Bombay High Court
Cherag Shah vs Harshwardhan H Sabale on 12 August, 2024
Author: Abhay Ahuja
Bench: Abhay Ahuja
60. IAL 16702-23 in COMEXL 16273-23.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION (L) NO. 16702 OF 2023
IN
COMMERCIAL EXECUTION APPLICATION (L) NO. 16273 OF 2023
Cherag Shah ...Applicant
V/s.
Harshwardhan H. Sabale ...Respondent
Mr. Rashmin Khandekar with Mr. Utkarsh Singh, Mr. Turab Ali Kazmi,
and Mr. Hardika Kukkeja and Ms. Karishni Khanna i/b S. K. Partners for
Applicant/Award Creditor.
Mr. Vikas Sharma for Respondent No.1.
Mr. Shlok Parekh with Mr. Siddharth Bafna and Ms. Rinu Kallan i/b
Integrum Legal, Advocate for Award Debtor No.1.
Ms. Aditi Phatak with Mr. Vijay Salokhe, Mr. Parag Sharma andMs.Kirti
Ojha i/b BLAC 7 Co. for RBI.
Mr. S.C. Mahanta, Mr. Arpit Galav and Mr. H. V. Tirodkar, RBI Officers
are present.
Mr. N. C. Pawar, OSD, Court Receiver present.
CORAM : ABHAY AHUJA, J.
DATE : 12th AUGUST, 2024
P.C. :
1. Pursuant to the earlier orders of this Court ending with order
dated 9th August, 2024, today when the matter is called out, this Court
is informed by Mr. Khandekar, learned Counsel appearing for the
Digitally
signed by
NIKITA
NIKITA YOGESH
YOGESH GADGIL
GADGIL Date:
Applicant that no payment has been received by his client as was
2024.08.13
19:13:50
+0530
undertaken by the Respondent on the last date. It has also been
submitted that the Respondent is also not present in the Court as was
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directed. That in view of the observations of this Court in paragraphs
6,9,11 and 14 to 18 of the order dated 9 th August, 2024, this Court
issue a show cause notice under the Contempt of Court's Act as this
Court has prima facie observed that the Respondent has committed
contempt of this Court.
2. Mr. Sharma, learned Counsel appears for the Respondent and
submits that he would now be representing the Respondent and seeks
to tender across the bar an affidavit filed on behalf of the Respondent.
Mr. Sharma has also furnished a copy of the same to Mr. Khandekar,
learned Counsel for the Applicant.
3. Mr. Sharma submits that although the Respondent had
undertaken to furnish a Demand Draft for a sum of Rs. 20 Crs in favour
of the Award Creditor by today 4.30 p.m. and also remain present in
the Court and also not leave the jurisdiction of the municipal limits of
Mumbai until further orders of this Court, in view of the circumstances
mentioned in the affidavit, he has had to leave the jurisdiction and has
set out the same in the affidavit and also apologized for the
inconvenience caused to the Court and requested that the proceedings
be adjourned to 20th August, 2024.
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4. Mr. Sharma submits that the Respondent has also made an
arrangement to deposit an amount of Rs. 2 Crs with the Prothonotary &
Senior Master and refers to a copy of the Demand Draft issued by the
Union Bank of India, Sawantwadi Branch in favour of the Prothonotary
& Senior Master at page 39 of the said affidavit, which Mr. Sharma
submits he will receive by today evening and deposit the same with the
Prothonotary & Senior Master by tomorrow, 10.30 a.m. Mr. Sharma
submits that the Respondent has also given his no objection to
withdrawal of the same by the Award Creditor.
5. Mr. Sharma further submits that application under Section 95 of
the Insolvency and Bankruptcy Code, 2016 has been filed against the
Respondent and that therefore, there is a statutory interim moratorium
under Section 96 of the Insolvency and Bankruptcy Code, 2016 in
respect of the Respondent and refers to Exhibit A to the said affidavit
and submits that therefore, this Court cannot proceed further in the
execution proceedings.
6. Mr. Khandekar, learned Counsel appears for the Applicant and
submits that the said application at Exhibit A does not have any
number nor any acknowledgment of having been filed and that the
statutory interim moratorium only commences when an application is
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filed under Section 94 or Section 95 of the Insolvency and Bankruptcy
Code, 2016.
7. To this, Mr. Sharma refers to page 40 of the Respondent's
affidavit and submits that the case number of the said application has
been given there as part of the case details and that therefore, in view
of the statutory interim moratorium period, any legal action or
proceedings pending in respect of any debt including this execution
proceedings shall be deemed to have been stayed and the creditors of
the debtor shall not initiate or continue any action or proceedings in
respect of any debt.
8. As far as the payment of Rs. 20 Crs is concerned, it has been
submitted by Mr. Sharma that since all the assets of the Respondent
have been attached and the Respondent has no money or resources or
assets to pay the outstanding dues, he had bona-fide depended on the
third parties for these payments, in respect whereof, affidavits had also
been furnished by those third parties as he had no option but to rely on
the third parties to fulfill the payment obligations on his behalf. With
respect to the balance amounts, Mr. Sharma submits that he would
need to take instructions from the Respondent.
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9. Mr. Khandekar has cursorily gone through the said affidavit of
the Respondent sought to be filed in this Court and submits that this is
yet another instance of the Respondent's dishonest and contumacious
conduct which ought not be spared and exemplary punitive action be
taken against him.
10. Mr. Khandekar, learned Counsel submits that the affidavit has
been notaraized this morning, which suggests that the Respondent was
in Mumbai this morning and has deliberately chosen to leave the city as
the hearing was fixed in the afternoon. That although the reason for his
absence is sated to be an urgent and unforeseen personal emergency of
the deteriorating health of his elder sister, there is no supporting
medical record or document to substantiate the same and that the
Respondent is in the habit of filing affidavits of this nature and evading
and avoiding Court proceedings and breaching undertakings with
impunity which should not be tolerated by this Court.
11. Mr. Khandekar submits that in view of the decision of the
Division Bench of this Court in the case of Rajenra Prasad Banal Vs.
Reliance Communication Limited1 the said proceedings before the NCLT
1 2023 SCC Online Bom 33
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would only be limited to the assets / properties of the Judgment Debtor
and not to actions or proceedings or assets which are beyond the said
proceedings. That the monies deposited in this Court would not be the
assets or properties of the Judgment Debtor nor would proceedings in
execution or the proceedings that would be initiated against the
Respondent under Order 21 Rule 40 or Rule 41 or proceedings for
breach of orders of this Court under the Contempt of Courts Act and
that this Court also direct that the Respondent be taken into custody
under Order 21 Rule 40 (2) for failing to respond / give satisfactory
explanation to the show cause notice issued pursuant to order dated
11th March, 2024 and also direct his arrest under Order 21 Rule 41 (3)
for disobeying the orders of this Court.
12. Mr. Khandekar also submits that the conduct of the Respondent is
not only is willfully disobedient for committing willful breaches of
undertakings given to this Court but also scandalizes and tends to
lower the authority of this Court and therefore, strictest of punishments
be awarded to him.
13. Having heard the learned Counsel and having considered their
submissions, the following order is passed:-
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ORDER
i. There is no doubt and it is self-evident that the Respondent has
not only breached the undertakings given to this Court, which although
is sought to be explained by way of an affidavit dated 12 th August,
2024, tendered across the bar today by a new Advocate who is yet to
file his vakalatnama, but as recorded in earlier orders this Court
including order dated 9th August, 2024 also been in contumacious and
egregious breach of the orders of this Court.
ii. On 9th August, 2024, this Court had passed the following order:
"1. Pursuant to order dated 6th August 2024, today when
the matter is called out, Mr.Kamat, learned Senior Counsel,
appears on behalf of Mr.Harshwardhan Sabale, the
Respondent in the matter and submits that there is a
moratorium operating in respect of the Respondent in view of
an application having been filed on 8 th August 2024 before
the National Company Law Tribunal ("NCLT") and that this
Court cannot proceed in execution in view of Section 96 of
the Insolvency and Bankruptcy Code, 2016. No affidavit or
document in support thereof has been furnished to this Court.
2. Mr.Kamat also submits that since there have been
operational difficulties in the functioning of the co-operative
bank from where the funds were to be transferred by NEFT
after the same is investigated, this Court can take a view in
the matter.
3. Upon a query from this Court with reference to the
affidavit cum undertaking furnished by the Respondent,
Mr.Harshwardhan Sabale, on 6th August 2024 undertaking to
furnish a demand draft of an amount of Rs.20,00,00,000/- in
60. IAL 16702-23 in COMEXL 16273-23.doc
favour of the Applicant by today Mr.Kamat submits that his
client has not been able to do so.
4. Mr.Khandekar, learned Counsel appearing for the
Applicant, also submits that, today, much to his shock and
surprise, the real Mr.Govind Wadkar, is present in Court and
on the other day, the person who was present through video
conferencing, styling himself as Mr.Govind Wadkar, was not
the real Govind Wadkar. Mr.Khandekar submits that
Mr.Govind Wadkar, who is present in Court, has furnished his
Identity-card as well as his photograph and submits that he is
the Deputy Chairman of the Sawantwadi Urban Co-operative
Bank and that the Branch Manager is also present in Court
and both of them have informed that firstly, the email dated
6th August 2024 furnished by Mr.Parekh, the then learned
Counsel appearing for the Respondent and as also reproduced
by this Court in paragraph 3 of the order dated 6 th August
2024, is not an email sent by Mr.Govind Wadkar. The learned
Counsel submits that not only that, Mr.Govind Wadkar and
the Branch Manager have also informed that the two NEFT
transactions referred to in the said email or referred to
anywhere else, could not have been undertaken by the bank,
in as much as the bank was, with effect from 14 th June 2023
subjected to the directions of the Reserve Bank of India under
Section 35A read with Section 56 of the Bank Regulation Act,
and further confirm the email dated 2nd August 2024 referred
to in paragraphs 1 and 2 of the order dated 6 th August 2024.
Mr.Khandekar submits that the fraud saga does not stop here
and that both the Vice Chairman and the Bank Manager
present in Court today, have also informed that there is no
account in the name of Balasaheb Yuvak Sanghtan (Society)
nor in the name of the Kishore Arjun Jadhav nor in the name
of Balasaheb Education Services Trust nor in the name of
Deepak Krishna Jadhav opened with the Sawantwadi Urban
Co-operative Bank. The Vice Chairman and the Branch
Manager of the bank confirm the aforesaid and also submit
that there is an account opened in the name of Streamcast
Education Services Private Limited in which the Respondent is
a director and the balance in the said account is only
Rs.2,070/-.
60. IAL 16702-23 in COMEXL 16273-23.doc
5. On 6th August 2024, this Court had passed the
following order :
"1. Pursuant to the order dated 31st July, 2024, today when
the matter was called out, this Court was informed that the bank
which had supposedly generated the National Electronic Fund
Transfer ("NEFT") reference numbers with respect to the two
purported transactions of Rs.10 Crs each is subject to directions
of the Reserve Bank of India ("RBI") under Section 35A read with
Section 56 of the Banking Regulation Act, 1949 as applicable to
the cooperative societies with effect from 14th June, 2023 and
therefore, there have been no RTGS/NEFT transactions allowed /
made by the bank with any customer of the bank and therefore
the subject NEFT transactions were not made by the bank.
2. Mr. Khandekar, learned Counsel appearing for the
Applicant tenders across the bar two e-mails dated 2 nd August,
2024 in support of his contention, the relevant extract whereof is
usefully reproduced as under:-
3.Mr.Parekh, learned Counsel appearing for the Respondent also
seeks to tender across the bar an email dated 6 th August, 2024,
purportedly from the Sawantwadi Urban Co-operative Bank with
respect to the two transfers whereby it is informed that the
Sawantwadi Urban Co-operative Bank is in the process of being
merged with the TJSB Co-operative Bank and the decision has
been taken on 29th June, 2024. That therefore, there may have
60. IAL 16702-23 in COMEXL 16273-23.doc
been delay in the transfer of the two amounts and that they are
investigating and within seven days they would give information
regarding the same. That in respect to the aforesaid two amounts
they have not contacted any person. That the information is
being provided at the request of the client and that no
responsibility is being undertaken with respect to the said
information by the bank. The email appears to have been sent by
Mr. Govind Wadkar, whose designation is mentioned as director.
The said email is also usefully reproduced as under:-
4. Further, pursuant to the directions of this Court, Mr. Jatin
Rawal, General Manager, Public Accounts Department, RBI is
also present in the Court along with his legal advisor.
5. Mr. Rawal, has confirmed that no monies have been
received into the account of the Prothonotary & Senior Master of
this Court, whether Rs. 10 Crs that were purportedly transferred
on 31st May, 2024 or the second Rs. 10 Crs purported to be
transferred on 5th July, 2024. Mr. Rawal, has also explained that
normally the NEFT numbers are generated by the concerned
bank pursuant to an application by the customer and at a time
when the transaction is being executed, there is a UTR number
also that is generated.
6. In the present case before the Hon'ble Supreme Court as
well as this Court, it has been stated on oath and also submitted
through Counsel which has been recorded in the orders of both
the Hon'ble Supreme Court and this Court that the said payments
had been made by NEFT.
60. IAL 16702-23 in COMEXL 16273-23.doc
7. This Court, therefore, kept back the matter, so as to get
assistance on whether the NEFT has been executed and whether
there was a UTR code generated and therefore the concerned
official of the Sawantwadi Urban Co-operative Bank, Mr. Govind
Wadkar, was directed to be available online to explain the same.
8. After a while i.e. at 11.30 a.m., Mr. Govind Wadkar came
online, however, he was unable to throw any light on the specific
questions with respect to the above and sought some time in the
matter, submitting that he was not the one who had executed the
transactions and the same were being executed through the bank
in Thane.
9. This Court therefore put it to Mr. Rawal of the RBI,
whether he would like to add anything to the answers given by
Mr. Govind Wadkar and Mr. Rawal submitted that he would not
like to add anything more than what he has already submitted.
10. Mr. Viraj S. Rane, Clerk, from the office of the
Prothonotary & Senior Master is present in the Court and he has
confirmed that since no payment had been received on 31 st May,
2024, a certificate of Non-Deposit dated 31 st July, 2024 has been
issued. That as regards the second transaction of Rs. 10 Crs, no
certificate has been issued as it has been recorded in the order
dated 11th July, 2024 that the Applicant has received the money,
however, submitting that neither the first payment of Rs. 10 Crs
nor the second purported payment of Rs. 10 Crs has been
received in the account of the Prothonotary & Senior Master of
this Court, maintained with the RBI.
11. The Respondent is present in the Court pursuant to the
directions of this Court. Mr. Parekh, learned Counsel for the
Respondent, on instructions, submits that the Respondents would
in view of the above circumstances make payment of the amount
of Rs. 20 Crs by 9th August, 2024 by way of Demand Draft of Rs.
20 Crs and that the statement may be accepted as an
undertaking to this Court.
12. Mr. Khandekar, learned Counsel appearing for the
Applicant, firstly, submits that from the events that have
transpired, it is clear that the conduct of the Respondents is
60. IAL 16702-23 in COMEXL 16273-23.doc
deliberate, contumacious and egregious and be met with the
strictest punishment and apart from punitive orders with respect
to the breaches of the orders of this Court, the payment of Rs. 20
Crs by Demand Draft offered to be paid by the Respondent by 9 th
August, 2024 ought to be in the name of the Applicant. Mr.
Khandekar further submits that the amount of Rs. 2,00,70,121/-
lying in the following accounts also be directed to be transferred
to the account of Applicant:
1.Axis Bank Account No. 921010013529564 - Rs. 26,14,530
2.ICICI Bank Account No. 333701501301- Rs. 1,38,809/-
3.ICICI Bank Account No. 344901000352- Rs 27,79,228/-
4.ICICI Bank Account No. 344905500008-Rs. 94, 042/-
5.ICICI Bank Account No. 3122401500240- Rs. 26,574/-
6.HDFC Bank Account No.50100677161031-Rs. 1,64,16,938/-
13. Mr. Parekh, learned Counsel for the Respondent, has in
anticipation of orders of this Court, offered to this Court, that his
client, the Respondent, would attend to the office of the
Prothonotary & Senior Master of this Court at 11.00 am and
mark his presence everyday.
14. I have heard the learned Counsel and also the officials of
the RBI, and the Bank.
15. On 31st July, 2024, the following order was passed:-
"1. Pursuant to the order dated 11 July 2024, today when the
matter was called out in the morning session, this Court was
informed by Mr. Khandekar, learned Counsel for the Award
Creditor that none of the two payments of Rs.10 Crore have been
received in the account of the Prothonotary & Senior Master of
this Court and that the Judgment Debtor has played a fraud.
Accordingly, this Court had kept back the matter for the
Judgment Debtor to remain present in Court in the afternoon
session. Mr. Khandekar has also tendered across the bar a
certificate of non-deposit from the Prothonotary & Senior Master
as regards, the non-deposit of Rs.10 Crores that was due by 31 st
July 2024.
2. In the afternoon session, when the matter is called out, Mr.
Parekh, learned Counsel appears for the Judgment Debtor and
seeks to tender across the bar a communication from the
Judgment Debtor seeking indulgence on humanitarian grounds
60. IAL 16702-23 in COMEXL 16273-23.doc
for not being able to remain present in the Court today
afternoon. Mr. Parekh also submits that Section 34 Application
challenging the Award has been withdrawn by the Judgment
Debtor and that he has sought time to settle the matter after the
RBI responds to their communication and follow-ups as pursuant
to the letter dated 19th July 2024 whereby on behalf of the
Judgment Debtor, the RBI has been requested to, with extreme
urgency, ascertain as to why the two payments by NEFT
amounting to Rs.20 Crores are not traceable or available in the
account of the Prothonotary & Senior Master, High Court,
Bombay. Mr. Parekh also seeks to tender across the bar two
Affidavits both dated 22nd July 2024 of two persons who have
respectively sought to transfer Rs.10 Crores each, one on 31 st
May 2024 and the other on 5th July 2024 on behalf of the
Judgment Debtor in the account of the Prothonotary & Senior
Master with the RBI. Mr. Parekh submits that although the said
amounts have been debited from the respective accounts, they
are not traceable and the RBI is in the process of investigating
the same.
3. Mr. Khandekar, learned Counsel for the Award Creditor
submits that since the Application under Section 34 of the
Arbitration and Conciliation Act, 1996 has been withdrawn, this
Court consider passing further orders in execution, so that the
amounts due under the Award are recovered.
4. Be that as it may, this Court is deeply concerned that the
monies that have been sought to be transferred to the account of
the Prothonotary & Senior Master by way of NEFT have not been
credited into the said account and therefore, this Court deems it
appropriate to issue notice to the General Manager of the Public
Accounts Department of the RBI to attend this Court on 6 th
August 2024 at 10.30 a.m. and to give an update in the matter
and as to when the monies would be credited to the account of
the Prothonotary & Senior Master of this Court.
5. Let the Judgment Debtor positively remain on the next
date, failing which this Court will pass necessary orders to secure
his presence.
6. Stand over to 6th August 2024 at 10.30 a.m. on
supplementary board."
16. As can be seen, this Court was deeply concerned with
respect to the monies that had to be transferred to the account of
60. IAL 16702-23 in COMEXL 16273-23.doc
Prothonotary & Senior Master by way of NEFT and which had
not been credited to the said account with the RBI and therefore,
this Court had issued notice to the General Manager of the Public
Accounts Department of the RBI to attend this Court and to give
an update in the matter and as to when the Rs. 20 Crs would be
credited into the account of the Prothonotary & Senior Master of
this Court.
17. From the above submissions, it is clear that the monies
purported to be transferred by NEFT into the account of
Prothonotary & Senior Master with the RBI have neither been
credited into the account nor have such monies even been
received by the RBI. Prima facie it also appears that although the
NEFT numbers have been given by the drawer's bank viz. the
Sawantwadi Urban Co-operative Bank, but the transactions have
not been executed as there is no UTR code or number. Although
in the email dated 6th August, 2024, from the bank to the
Advocate for the Respondent, there is a mention of the UTR
number but it is mentioned alongwith the NEFT number and
which number is statedly the same. This Court has shown the
said email to Mr. Rawal, the General Manger of the RBI, who has
clarified that it cannot be the same number. Therefore, it appears
that the said reference as "1. #- 31 es 2024 jksth 10,00,00,000/-
(#i;s QDr ngk dksVh) (UTR dzekad %
NEFT/PROTHO/NB24152398731), 2. #- 5 tqyS 2024 jksth
10,00,00,000/- (#i;s QDr ngk dksVh) (UTR dzekad %
NEFT/PROTHO/NB24604759182)" appear to be misleading.
18. For want of better words this is serious and cannot be
taken lightly. This court is aware that these are execution
proceedings where the Respondent has agreed to make payment
of approximately Rs.50 Crs to the Applicant under the Consent
Terms filed before the Hon'ble Supreme Court and also this Court
in which, as stated on oath before the Hon'ble Supreme Court
and recorded in the orders of the Hon'ble Supreme Court Rs. 10
Crs had purportedly been deposited with the Prothonotary &
Senior Master on 31st May, 2024 and later on under the same
consent terms, modified by consent of the parties another Rs. 10
Crs were purportedly deposited in the account of the
Prothonotary and Senor Master on 5th July, 2024, by two
individuals : Mr. Dipak Krushna Jadhav, has confirmed on oath
60. IAL 16702-23 in COMEXL 16273-23.doc
by affidavit dated 22nd July, 2024 that NEFT payment of Rs. 10
Crs has been made to the account of the Bombay High Court on
31st May, 2024 and has given the transaction details in paragraph
2 of the said affidavit as under:-
"2. Details of transaction:
* Account Name : 8443 Prothonotary & Senior Master, High
Court,Bombay.
*Bank Name and Branch: RBI,Mumbai
Regional Office, S. B. Singh Road, Fort, Mumbai-400 001
* Account Type: Personal Ledger Account
*Account No. :01514601100
*IFSC Code: RBIS0MBPA04
*UTR No. : NEFT/PROTHO/NB2415298731"
19. The purpose of the payment is mentioned in the said
affidavit as payment being made on behalf of Mr.
Harshawardhan Sabale viz. Respondent in the matter in
compliance with his matter involving Mr. Cherag Shah viz.
Applicant in this matter.
20. In paragraph 5 of the said affidavit there is a confirmation
and undertaking that the payment has been duly made and that
the affidavit is to be treated as an official undertaking from the
deponent confirming the payment. The said affidavit has been
verified and notarized by a Notary from Sindhudurg.
21. A similar affidavit dated 22nd July, 2024, has been given by
another individual by the name Kishor Arjun Jadhav that on 5 th
July, 2024 NEFT payment of Rs. 10 Crs was made to the account
of the Bombay High Court with the following details:-
"Amount : Rs. 10,00,00,000/- (Rupees Ten Crores only)
* Account Name : 8443 Prothonotary & Senior Master, High
Court,Bombay.
*Bank Name and Branch: RBI,Mumbai
Regional Office, S. B. Singh Road, Fort, Mumbai-400 001
* Account Type: Personal Ledger Account
*Account No. :01514601100
*IFSC Code: RBIS0MBPA04
*Date of Payment : 5th July 2024
*UTR No. : NEFT/PROTHO/NB24604759182"
60. IAL 16702-23 in COMEXL 16273-23.doc
22. That the purpose of the payment was on behalf of the
Respondent for compliance in the matter with the Applicant. In
this affidavit it has also been stated that the payment has been
made into the High Court account from the deponent's account
bearing No. 0020005090000035 with the Sawantwadi Urban Co-
Op Bank Ltd., Sawantwadi. The said affidavit has also been
verified and notarized by a Notary in Sindhudurg.
23. The email dated 2nd August, 2024 from the bank as quoted
above and the email dated 6th August, 2024 also quoted above,
clearly suggest that the transactions in respect whereof the
aforesaid two affidavits have been furnished are doubtful
requiring further investigation by an independent agency.
24. This Court, therefore, enquired from Mr. Rawal, General
Manager of the RBI, whether the RBI can undertake the
investigation. Mr. Mahanta, Deputy Legal Advisor of the RBI
informs this Court that the RBI only has supervisory powers to
carry out sample inspections under Section 35A of the Banking
Regulation Act, 1949 but does not have the power to carry out
investigation into fraudulent transactions.
25. This Court therefore sought to peruse Section 35A of the
Banking Regulation Act, 1949 which is usefully quoted as under:-
"35-A. Power of the Reserve Bank to give directions.-
(1) Where the Reserve Bank is satisfied that-
(a) in the public; or
in the interest of banking policy; or
(b) to prevent the affairs of any banking company being
conducted in a manner deterimental to the interests of
the depositors or in a manner prejudicial to the
interest of the banking company; or
(c) to secure the proper management of any banking
company generally, it is necessary to issue directions
to banking companies generally or to any banking
company in particular, it may, from time to time, issue
such directions as it deems fit, and the banking
companies or the banking company, as the case may
be, shall be bound to comply with such directions.
(2) The Reserve Bank may, on representation made to it or
on its own motion, modify or cancel any direction
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issued under sub-section (1), and in so modifying or
cancelling any direction may impose such conditions
as it thinks fit, subject to which the modification or
cancellation shall have effect."
26. A perusal of the aforesaid Section makes it clear that
where the RBI is satisfied in public interest or in the interest of
banking policy or to prevent the affairs of any banking company
being conducted in a manner detrimental to the interests of the
depositors or in a manner prejudicial to the interests of the
banking company or to secure the proper management of any
banking company considers that it is necessary to issue directions
to the banking company (ies) it may, issue such direction(s) as it
deems fit, and the banking company(ies) shall be bound to
comply with such directions.
27. Section 56 of the Banking Regulation Act, 1949, provides
that the Banking Regulation Act shall apply to co-operative
societies with the modifications mentioned therein. In other
words, the Banking Regulation Act, 1949 also applies to co-
operative banks of the nature of Sawantwadi Urban Co-operative
Bank.
28. From the aforequoted email of 2 nd August, 2024
purportedly from the branch manager of the said co-operative
bank, it appears that the bank is already under directions issued
under Section 35A read with Section 56 of the Banking
Regulation Act, 1949 and that it has been stated in the said mail
that with effect from 14th June, 2023 there have been no RTGS /
NEFT transactions allowed by the bank with any customer of the
bank. It, therefore, prima facie appears that the affidavits filed by
Mr. Dipak Krushna Jadhav and Kishor Arjun Jadhav are false as
there is a clear contradiction in view of the said email of the
Bank, which position of non deposit / non receipt has also been
confirmed by the office of the Prothonotary & Senior Master as
well as the Applicant.
29. While the RBI can continue to monitor the compliance of
directions given under Sections 35A read with 56 of the Banking
Regulation Act, 1949 with respect to the Sawantwadi Urban Co-
operative Bank, this Court is of the view that the matter with
60. IAL 16702-23 in COMEXL 16273-23.doc
respect to the purported payments of Rs. 10 Crs. on 31 st May,
2024 and 5th July, 2024 requires to be investigated by the police
authorities.
30. Let the police authorities register a First Information
Report in this matter at the instance of the Applicant, within a
period of two weeks and thereafter the investigation be
preferably completed within a period of three months, keeping in
mind the above prima facie observations of this Court and submit
report to this Court in addition to taking steps as per law
including filing of chargesheet against concerned persons.
31. The Respondent, Mr. Harshawardhan Hanmant Sabale, to
furnish an undertaking to this Court that he would make the
payment of Rs. 20 Crs by way of Demand Draft in the name of
the Applicant viz. Cherag Shah by 9 th August, 2024. In addition,
the Respondent to also undertake that he would not leave the
Mumbai city under any circumstances and remain present in the
Court on every date when the matter is called out. Let the said
affidavit/undertaking be furnished during the course of the day.
32. Let the amounts lying in the banks accounts mentioned in
paragraph 12 above be transferred to the account of the
Applicant within a period of two weeks upon a communication
being addressed in this behalf by the Applicant to the said banks.
33. While this Court appreciates the assistance rendered by the
RBI officials, this Court directs them to remain present on the
next date as well, with an update, if any, in the matter.
34. List on 9th August, 2024. However, Mr. Parekh, learned
Counsel for the Respondent requests that the matter be listed at
02:30 p.m. on the said date. Accordingly, list on 9th August, 2024
at 2.30 p.m., when this Court will also consider passing
appropriate orders with respect to the breach of the orders of this
Court including under the Contempt of Courts Act, 1971 as well
as under Article 215 of the Constitution of India.
35. All to act on an authenticated copy of this order."
60. IAL 16702-23 in COMEXL 16273-23.doc
6. From the aforesaid facts and the series of orders passed by
this Court, it prima facie appears that the Respondent has not
only disobeyed the orders of this Court but has also defrauded
this Court as well as the Hon'ble Supreme Court and also failed
to comply with the undertaking given to this Court and that his
conduct is contumacious and egregious.
7. As can be seen, on 6 th August 2024, this Court had
recorded that this Court would consider passing appropriate
orders with respect to the breach of the orders of this Court
including under the Contempt of Courts Act, 1971 as well as
under Article 215 of the Constitution of India.
8. The orders clearly bear out that neither Rs.10,00,00,000/-,
as claimed to be deposited by the Respondent on 31 st May 2024
before the Hon'ble Supreme Court as well as this Court has been
deposited, nor the Rs.10,00,00,000/- claimed to have been
deposited pursuant to the Consent Terms filed in this Court, as
modified by orders by consent and claimed to be deposited on 5 th
July 2024, has been deposited as that could not have been
deposited, as is clearly borne out from the above facts. There was
an undertaking given to this Court on 6 th August 2024 that a
demand draft of Rs.20,00,00,000/- in favour of Mr.Cherag Shah,
the award creditor, would be presented before this Court on 9 th
August 2024 at 2.30 p.m., which undertaking has also admittedly
been breached, as even at 4.39 p.m., there is no sign of the
demand draft and the learned Senior Counsel appearing for the
Respondent fairly submits that the said demand draft is not in
place.
9. That being the position, the above facts, prima facie
demonstrate that the Respondent has committed contempt of this
Court.
10. Just when this order is being dictated and this Court was
considering the provisions of the Contempt of Courts Act as well
as Article 215 of the Constitution of India and the connected
High Court Rules, Mr.Kamat, learned Senior Counsel for the
Respondent, submits that he be given an opportunity to confer
with his client to take appropriate instructions.
60. IAL 16702-23 in COMEXL 16273-23.doc
11. After Mr.Kamat has conferred with his client and taken
instructions in the matter, Mr.Kamat submits that he has put to
his client to given an undertaking to the Court which would be
honoured and not like the ones given earlier and submits, on
instructions, that if time be given till Monday, 12 th August 2024,
4.30 p.m., his client would make good the payment. Mr.Kamat
submits that the Respondent would furnish a fresh undertaking
seeking extension of time to make the payment of
Rs.20,00,00,000/- to the Applicant by 4.30 p.m. on Monday, 12 th
August 2024.
12. Mr.Khandekar, learned Counsel for the Applicant,
vehemently opposes any request for time, submitting that the
conduct of the Respondent, thus far, in no way inspires any
confidence that he would honour his commitment even by
Monday, 12th August 2024 and that this Court apart from issuing
show cause notice under the Contempt of Courts Act, can
immediately commit the Respondent to civil prison under Order
XXI Rule 40(2) of the Code of Civil Procedure, 1908, ("CPC") in
as much as the notice under Order XXI Rule 37 of the CPC was
issued pursuant to order dated 11 th March 2024 and that the
current chain of events clearly demonstrate that the Respondent
has not been able to explain as to why he should not be
committed to civil prison in execution of the award and the
subsequent Consent Terms.
13. Mr.Khandekar also points out that even if a show cause
notice is issued under the Contempt of Courts Act, pending
determination of the charge, this Court can also direct the
Respondent to be detained in such custody, as it may specify.
14. I have heard the learned Counsel and also considered the
submissions. From the aforesaid facts, as noted above, prima
facie the conduct of the Respondent appears to be deliberate,
willful and contumacious. However, despite the aforesaid
finding, just so as to honour the request made by Mr.Kamat,
learned Senior Counsel appearing for the Respondent, to give
time to the Respondent till 4.30 p.m. on Monday, 12 th August
2024, this Court deems it appropriate to list the matter on
Monday, 12th August 2024, at 4.30 p.m. Let the undertaking as
submitted by Mr. Kamat, learned Senior Counsel be furnished
60. IAL 16702-23 in COMEXL 16273-23.doc
today itself.
15. Even though this Court, in view of the submissions made
by the learned Senior Counsel, is granting time to the
Respondent to make payment of Rs.20,00,00,000/- in the name
of the Applicant by Monday, 12th August 2024, in view of the
breaches of the orders of this Court and prima facie
contumacious and egregious conduct of the Respondent, as
described above, this Court is inclined to issue show cause notice
under the Contempt of Courts Act.
16. However, just as this part of the order has been dictated,
Mr.Kamat, learned Senior Counsel for the Respondent, urges this
Court to postpone the issuance of the show cause notice till
Monday, 12th August 2024, in as much as, the learned Senior
Counsel believes that one last opportunity be granted to the
Respondent to purge the contempt.
17. Therefore, only by way of sheer indulgence to the learned
Senior Counsel this Court postpones the issuance of show cause
notice under the Contempt of Courts Act till Monday, 12 th
August, 2024. List on 12th August 2024 at 4.30 p.m.
18. The Respondent is also directed to remain present in Court
on the next date. The Reserve Bank of India officials as well as
the officials of the Sawantwadi Urban Co-operative Bank Officials
also to remain present on the next date."
iii. This Court had accordingly recorded that in the facts of the case,
prima facie there was contempt of this Court committed by the
Respondent. Thereafter, only to give one last indulgence at the request
of the learned Senior Counsel then appearing for the Respondent in the
matter, as recorded in the said order dated 9 th August, 2024, this Court
had posted the matter today at 4.30 p.m. However, despite a second
60. IAL 16702-23 in COMEXL 16273-23.doc
undertaking dated 9th August, 2024, to this Court to make payment of
Rs. 20 Crs in favour of the Award Creditor and to remain present in this
Court at 4.30 p.m. today and not to leave the jurisdiction of the
municipal limits of Mumbai, the Respondent has breached the
undertaking and this time in toto.
iv. On 9th August, 2024, as noted in the order reproduced above, this
Court was inclined to issue a show cause notice against the Respondent
under the Contempt of Courts Act but only at the request of learned
Senior Counsel appearing for the Respondent to grant one last
opportunity to the Respondent to purge his contempt, this Court had
granted indulgence and postponed the issuance of show cause notice
till today.
v. Accordingly, having inter alia noted that even the undertaking
given on 9th August, 2024 to make the payment of Rs. 20 Crs and not to
leave the jurisdiction of this Court and also to remain present on every
date when the mater is listed, has been breached, this Court deems it
appropriate to direct the Registry to issue a show cause notice under
the Contempt of Courts Act, 1971 in Form I as provided in the High
Court Rules, to appear before this Court on 26th August, 2024 and to
60. IAL 16702-23 in COMEXL 16273-23.doc
show cause as to why he should not be punished with maximum
punishment of imprisonment and fine, in accordance with the
Contempt of Courts Act, 1971.
vi. Let the Respondent positively remain present in the Court on the
next date, when this Court will also consider the submissions made on
behalf of the Applicant urging this Court to pass appropriate orders
under Order 21 Rule 40 (2) and order 21 Rule 41 (3) of the Code of
Civil Procedure, 1908.
vii. Let the Demand Draft of Rs. 2 Cr., copy whereof is at page 39 of
the affidavit of the Respondent dated 12 th August, 2024, as in the name
of Prothonotary & Senior Master be deposited with the Prothonotary &
Senior Master by the end of tomorrow.
viii. Let Mr. Sharma take instructions as to when the balance amount
would be deposited in Court.
ix. Let a response to the Respondent's affidavit dated 12 th August,
2024 be filed by the Applicant by the next date.
60. IAL 16702-23 in COMEXL 16273-23.doc
x. Let Mr. Sharma file his vakalatnama within a period of one
week.
xi. List on 26th August, 2024 First on Board.
(ABHAY AHUJA, J.)
