm) 361/2019 only Digitally Signed OMP (I) (COMM) 361/2019 Page 12 of 14 By:SUNIL SINGH NEGI Signing Date:16.02.2022 15:15 after he purged the contempt of which he had been found guilty by the judgment dated 21st January, 2020 passed by the Coordinate Bench of this Court. Mr. Milan Saini has not chosen to file a reply to this application till date. Nor has he chosen to purge the contempt. Nor has he chosen to pay the fees outstanding to be paid to the learned Arbitrator, despite the order passed on the last date of hearing i.e. 9 th December, 2021.
15. It appears that Mr. Milan Saini has no regard whatsoever for this Court or its processes, apparently sanguine in the belief that he is outside the reach of this Court, as he resides in the US.
16. In the circumstances, this Court has no option, but to dismiss OMP (Comm) 361/2019. The petition accordingly stands dismissed.
17. It would, however, be open to Mr. Milan Saini to apply for reviving the said petition after paying to the Arbitrator, the fees outstanding as well as purging the contempt of which he already has been found guilty.
18. At this stage, Mr. Bakhru points out that, owing to the manner in which Mr. Milan Saini was avoiding responding to this Court or participating in the proceedings, the direction for issuing a lookout circular to detain and produce him before this Court, already stands issued on 12th July, 2019. Despite this fact, Mr. Milan Saini is avoiding appearing before this Court.
Signature Not Verified Digitally Signed OMP (I) (COMM) 361/2019 Page 13 of 14 By:SUNIL SINGH NEGI Signing Date:16.02.2022 15:1519. Mr. Kirtiman Singh, learned Central Government Standing Counsel submits that, as Mr. Milan Saini is a US citizen, it is not possible to deport him and extradition proceedings would not be possible in a case such as this. Issuance of a lookout circular has also not resulted in Mr. Milan Saini condescending to appear before this Court.
20. In view thereof, it is made clear that revival of these proceedings would be allowed only if Mr. Milan Saini presents himself before this Court as directed by earlier orders already passed in that regard, after making payments in terms of para 16 supra. The personal presence of Mr. Milan Saini is accordingly directed before this petition is revived.
21. This petition stands dismissed accordingly.
C. HARI SHANKAR, J FEBRUARY 11, 2022/kr Signature Not Verified Digitally Signed OMP (I) (COMM) 361/2019 Page 14 of 14 By:SUNIL SINGH NEGI Signing Date:16.02.2022 15:15