Bombay High Court
Ashapura Minechem Ltd vs Armada (Singapore) Pte. Ltd. 3 Ors on 29 June, 2016
Bench: R.D. Dhanuka
ppn 1 12.conp-89.15(j).doc
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 )
::: Uploaded on - 08/07/2016 ::: Downloaded on - 30/07/2016 07:29:05 :::
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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
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
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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.
ppn 5 12.conp-89.15(j).doc
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
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.
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
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.
ppn 9 12.conp-89.15(j).doc
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)
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
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
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
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
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
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
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
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
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,
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
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
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
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
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.
