Tecon Projects Pvt. Ltd. vs Sanjay Mehta & Ors.
2012 Latest Caselaw 6152 Del

        IN THE HIGH COURT OF DELHI AT NEW DELHI
                                                     (Reportable)
            CCP (O) No.16 of 2009 in O.M.P. 495 of 2008

                                              Reserved on: 7th September, 2012
                                              Decision on: 12th October, 2012

        TECON PROJECTS PVT. LTD.                 ..... Petitioner
                     Through: Mr.    Harish  Malhotra,       Senior
                               Advocate with Mr. Vikas Sharma,
                               Advocate.

                                        Versus

        SANJAY MEHTA & ORS.                                      ..... Respondents
                    Through:                  Mr. Y.P. Narula, Senior Advocate
                                              with Mr. Aniruddha Choudhury,
                                              Advocate for Canara Bank.


        CORAM: JUSTICE S. MURALIDHAR

                                       JUDGMENT

12.10.2012

1. Contempt Petition C.C.P. No. 16 of 2009 has been filed by Tecon Projects Private Limited ('Tecon'), the Petitioner in O.M.P. No. 495 of 2008, under Sections 11 and 12 of the Contempt of Courts Act, 1971 complaining of wilful breach, disobedience and violation by the Respondents of the order dated 18th September 2008 passed by the Court in O.M.P. No. 495 of 2008.

Background facts

2. The background to the contempt petition is that Tecon specializes in design, engineering, manufacture, supply, erection and commissioning of bulk material handling systems. M/s Kolsons International ('Kolsons') had

been awarded the work of design, engineering, manufacture, supply erection and commissioning of material handling system for the Respondent in O.M.P. No. 495 of 2008 Gulf Sponge Iron Company Limited ('Gulf') at ICAD-1 Mussfah Abu Dhabi, UAE. For this purpose, Kolsons entered into an agreement dated 29th May 2007 with Gulf. The stipulated date of completion was 30th April 2008. Tecon stated that it was approached by Kolsons immediately thereafter for execution of the said work on its behalf. In terms of the agreement, the contract could be assigned by Kolsons in favour of Tecon subject to the approval by Gulf. This was formalized by a letter dated 30th May 2007 awarded to Tecon which was accepted by it on 1st June 2007.

3. It is not necessary to set out in detail the dispute that arose between the parties in relation to the execution of the said work by Tecon. What is relevant is that Gulf opened a Letter of Credit ('LC') dated 22nd October 2007 in favour of Tecon for US Dollar ('USD') 1,646,800 after 100 days. Under Clause 4.4 of the agreement entered into between the parties, the LC was to be received by Tecon within 40 days of the agreement. Since there was delay in approval of the designs and drawings, meetings were held between the parties. As a result the time schedules got revised.

4. On 23rd February 2008, Tecon furnished a Bank Guarantee ('BG') in the sum of USD 411,700 in favour of Gulf through Tecon's bankers i.e. Canara Bank, Barakhamba Road, New Delhi. This was to secure the advance that was released by Gulf to Tecon which was to be adjusted as and when payment was made of the bills raised by Tecon for the work done under the contract. One of the conditions in the BG was that "this guarantee shall stand

reduced to the extent of advance adjusted against the bill raised on the buyer." The disputes between the parties remained unresolved and the contract could not proceed as scheduled.

Tecon's case in the Section 9 petition

5. In O.M.P. No. 495 of 2008, filed in this Court under Section 9 of the Arbitration and Conciliation Act, 1996 ('Act'), Tecon stated that even while it was executing the work "suddenly for no justification" they were informed by their bankers that by letter dated 30th July 2008 Gulf informed HSBC bank that it had cancelled the contract. However, no formal intimation was sent to Tecon. According to Tecon, till that date it had raised bills of the value of USD 460,023.38 on Gulf against which it had received a sum of USD 50,683.39. Consequently, there was a balance of USD 409,339.99. Gulf was accordingly informed on 3rd September 2008. In addition Tecon also claimed that it was entitled to USD 500,000 towards its claim against Gulf. However, Tecon apprehended that Gulf would encash the BG and use the drawings and designs prepared by Tecon for executing and completing the contract in violation of the agreement.

6. According to Tecon, Gulf was trying to take undue advantage of its dominant position by arm twisting Tecon to agree to a mutual cancellation. Further, Tecon alleged that in view of the fluctuating dollar price Gulf had become dishonest and it had, therefore, cancelled the contract with Tecon. In para 31 of O.M.P. No. 495 of 2008 Tecon stated that the advance for which the BG was furnished was liable to be adjusted against the bill dated 1st August 2008 for USD 205,850 raised by it. No payment had been received from Gulf. Consequently, if USD 409,339.99 due from Gulf was

adjusted against the advance BG then the amount payable thereunder would stand reduced to USD 2,360. In the circumstances, it was stated that action of Gulf threatening to invoke the BG was illegal and fraudulent. In paras 34 to 36 of O.M.P. No. 495 of 2008 Tecon repeatedly pleaded that it had suffered on account of fraud and misrepresentations of Gulf. Tecon's prayer in O.M.P. No. 495 of 2008 inter alia read as under:

"restrain the respondent their agents assigns, successors, executors, employees from encashing the advance bank guarantee bearing No. 0179FOG0082008 dated 23/2/08 for USD 411700 issued by Canara Bank, Barakhamba Road, New Delhi and send the intimation to Manager, Canara Bank, Barakhamba Road, New Delhi to not to remit any amount to the respondent."

The order dated 18th September 2008

7. On 18th September 2008 this Court passed the following order:

"Issue notice to the respondent, upon the petitioner taking requisite steps through all modes, including electronic media, returnable on 28th November, 2008.

The senior counsel for the petitioner has, at this stage, prayed for interim relief with respect to the encashment of the bank guarantee. The bank guarantee has been given in pursuance to the agreement, as per Clause 5.1 whereof the bank guarantee was against the advance of 20% paid by the respondent to the petitioner and to secure the said advance. It is further provided that the advance bank guarantee shall stand reduced to the extent of advance adjusted against the bill raised by the petitioner on the respondent. It is contended that the petitioner has already raised bills of USD 460023.38 against the bank guarantee for a sum of USD 411700 and it is argued that the said bills have not been disputed or controverted by the respondent and the respondent has not denied the liability to pay the said bills. The bank guarantee also, though providing for payment by the bank without any

demur and merely on the first demand from the respondent, also provides that the guarantee shall stand reduced to the extent of advance adjusted against the bills raised on the respondent. It is, therefore, argued that the threatened action of the respondent of invoking the bank guarantee for the entire amount is contrary to the terms of the bank guarantee itself, since as per its terms the guarantee was to stand reduced to the extent of the bills raised and which are stated to have been raised.

Considering that the respondent is a foreign party and in the event of the petitioner succeeding, irretrievable injury may be caused to the petitioner and further since the rights of the respondent can be protected by imposing the conditions on the petitioner to renew and keep the bank guarantee alive and to also pay interest to the respondent for the delay, if any, in release of the amount under the bank guarantee to the respondent, I deem it appropriate to grant ad interim ex parte order. The respondent, till the next date of hearing, is restrained from encashing the advance bank guarantee No.0179FOG0082008 dated 23.02.2008 for USD 411700 issued by Canara Bank, Barakhamba Road, New Delhi. This shall, however, be subject to the petitioner immediately taking steps for renewal of the extension of bank guarantee and having the same so renewed/extended, at least, for a period of three months from today and to pay interest for delay, if the stay is vacated and to which the counsel for the petitioner has agreed.

A copy of this order be given dasti to the petitioner under signature of court master for communication to the bank."

The counter Bank Guarantee issued by Canara Bank

8. In the documents enclosed with the petition of Tecon was a copy of the (counter) BG dated 23rd February 2008 issued by Canara Bank. The said BG was sent to the HSBC Bank, Middle East Limited, Dubai. The relevant

portion of the said BG read as under:

"At the request of our customer M/s. Tecon Projects Private Limited, B159 Sector 63, Noida, District Gautam Budh Nagar - 201307, UP, India, we request you to issue your advance payment guarantee for USD 411,700.00 (USD four hundred eleven thousand seven hundred only) against our counter guarantee No. 0179FOG0082008 dated 23-Feb-2008.

Quote To Gulf Sponge Iron Co. Ltd., P O Box No. 8795 Mussafah Abu Dhabi, U.A.E.

In Consideration of Gulf Sponge Iron Co. Ltd., P.O. Box No. 8795, Mussaffah, Abu Dhabi, U.A.E. (hereinafter called the 'Overseas Buyer') and Tecon Projects Private Limited, having its registered office at C-516, Sarita Vihar, New Delhi 110 044, India (hereinafter called 'the Said Supplier') entered into a contract for design, engineering, manufacturing, supply, erection and commissioning of material handling system for USD20,58,500 (USD two million fifty eight thousand five hundred only) as per contract No. GSPI/MH/1 dated 29-May-2007. The supplier has agreed to furnish a bank guarantee for USD411,700.00 (USD four hundred eleven thousand seven hundred only) being 20 per cent of the contract price to cover the advance. We ............... (Bank's name and address) do hereby undertake to pay the damage caused to or suffered by the overseas buyer by reason of any breach by the said supplier."

9. The above counter BG also stated that "this guarantee shall stand reduced to the extent of advance adjusted against the bill raised on the buyer" and that "this letter of guarantee is subject to Uniform Rules for Demand Guarantee 1992 revision International Chamber of Commerce Publication No. 458." The said counter guarantee was valid up to 7th June 2008 and thereafter up to 22nd September 2008.

Events leading to the contempt petition

10. The contempt petition came to be filed in the following circumstances. HSBC by an affidavit filed on 6th April 2010 in O.M.P. No. 495 of 2008 informed the Court that pursuant to the assignment of the supply contract by Kolsons in favour of Tecon, Gulf had given Tecon an advance on the sum of USD 411,700 being 20% of the contract price against the supply of equipment. Tecon had to furnish Gulf a BG for the aforementioned sum. HSBC received a request from Canara Bank through a swift message dated 24th February 2008 to issue an advance payment guarantee ('APG') and in lieu thereof Canara Bank would execute a counter BG in the same sum in favour of HSBC. Accordingly, Canara Bank executed the counter BG No. 0179FOG0082008 dated 23rd February 2008 in favour of HSBC.

11. In response to the swift message, HSBC wrote to Canara Bank asking it to carry out certain amendments as suggested by HSBC. The amended terms were confirmed by Canara Bank by its swift message dated 22nd March 2008. Pursuant to the above communication, HSBC issued an APG being Guarantee No. APG/GTY/081813/C dated 25th March 2008 for a sum of USD 411,700 in favour of Gulf. This APG was extended from time to time up to 22nd September 2008.

12. By letter dated 8th September 2008 Gulf lodged a valid claim with HSBC on 15th September 2008 asking it to encash the APG and credit the proceeds to its account. Pursuant thereto HSBC sent an intimation to Canara Bank by swift message dated 18th September 2008 invoking the counter BG and asking Canara Bank to make arrangements to pay HSBC a sum of USD 411,700.

13. In response to HSBC's said swift message, Canara Bank sent its first swift message on 20th September 2008 informing HSBC that the Court had restrained the beneficiary from encashing the APG dated 23rd February 2008 issued by Canara Bank till the next date of hearing. HSBC understood the number of the BG in the Canara Bank's swift message as actually referring to Canara Bank's counter BG and not the APG. Therefore, HSBC was not clear whether in fact the Court had stayed payment of the APG. By a second swift message on the same date i.e. 20th September 2008 Canara Bank informed HSBC that there was a Court order restraining Canara Bank from making payment of the BG without specifying which BG was being referred.

14. On 22nd September 2008 HSBC advised Canara Bank that it had made payment of USD 411,700 to Gulf "towards a valid claim received from them as the beneficiary under the Advance Bank Guarantee." HSBC therefore called upon Canara Bank to reimburse USD 411,700 to HSBC's account in New York. On 23rd September 2008 HSBC received another swift message from Canara Bank which stated that Canara Bank had couriered a copy of the order passed by the Court to HSBC. On 24th September 2008 for the first time Canara Bank informed HSBC that since Tecon had raised certain bills on Gulf the amount under the APG stood reduced by USD 409,340. Canara Bank requested HSBC to recall the amount paid to Gulf to the above extent. Since by then the payment under the APG had already been made by it, HSBC sent a swift message to Canara Bank on 24th September 2008 pointing out that the alleged bill raised by Tecon upon Gulf had not been notified in time to HSBC and was therefore not binding on HSBC. Canara Bank pressed Tecon to make payment. On 31st October 2008, Canara Bank

informed Tecon that it had made payment to HSBC. When Tecon failed to deposit the amount in its account, Canara Bank froze Tecon's account. In the above circumstances, Tecon filed the present contempt petition.

Proceedings in the contempt petition

15. In the contempt petition Tecon arrayed the Chief Executive Officer ('CEO') and Deputy General Manager of Gulf as Respondent Nos.1 and 2. Canara Bank was arrayed as Respondent No.3 and HSBC Bank as Respondent No.4. Tecon's main grievance was that despite the order passed by this Court on 18th September 2008, the Respondents had proceeded to encash "the bank guarantee" and therefore they should be held to be in contempt and asked to refund/return USD 411,700 to Tecon.

16. In its reply to the contempt petition, Canara Bank narrated the entire sequence of events. In particular, it highlighted Clause No.4 of the clarifications/confirmations that was incorporated in the counter BG which read: "our counter guarantee and your guarantee is governed by and construed in all respects in accordance with the laws of UAE". It was Tecon which conveyed to Canara Bank by its letter dated 3rd March 2008 that HSBC required the above confirmation. Therefore, Tecon was fully aware of the requirement of HSBC as regards furnishing of a counter BG by Canara Bank. In its affidavit dated 16th April 2010, Canara Bank pointed out that HSBC had forwarded to Canara Bank a copy of APG issued by it in favour of Gulf on 25th March 2008 which, apart from stating that the APG would be governed and construed in accordance with the laws of UAE provided as under:

"We undertake to pay the Overseas Buyer any money so

demanded notwithstanding any disputes raised by the Supplier in any suit or proceeding pending before any court or tribunal relating thereto our liability under the present being absolute and unequivocal. The payment so made by us under this Bond shall be valid discharge to our liability for payment thereunder and the Supplier shall have no claim against us for making such payments."

17. Canara Bank contended that despite being aware of the above facts, Tecon failed to implead either Canara Bank or HSBC as parties to O.M.P. No.495 of 2008; Tecon did not inform the Court that an APG favouring Gulf was issued by HSBC and that Canara Bank had only issued a counter BG and that too in favour of HSBC and not Gulf. In particular, Canara Bank pointed out that Tecon could not have sought any restraint order against Gulf from encashing the counter BG issued by Canara Bank in favour of HSBC. Further such remedy if at all was available only before the Courts in the UAE.

18. Referring to the correspondence following the orders passed by the Court, Canara Bank stated that by its swift message dated 29th September 2008 HSBC took the stand that the order passed by the Court was in respect of Canara Bank's counter BG in favour of HSBC and not the BG issued by HSBC in favour of Gulf. It was in these circumstances that Canara Bank paid the amount under the counter BG to HSBC on 31st October 2008 in order to safeguard its interest and to avoid its other liabilities to HSBC.

The order dated 19th January 2011

19. This Court has passed a detailed order in the contempt petition on 19th January 2011. After noticing some of the above facts the Court held that

there was no case for proceeding in contempt against Gulf inasmuch as they had invoked the APG on 8th September 2008 prior to the order dated 18th September 2008. It had not been shown by Tecon that "Gulf had been served either with the stay order passed by this Court, or even informed of the details of the said OMP". It was held that the mere acceptance of the funds by Gulf from HSBC Bank, Dubai in respect of the APG which had already been invoked on 8th September 2008 could not be said to be wilful disobedience of the order passed by this Court.

20. As far as HSBC was concerned, the Court observed that "its action in making payment under its guarantee to Gulf appears to be questionable". It could not strictly be held that HSBC was in wilful disobedience of the order "inasmuch as there was no restraint in relation to the bank guarantee issued by HSBC Bank, Dubai and they had not been served with the copy of the order by 22nd September 2008, when they made the payment under their own guarantee."

21. As regards Canara Bank, the Court observed as under:

"21. So far as the Canara Bank is concerned, I find absolutely no justification for its conduct of making payment under its own guarantee which had been squarely stayed by this court and the Canara Bank had been duly served with the order passed by this court. Merely because HSBC Bank, Dubai was pressing for payment under the said guarantee was no ground for Canara Bank to disregard the order passed by this Court. If it were so minded, it should have approached this court for clarification or vacation of the injunction order. The stand taken by the Canara Bank in its letter dated 31.10.2008 that its higher authorities had advised the bank to pay the invoked amount is in the teeth of the

interim order of injunction granted by this court. No authority is above the law, and once there was an order passed by this court - whether right, wrong or indifferent, that order was bound to be obeyed by all authorities including those of the Canara Bank.

22. It is clear that the second communication dated 10.12.2008, whereby the petitioner is claimed to have absolved the Canara Bank of its liability in making payment under its guarantee, was extracted from the petitioner. This is evident from the first communication dated 10.12.2008 issued by the petitioner to the Canara Bank wherein the petitioner stated as follows:

"Gulf Sponge Iron Co. Bank Guarantee Encashment: We have time and again informed Canara Bank that the encashment of the Bank Guarantee done by our clients is wrong and illegal and the payment against the same should not be sent to them. However, as per your performa we are enclosing the letter required by the bank to op0erate our bank normally."

23. As the Canara Bank has made payment despite the injunction being granted by this court, it is not entitled to recover the said amount from the petitioner. It is, therefore, accordingly, directed that the amount of US $411700/- debited to the petitioner's account by conversion of US $411700/- should be credited to the petitioner's account and status quo ante should be restored in all respects. This is, however, without prejudice to the rights and obligations of the parties.

24. The contempt petition is dismissed so far as respondents No. 1, 2 and 4 are concerned.

25. Issue notice to the Manager, Canara Bank, Barakhamba Road Branch, New Delhi requiring him to be present in person in court on the next date to show cause as to why he should not be punished for contempt

of court."

Order of the Division Bench

22. Aggrieved by the above order, Canara Bank filed Contempt Appeal (C) Nos.8-9 of 2011, in which, the Division Bench while issuing notice on 10th May 2011 stayed the order and directed status quo to be maintained "in respect of the amounts deposited by the Bank in the accounts of the Respondent".

23. Thereafter, on 5th March 2012, the Division Bench passed the following order:

"Learned counsel for R-3 states that R-4 has received the services of Gulf Sponge Iron Co. Ltd and thus she will not be able to represent R-4 and the service of R-4 has been effected on her as she was the counsel earlier. The lis in the present appeal is, however, really between the appellant and R-4.

The occasion for the appellant to file the appeal arose on account of the directions contained in para 23 of the impugned order dated 19.01.2011 passed on CCP(O) No.16/2009 as it has civil consequences. To that extent, the interim order dated 10.05.2011 directing status quo to be maintained in respect of the amount deposited by the Bank in the account of R-1, takes care of the position. However, there cannot be stay of the contempt proceedings itself as it is for the appellant to persuade the learned Single Judge that no case of contempt is made out and it is naturally open to the appellant to urge whatever pleas are permissible in this behalf before the learned Single Judge.

It is, thus, agreed that the present appeal be disposed of with the direction that the CCP(O) No.16/2009 be heard on merits and insofar as the directions contained in the

order dated 19.01.2011, which have civil consequences, are concerned till the decision of the CCP(O) No.16/009, the interim arrangement envisaged by the order dated 10.05.2011 would continue to enure for the benefit of the appellant.

The appeal and the applications stand disposed of.

The parties to appear before the learned Single Judge in CCP (O) No.16/2009 on 30.03.2012."

Was Canara Bank in contempt of the Court's order?

24. At the outset it must be pointed out that in the light of the order passed by the Division Bench on 5th March 2012, it is clear that the observations made by this Court in its order dated 19th January 2011 were tentative and at a stage prior to Canara Bank showing cause. Canara Bank has on 10th March 2011 filed a reply to the show cause notice issued by this Court on 19th January 2011. Tecon has filed a response thereto.

25. This Court has heard the submissions of Mr. Harish Malhotra, learned Senior counsel appearing for Tecon and Mr. Y.P. Narula, learned Senior counsel appearing for Canara Bank.

26. An examination of the submissions made should begin with reiterating the settled legal position that the question whether a party is in contempt of the Court's order is essentially one between the Court and the contemnor. The Court has to be satisfied that the disobedience, if at all, by the party of the Court's order was wilful and intended to obstruct the administration of justice. In exercising its power under the Contempt of Courts Act, 1971 the Court has to be cautious in ensuring that the order originally passed by the

Court the breach of which is complained is not interpreted in the manner inconsistent with what the order actually states. It is not open to the Court to expand the scope of the order of which disobedience by the contemnor is alleged.

27. In R.N. Dey v. Bhagyabati Pramanik (2000) 4 SCC 400, the Supreme Court held as under (SCC, p.404):

"We may reiterate that the weapon of contempt is not to be used in abundance or misused. Normally, it cannot be used for execution of the decree or implementation of an order for which alternative remedy in law is provided for. Discretion given to the Court is to be exercised for maintenance of the Court's dignity and majesty of law. Further, an aggrieved party has no right to insist that the Court should exercise such jurisdiction as contempt is between a contemner and the Court."

28. There are some disconcerting aspects of the present case which were perhaps not noticed in their entirety by the Court when it issued notice to Canara Bank on 19th January 2011. The foremost is that Tecon failed to place the complete facts before the Court which first heard O.M.P. No. 495 of 2008 on 18th September 2008. Tecon knew there were two BGs involved. One was an APG issued by HSBC in favour Gulf. The second was the corresponding counter-BG issued by Canara Bank in favour of HSBC. This basic fact was kept back from the Court for reasons best known to Tecon.

29. A perusal of O.M.P. No.495 of 2008 as was presented before the Court when it passed the order dated 18th September 2008 shows that therein reference was made only to the counter BG issued by Canara Bank (without referring to it as a counter BG) and stay was also sought of encashment of

the said counter BG. While the copy of the BG enclosed with the petition did refer to it being a counter BG, in the absence of Tecon drawing the Court's attention specifically to that fact and explaining the context in which such counter BG was issued it could not be expected that the Court would on its own discern it. On the basis of the petition in O.M.P. No. 495 of 2008, it was not possible for the Court to have on its own realised that there was an APG issued by HSBC in favour of Gulf and a corresponding counter BG issued by Canara Bank in favour of HSBC. Tecon made it appear as if Gulf was threatening to encash a BG issued in its favour by Canara Bank and which therefore was required to be stayed. This was contrary to the correct factual position and led to further unnecessary litigation arising out of the order dated 18th September 2008 passed by this Court. This deliberate, incorrect and incomplete presentation of facts by Tecon has serious consequences.

30. In S.P. Chengalvaraya Naidu v. Jagannath (1994) 1 SCC 1, the Supreme Court emphasized as under (SCC, p.5):

"A litigant, who approaches the Court, is bound to produce all the documents executed by him which are relevant to the litigation. If he withholds a vital document in order to gain advantage on the other side then he would be guilty of playing fraud on the Court as well as on the opposite party."

31. A second aspect was that the entire correspondence between the parties which was material to the case was not produced before the Court or adverted to by Tecon. In particular, it did not bring to the notice of the Court the letter written by it to Canara Bank on 3rd March 2008 which drew Canara Bank's attention to HSBC requiring the incorporation in the counter BG

certain specific clauses. The relevant portions of the said letter read as under:

"Sub: FBG of USD 411,700/- in favour of GULF SPONGE IRON CO. LTD. UAE

Dear Sir,

As our request and the advise of your branch, foreign deptt. Main New Delhi Of Canara Bank advise to HSBC Bank middle East Ltd. Dubai to issue advance guarantee USD 411,700/- in favour of GLF SPONGE IRON CO. LTD. UAE against their counter Guarantee No.0179FOGOO82008 dated 23.02.2008 on dated 23.02.2008 itself.

Against the above mentioned counter guarantee, HSBC Bank middle East Ltd., Dubai requires the confirmation of the following:

1. Your Guarantee will be issued against our irrevocable an unconditional counter guarantee in your favour, under our full risk and responsibility.

2. ........

3. Our counter guarantee will be valid until 22 June 2008 (one month from expiry date of your guarantee).

4. Our counter guarantee and your guarantee is governed by and construed in all respects in accordance with the laws of UAE. ....

10. We hereby confirm the above mentioned clauses and request you to kindly advise to your Foreign Department, Main, New Delhi."

32. There was no justifiable reason for Tecon to have kept back the above information from the Court. A party which suppresses material facts and obtains an order considerably weakens its case for persuading the Court to

proceed against another party for disobedience of such an order. The Court will be reluctant to exercise its power under the contempt jurisdiction at the instance of a litigant who acts irresponsibly.

33. Mr. Malhotra, learned Senior counsel for Tecon sought to point out that during the course of arguments Tecon had pointed out to the Court about it having raised bills in the sum of USD 460,023.38 and to that extent the BG would stand reduced. This however does not still explain why reference was being made in the Court to an "advance bank guarantee" issued by Canara Bank when in fact what had been issued was a counter BG. The Court was not told that such counter BG was in fact issued by Canara Bank in favour of HSBC and not Gulf. No mention was made of the APG issued by HSBC in favour of Gulf. In respect of the said APG there was in fact no interim order sought by Tecon or passed by this Court. It is impossible to read into the order dated 18th September 2008 something that even Tecon had not prayed for. Without making HSBC or Canara Bank parties to the petition no interim order restraining either of them from making payment under the counter BG or the APG could have been sought. If Tecon wanted to restrain Gulf from encashing the APG issued by HSBC in its favour, Tecon should have in the first place pleaded that as a fact giving such details of APG, made HSBC a party, and then sought a specific order restraining HSBC from making payment under the APG, by giving the precise number of the APG. There was no such pleading and there was no such prayer.

34. While examining if Canara Bank acted in wilful disobedience of the Court's order dated 18th September 2008 it is important to note in the first place that Canara Bank was not a party to that order. Further Canara Bank

was in any event not going to make any payment to Gulf under the counter BG issued by it. Therefore the direction in the order dated 18th September 2008 was not capable of being complied with by Canara Bank. The Court while exercising jurisdiction under the Contempt of Courts Act, 1971 when an allegation is made of civil contempt, i.e. wilful disobedience of an order passed by the Court, has to be cautious in first ascertaining what precisely was the scope of the order of which the disobedience is alleged and whether the party against whom the allegation is made, was obliged to obey such order.

35. In this context the following observations of the Supreme Court in Bihar Finance Service H.C. Coop. Soc. Ltd. v. Gautam Goswami AIR 2008 SC 1975 regarding the exercise of power by the Court in the contempt jurisdiction are relevant (AIR, p.1980):

"22. While exercising the said jurisdiction this Court does not intend to reopen the issues which could have been raised in the original proceeding nor shall it embark upon other questions including the plea of equities which could fall for consideration only in the original proceedings. The Court is not concerned with as to whether the original order was right or wrong. The Court must not take a different view or traverse beyond the same. It cannot ordinarily give an additional direction or delete a direction issued. In short, it will not do anything which would amount to exercise of its review jurisdiction."

36. It is plain to the Court that there was no disobedience of the order passed by this Court on 18th September 2008 as a result of HSBC making payment to Gulf under the APG issued by it in favour of Gulf. That was not the subject matter of O.M.P. No.495 of 2008 or the interim order passed by this Court on 18th September 2008. As far as payment under the counter BG is

concerned, it had to follow the payment made under the APG. The order passed by this Court was not a mandamus issued to Canara Bank. It only restrained Gulf from encashing the BG but the number given was of the counter BG to which Gulf was not a party and therefore it was incapable of being complied with by Gulf. Since the direction was to Gulf, Canara Bank could also not have complied with it. In any event there was no order restraining Canara Bank from making payment to HSBC although the number in the order of the Court refers to the counter BG. In other words, it was an order incapable of being complied with either by Gulf, which alone was party to it, or by Canara Bank which was not a party to the order. Significantly, at no point in time did Tecon seek modification of the order dated 18th September 2008.

37. As already noted in the order dated 19th January 2011, the Court's order dated 18th September 2008 was not communicated to Gulf prior to its invoking the APG. Even HSBC stood absolved because there was no reference to the APG issued by it in favour of Gulf in the order dated 18th September 2008. With Tecon not seeking any amendment of the order passed by the Court, Canara Bank could not have on its own restrained HSBC from proceeding to pay Gulf the amount under the APG. All that Canara Bank could do within its means, and which it did, was to communicate the order of this Court to Gulf. Even when Canara Bank made payment to HSBC on 31st October 2008 it was not acting in disobedience of any order of the Court.

38. This Court is, therefore, satisfied that there was no disobedience of the order dated 18th September 2008 by Canara Bank. The contempt notice

issued to Canara Bank is discharged and the contempt petition is dismissed. Consequently, the order passed by this Court on 19th January 2011 requiring Canara Bank to credit the account of Tecon with a sum of USD 411,700 does not survive and is hereby vacated.

S. MURALIDHAR, J.

OCTOBER 12, 2012 AK/bs