Wilful disobedience of court orders constitutes contempt of court and may result in punishment under the Contempt of Courts Act.

JUDGMENT :

M.R. SHAH, J.

1. Present contempt petition has been preferred by the petitioner herein, alleging wilful, intentional and deliberate disobedience of the directions issued by this Court by the alleged contemnors-respondents herein in not depositing the shortfall amount so as to maintain a balance of USD 60 million in the Corporation Bank account maintained by Avitel Post Studioz Limited (hereinafter referred to as the “Avitel”) a company owned by the alleged contemnors. It is alleged that the alleged contemnors are in wilful breach of two orders of this Court dated 19.08.2020 and 06.05.2021.

2. The facts leading to the present contempt proceedings in a nutshell are as under:

2.1 A Share Subscription Agreement (SSA) was entered into on 21.04.2011 between HSBC-petitioner herein and Avitel and others (original appellants before this Court in Civil Appeal No. 5145/2016). HSBC made an investment in the equity capital of Avitel India for a consideration of USD 60 million in order to acquire 7.8% of its paid-up capital. That the said SSA contained an arbitration clause.

2.2 That thereafter, both the parties entered into a Shareholders Agreement (SHA) on 06.05.2011, which defined the relationship between the parties after SSA dated 21.04.2011 had been entered into. The said SHA also contained an arbitration clause. As disputes arose between the parties, on 11.05.2012, notices of arbitration were issued by HSBC to the Singapore International Arbitration Centre (SIAC) to commence arbitral proceedings. The SIAC appointed an Emergency Arbitrator. The Emergency Arbitrator passed two interim awards dated 28.05.2012 and 29.05.2012, in the SSA and SHA, respectively, in favour of HSBC, directing the alleged contemnors-Avitel Dubai to refrain from disposing of or dealing with or diminishing the value of their assets up to USD 50 million, and permitting HSBC to deliver a copy of the interim awards to financial institutions in India and the UAE with which any of them hold or may hold or be signatory to accounts, together with a request that the financial institutions freeze such accounts consistent with the interim awards. On 27.07.2012, the Emergency Arbitrator made an amendment to interim awards granting further relief to HSBC. That thereafter on 30.07.2012, HSBC filed Arbitration Petition No. 1062/2012 under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the Act, 1996) in the Bombay High Court, inter-alia, seeking directions to call upon the alleged contemnors to deposit a security amount to the extent of HSBC’s claim in the arbitration proceedings that had begun under both the SSA and SHA.

2.3 On 03.08.2012, the learned Single Judge of the Bombay High Court passed an interim order under Section 9 petition, inter-alia, directing the Corporation Bank to allow the alleged contemnors to withdraw a sum of INR 1 crore from their account on or before 09.08.2012, but not to allow any further withdrawals until further orders, till which time, the account was to remain frozen. Meanwhile, the alleged contemnors challenged the jurisdiction of the three-member Arbitral Tribunal set up under the auspices of the SIAC. The Arbitral Tribunal on 07.12.2012 passed a unanimous “final partial award on jurisdiction” dismissing the jurisdictional challenge.

2.4 That thereafter in Section 9 petition pending before the Bombay High Court, the learned Single Judge passed an order dated 22.01.2014, in which the respondents herein-alleged contemnors were directed to deposit any shortfall in their account with the Corporation Bank so as to maintain a balance of USD 60 million. An appeal against the order of the learned Single Judge was disposed of by the Division Bench of the High Court vide judgment and order dated 31.07.2014. The order passed by the learned Single Judge directing the alleged contemnors to deposit the shortfall in their account with the Corporation Bank so as to maintain a balance of USD 60 million was the subject m