Delhi High Court

Mtech Solutions vs Pclit Solutions Pvt. Ltd. on 31 July, 2009

Author: Manmohan Singh

*           HIGH COURT OF DELHI : NEW DELHI

+              CCP No.132/2007 in OMP No.320/2007

                      Judgment reserved on:        13th July, 2009

%                     Judgment decided on :         31st July, 2009

MTECH SOLUTIONS                            ......Petitioner
              Through: Mr. C. Mukund, Adv. with Ms. Vandana
                       Anand, Adv.

                      Versus

PCLIT SOLUTIONS PVT. LTD.                     .....Respondent
                Through: Mr. Anil Sapra, Adv.

Coram:

HON'BLE MR. JUSTICE MANMOHAN SINGH

1. Whether the Reporters of local papers may
   be allowed to see the judgment?                                    No

2. To be referred to Reporter or not?                                 Yes

3. Whether the judgment should be reported                            Yes
   in the Digest?

MANMOHAN SINGH, J.

1. By this order I shall dispose of CCP No. 132/2007 in OMP

No. 320/2007. The present application has been filed by the petitioner

under Sections 2, 10 & 12 of the Contempt of Courts Act, 1971 read

with Section 151 of the CPC, 1908 and the following prayers have been

made thereunder:

(i) Pass an appropriate order against the contemner for

violating the order dated 04.06.2007 (and subsequent

orders continuing this order) passed by this court and

continued by the Arbitral Tribunal;

(ii) Appoint a local commissioner to determine all relevant

facts and bring the same to the notice of this court;

(iii) Direct the contemner to comply with the terms of the said

order, both in letter and in spirit;

      (iv)     Grant the costs of this petition in favour of the petitioner

               and against the respondent, and

      (v)      Such other order as this court may deem fit.

2. The brief facts leading up to this application are as follows.

The petitioner filed OMP No. 320/2007 wherein it was prayed inter alia

that the respondent be restrained from causing any disturbances or

hindrances in the calling process of the petitioner and be directed to

abide by all the provisions of the Campaign Services Agreement till the

Arbitrator decides the disputes between the parties.

3. In the petition filed under Section 9 of the Arbitration and

Conciliation Act, 1996 it was alleged that the petitioner has been regular

with its payments to the respondent as is evident from the fact that the

respondent has never approached this or any other court as regards any

inadequacy in the said payments.

4. This court, by order dated 4th June, 2007 issued an ad interim

order to the following effect:

"The petitioner is directed to make all payments up to date if not already made within a period of one week from today. Till the next date of hearing the respondent is hereby restrained from causing any interference and disturbance in the calling process of the petitioner."

5. In spite of this, the respondent issued a termination notice

dated 31st July, 2007 thereby unilaterally terminating the Campaign

Services Agreement. In lieu of this act of the respondent, the petitioner

vide I.A No. 9042/2007 prayed that the respondent and its agents be

restrained from suspending/terminating the Campaign Services

Agreement and from acting on the termination notice dated 31st July,

2007.

6. Pursuant to this application, this court passed an order dated

31st August, 2007 while disposing the main OMP itself by observing

that the interim order dated 4th June, 2007 should continue for seven

days only during which period the Arbitrator may grant whatsoever

relief he/she considers appropriate.

7. As regards termination of the agreement, the said issues were

left to be urged before the Learned Arbitrator. The Ld. Arbitrator

Hon‟ble Justice Ms. Manju Goel (Retired) held in order dated 7th

September, 2007 that the restraining order passed by this court on 4th

June, 2007 be extended till 12th September, 2007 subject to the claimant

furnishing a bank guarantee of Rs. 6 lakhs. On 12th September, 2007 it

was held that as the arguments were inconclusive, the restraining order

was to continue till 17th September, 2007.

8. The petitioner submits that the respondent‟s act of

terminating the Campaign Services Agreement vide notice dated 31st

July, 2007 is in violation of this court‟s order dated 4th June, 2007. The

respondent, as regards any activity on its part relating to the Campaign

Services Agreement, clearly states that as the very agreement which

underlies the calling process has been terminated, the respondent is

under no obligation to take any action what so ever.

9. The petitioner also submits that in a final act of flagrant

violation of this court‟s orders, the respondent on 11th September, 2007

completely shut down the operations of the petitioner as of 5.30 AM by

maliciously not providing the requisite telephone lines (T1s) and the

telephone minutes (PSTN). Without the said T1s and the PSTN, the

petitioner cannot make any phone calls at all and its entire operation

comes to a standstill. Thereafter, the petitioner made several requests to

the respondent asking the latter to provide the T1s and PSTN, but to no

avail.

10. In letter dated 13th September, 2007 the petitioner conveyed

to the respondent that it was aware that the latter had not paid its dues to

a vendor COLO in Atlanta, Georgia, USA and that it was due to this

non-payment on part of the respondent that the requisite T1s and PSTN

were not being provided to the petitioner. The petitioner again requested

the respondent to either pay its dues to the vendor or to provide an

alternate arrangement whereby the requisite T1s and PSTN would be

made available to the petitioner in order for it to carry on its calling

process.

11. The petitioner submits that the respondent has carried out

petty acts such as not providing cleaning agent to the cleaning persons

for the washrooms of the call centre of the petitioner, all in an attempt to

hinder its operations. In view of these blatant and wilful violations of

the continued restraining order by the respondent, the petitioner has

filed the present contempt application.

12. In its reply to the present application, the respondent has

stated that the petitioner has been filing application after application

with this court as well as with the arbitral tribunal only with the intent of

harassing the respondent. The respondent also submits that the

Contempt of Courts Act is not applicable to the present proceedings as

the interim order was passed by this court under Section 9 of the

Arbitration and Conciliation Act, 1996.

13. As regards the provision of T1s and PSTN, the respondent

submits that it is a company in USA which provides the same to the

petitioner. The petitioner is alleging contempt against the respondent on

a ground which is not even an obligation of the respondent under the

agreement between parties. Under the agreement, the respondent was

only supposed to facilitate the connection provided by that company so

that the agents employed by the petitioner could run the campaigns. The

petitioner, as per the respondent, is trying to confuse issues and trying to

make it appear as if it is the respondent who is responsible for providing

the said connections to the petitioner thereby making it seem as if the

respondent is obstructing the petitioner‟s work and consequently,

violating the directions of this court. The respondent further submits that

the petitioner had moved an application for a direction to the respondent

to provide T1s and PSTN but the Learned Arbitrator after hearing the

parties did not pass any order in favour of the latter.

14. The respondent submits that T1s and PSTN were provided to

the petitioner via a DS-3 since the date of agreement i.e. 7th May, 2007

effective from 10th May, 2007. Further, it is alleged that the petitioner

had not enough work and therefore the said company withdrew some of

its T1s. One T1 has 24 telephone lines and one DS-3 has 28 T1s making

it in all 672 lines.

15. The respondent submits that the petitioner had, at any point

in time, not more than 116 agents using the facilities thereby making

even 5 T1s sufficient as 5 T1s means 120 telephone lines which are

adequate for 116 agents. The respondent also states that as per the log

sheet available with it, the petitioner had at no time from 10th May, 2007

onwards more than an average of 10 agents working on any day. On a

perusal of the said log sheet it is clear that the reason for the service

provider withdrawing its services is that the petitioner did not have

sufficient number of agents to use the provided T1s.

16. The respondent submits that the telephone company earns a

fixed rent on the T1s provided as well as the variable cost which a

consumer is liable to pay for the use of telephone lines, i.e. calls made.

In the petitioner‟s case, the use of telephone lines was virtually nil

which compelled the service provider to first reduce the number of T1s

provided and then to completely withdraw its services.

17. It is the respondent‟s contention that with a view to

circumvent payment of fixed charges and specific directions contained

in this court‟s order dated 4th June, 2007, the petitioner started writing

various letters making allegations therein that the respondent was not

providing complete infrastructure etc to it. It is also submitted that the

respondent does not run any telephone company and it was, under the

agreement, only to facilitate the connection of T1s and PSTN. The

respondent has also denied, during the course of argument, that the

respondent is in default of any dues to a vendor and it was due to non-

payment that the said service was withdrawn.

18. Learned counsel for the respondent has referred Clause 1.1

„c‟ of Exhibit A of the Campaign Services Agreement dated 7th May,

2007 provides as under:

"c. CALL CENTER shall provide International Private Leased Circuit, T1s, Servers, Multiplexers remote end, Internet on all seats, PSTN, Dialer services and Support services."

And also, the MOU dated 7th May, 2007 between the parties

which adds to the above-mentioned clause. The relevant portion of

clause 3 of the MOU states the following:

"(3) In the beginning, the CLIENT is planning to apply and get its own PSTN facility through a company called TSI, situated in the USA. The CLIENT is planning to pay a security deposit to TSI for PSTN and will make periodic usage payments to TSI directly in this connection. However, the CLIENT has right to request the CALL CENTER to provide the PSTN, as envisioned in the Agreement, anytime in future by giving a 15 day notice. At the time of such notice only, appropriate PSTN deposit, which is estimated to be $5450, will become payable."

19. The respondent has denied the receipt of the letter dated 13 th

September, 2007 in its reply. As regards the respondent‟s contention

that the Contempt of Courts Act is not applicable to the present

proceedings as the interim order was passed by this court under Section

9 of the Arbitration and Conciliation Act, 1996, Section 42 of the

Arbitration and Conciliation Act, 1996 provides:

"Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court."

20. In light of the clear intention of the statute conveyed through

the above-stated section which gives jurisdiction to this court over the

arbitral proceedings as well as any subsequent application with regard to

the same, the contention of non-maintainability by the respondent

cannot be accepted.

21. I have gone through the submissions and relevant documents

submitted by the parties. On a perusal of the MOU between the parties,

it appears that the petitioner had voluntarily planned to obtain the

requisite T1s and PSTN from the American company TSI. The

petitioner went from a full fledged operation with more than 100

employees which was later on reduced to only 10-15 employees as the

said connection was not being provided by the American company.

Further, it appears from the pleadings that these 10-15 employees were

sitting idle due to absence of the PSTN connection.

22. The injunction order granted by this court was for restraining

the respondent from causing any interference and disturbance in the

calling process of the petitioner. In view of these clear facts, I find

myself agreeing with the Learned Counsel for the respondent. The

situation of the plaintiff did not allow it to pay rent and other fixed

charges, which led the respondent to terminate the agreement between

the parties.

23. The respondent has denied the averment made by the

petitioner in its petition. Respondent‟s contention is that firstly, the

requisite connection was not being provided by the Company in USA,

secondly, that no payment was being made by the petitioner and

thirdly, that the employees of the petitioner were sitting idle. In such

circumstances, the respondent had no other alternative but to terminate

the contract and appropriate proceedings in this regard are pending

before the Arbitrator. The question of causing any interference and

disturbance in the calling process by the respondent does not arise

under these circumstances.

24. As the injunction restraining the respondent was limited to

non-interference with the petitioner‟s calling process, the respondent

has not apparently disobeyed the restraining order of this court as it has

not directly or deliberately caused any such interference. The

respondent‟s act of terminating the agreement due to drawbacks in the

petitioner‟s work is not an intentional or deliberate attempt on its part to

violate this court‟s order, in fact, it appears that circumstances took such

a turn that no other course was available to the respondent. In my

opinion the respondent‟s act does not sum up to be an act of wilful

disobedience of court orders.

25. In the case of Vijay Pandit v. GR Investment India Pvt.

Ltd. & Anr, CCP No. 132/2008 in CS (OS) No. 214/2002 decided on

6th April, 2009 by this Court, it was held as follows:

"14. Exercise of power under Contempt of Courts Act of 1971 is comparatively a rarity and has to be used sparingly and in the larger interest of society and for proper administration of justice. Mere disobedience of an order may not be sufficient to amount to a „civil contempt‟ within the meaning of Section 2(b) of the Act of 1971. The element of willingness and intention is an indispensable requirement to take action. If two interpretations are possible as to the action of the alleged contemnor and one of such interpretations raises doubts about the wilful nature of his conduct, contempt will not be made out. The Supreme Court of India.

26. In the case of Perspective Publications (Pvt.) Ltd. v. State

of Maharashtra AIR 1971 SC 221 at page 230 it was held as under :

"The summary jurisdiction by way of contempt must be exercised with great care and caution and only when its exercise is necessary for the proper administration of law and justice." (Perover, J.) Contempt of Court is essentially a matter which concerns the administration of justice and the dignity and authority of judicial Tribunals. It is not a right of a party to be invoked for the redress of his grievances. It is also not a mode by which the rights of a party, adjudicated upon by a Tribunal can be enforced against another party. Moreover, if the matter, as in the present case, requires a detailed enquiry, it must be left to the Court which passed the order and which presumably is fully acquainted with the subject-matter of its own order. When the matter relates to mere infringement of an order, as between parties, it is clearly inexpedient to invoke and exercise contempt jurisdiction as a mode of executing the order, merely because other remedies may take time or are more circumlocutory in character. Contempt jurisdiction should be reserved for what essentially brings the administration of justice into contempt or unduly weakens it."

27. It is made amply clear by the above-quoted observation that

in order for there to be contempt by a party against court orders, it must

appear that :

(i) there is an element of willful disobedience, i.e. an

intentional and deliberate attempt by the alleged contemnor

to violate orders consciously, and

(ii) no two interpretations are possible as regards the alleged

act of violation and the single interpretation afforded by

such act clearly indicates that there was willful

disobedience.

28. It is my opinion that in the present case, two interpretations

are possible as to the action of the respondent and one of these

interpretations clearly raises doubts as to any deliberation on the

respondent‟s part to act in contempt of this court‟s orders. As has been

mentioned above, I believe that circumstances compelled the respondent

to terminate the agreement with the petitioner. Further, the petitioner

voluntarily wanted the connection to be provided by the American

company TSI and the respondent was not responsible for the same.

Further still, the injunction only restrains respondent‟s interference with

the petitioner‟s calling process.

29. Willful disobedience by a party of the orders of a judicial

authority causes damage to the dignity of those orders and consequently,