Article

The matter pertains to judgment in Urban Infrastructure Real Estate Fund v. Dharmesh S. Jain and Anr. [Contempt Petition (C) No. 940 of 2021] passed by the Hon’ble Supreme Court on 10.03.2022. The Petitioner initiated arbitral proceedings and received an Arbitral Award dated 30.08.2018 in its favour. The Arbitral Tribunal directed the respondent for specific performance of the Share Purchase Agreement and also directed recovery of an amount of Rs. 78,33,37,500/- along with the interest from the respondents. The Arbitral Award was challenged under section 34 of the Arbitration and Conciliation Act, 1996. The Award Debtor further moved a notice of motion praying for the stay of the Award. The Hon’ble Single Bench of the Delhi High Court granted the interim stay on the condition that respondents deposit 50% of the awarded sum within twelve weeks.

The order of the Hon’ble Single Bench was challenged by the respondents. The application was dismissed by the Division Bench of the Hon’ble High Court. The respondents then preferred a special leave petition which was also dismissed by the Hon’ble Supreme Court vide order dated 28.10.2021. The Court, however, granted the respondents a period of eight weeks, as prayed, for depositing 50% amount as directed by the Single Bench with a rider that non-compliance of the order shall be taken very seriously and non-deposit of the amount shall be considered to be non-compliance of the order of the Hon’ble Supreme Court with serious consequences.

The respondents not only miserably failed to comply with the orders of the Hon’ble Supreme Court despite various reminders and a legal notice issued by the Petitioner, but also moved an application before the Hon’ble Supreme Court praying for recall of order dated 28.10.2021. The application was dismissed by a detailed order dated 25.01.2022.

The Petitioner moved an application alleging disobedience of the order dated 28.10.2021. The application was opposed by the respondents inter alia on the ground that section 36 of the Arbitration and Conciliation Act, 1996 separately provides for execution of award and “the weapon of contempt cannot be used for purposes of executing a decree or implementing an order for which law provides appropriate procedure” [reliance placed on R.N. Dey and Ors. Vs. Bhagyabati Pramanik and Ors., (2000) 4 SCC 400]. Petitioners on the other hand pleaded that as on date the total amount due from the respondents was Rs. 190 crore. The respondents, on one pretext or the other, have been taking extensions of time for deposit of the 50% amount as directed.

As to the findings of fact, the Hon’ble Supreme Court observed that for approximately two years, the respondents have been able to successfully avoid deposit of the 50% amount by seeking extensions and consequently has obstructed the execution proceedings for this long. The order directing the respondents to disclose their assets was not complied until 2 years. The Court rejected the argument of the respondent that since they have not deposited the amount as per the order dated 08.08.2019, necessary consequences under Section 36 of the 1996 Act shall follow and the execution proceedings have to be proceeded further. The Court opined that the conduct of respondent was an abuse of process of law. It showed the wilful disobedience of the respondent by non-compliance of the order that included order of the Hon’ble High Court as well as the Hon’ble Supreme Court, more so when the application for recall of its order dated 28.10.2021 was dismissed by the Hon’ble Supreme Court. This also belied the contention of the respondent that order dated 28.10.2021 was not a mandatory order when the respondent itself applied for its recall. The respondent had gone ahead to consciously not comply with order dated 28.10.2021 even when it was specifically observed in the order that non-compliance of the said order shall be treated very seriously and non-deposit of the amount as directed by the High Court shall be treated as non-compliance of the order of this Court and also having a serious consequence.

With regard to the case laws cited by the respondents, the Court observed that “We are mindful of the fact that contempt proceedings should not be of the nature of ‘execution proceedings in disguise.’ However, we hold that the case law cited supra would not come to the aid of the contemnor herein as the facts of the said case were significantly different from the case at hand. In the said case, no stay was operating on the decree of which contempt was alleged. Therefore, the decree-holder therein could very well initiate execution proceedings.” In the present case, the award was stayed subject to the deposit of an amount.

While dealing with the argument of the respondent that failure to comply with the order dated 28.10.2021 would have no consequences under the Contempt of Courts Act, 1971, the Court observed that “it is trite law that the jurisdiction of a Court under the Act, would not cease, merely because the order or decree of which contempt is alleged, is executable under law, even without having recourse to contempt proceedings.” The Court clarified that “Contempt jurisdiction could be invoked in every case where the conduct of a contemnor is such as would interfere with the due course of justice”. The Court further elaborated that “Contempt is a matter which is between the Court passing the order of which contempt is alleged and the contemnor; questions as to executability of such order is a question which concerns the parties inter-se. The power of the Court to invoke contempt jurisdiction, is not, in any way, altered by the rights of the parties inter-se”. The reliance was placed on Bank of Baroda vs. Sadruddin Hasan Daya  [(2004) 1 SCC 360] and Rama Narang vs. Ramesh Narang  [(2006) 11 SCC 114.

The Court explained that when an order or direction is given by the Court, the party is required to comply with the order within the time given and if the party is unable to do the needful in the given time, the party is required to apprise the Court of the same to seek reasonable extension of time. If the party has not resorted to either of the two things and has caused delay in compliance, the said party is liable for contempt. The further relied on Maruti Udyog vs. Mahinder C. Mehta AIR 2008 SC 309 where in it was held that the conduct of the contemnor is the relevant factor in determining the offence of contempt and this is irrespective of whether the decree is executable or not.

On the basis of the above discussion, the Court held that the conduct of the respondent-contemnors justified invocation of contempt jurisdiction of this Court.

D & H India Ltd. vs Superon Schweisstechnik India Ltd. [FAO(OS)(COMM) No. 237/2019] decided on 16.03.2020 it was held that On a plain reading, the proviso to Section 13 (1A) of the Commercial Courts Act is an enabling, rather than a disabling, provision. There is nothing, in the said proviso, which would seem to indicate that it dilutes the effect of sub-section (1A) of Section 13. If we were to read the said proviso as excluding, from the jurisdiction of the appellate court, all orders, passed by a Commercial Court, save and except those which find specific enumeration in Order XLIII of the CPC, it may amount to rewriting the proviso to read “Provided that no appeal shall lie, except from such orders passed by a Commercial Division or the Commercial Court as are specifically enumerated under Order XLIII of the Code of Civil Procedure, 1908 (5 of 1908) as amended by this Act and section 37 of the Arbitration and Conciliation Act, 1996 (26 of 1996).” We are not convinced that the province of our jurisdiction, in the present case, allows us to so legislate. To our mind, therefore, sub-section (1A) of Section 13 of the Commercial Courts Act allows appeals to be preferred against all judgements and orders of the Commercial Division of the High Court, to the Commercial Appellate Division thereof, and the proviso, to the said sub-section merely clarifies that, in the case of orders specifically enumerated in Order XLIII of the CPC, such appeals shall lie Order XLI Rule 1(3) and Rule 5 also provide for opportunity to the judgment debtor to obtain a stay against the decree upon deposit of the disputed amount in the Court.