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2016 Supreme(Bom) 711
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
R.D. DHANUKA, J.
Ashapura Minechem Ltd. - Petitioner
Versus
Armada (Singapore) Pte. Ltd. - Respondents
CONTEMPT PETITION NO.89 OF 2015 IN ARBITRATION PETITION NO.1359 OF 2010
Decided On : 29-06-2016
For the Appellant : Mr.Zal Andhyarujina a/w Mr.Hursh Meghani a/w Mr.Rushabh Sheth i/by M/s. M.S. Bodhanwalla & Co.
For the Respondent:Mr.Rahul Narichania, Senior Advocate a/w Mr.Shrinivas Deshmukh a/w Mr.Sunilkumar V. Neelambaran i/by M/s.Mulla & Mulla & Craigie Blunt & Caroe.
The provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 do not have extra territorial application and do not extend to properties outside India. The observations made in the judgment were not in the nature of a command or authoritative instruction and thus any alleged non-compliance would not attract the provisions of the Contempt of Courts Act, 1971.
Headnote:
Contempt of Courts Act - Breach of Court Order - Sick Industrial Companies (Special Provisions) Act, 1985 - [Contempt of Courts Act, Sick Industrial Companies (Special Provisions) Act, 1985] - The judgment discusses the interpretation of the order dated 8th September 2015 and whether the respondents were required to obtain permission of the BIFR under Section 22 of the SICA for seeking enforcement of the foreign awards and to file garnishee proceedings in respect of the properties of the petitioner judgment debtor situated outside India. The court held that the provisions of the SICA do not have extra territorial application and do not extend to properties outside India. The court also observed that the observations made in the judgment were not in the nature of a command or authoritative instruction and thus any alleged non-compliance would not attract the provisions of the Contempt of Courts Act, 1971. The court dismissed the contempt petition as the steps taken by the respondents in execution of the foreign awards against the petitioner in respect of the properties situated outside India cannot be considered as contemptuous conduct.
Fact of the Case:
The case involved a dispute arising from a Contract of Affreightment dated 12th April 2008, which culminated in two separate foreign awards dated 16th February 2010. The petitioner sought a declaration that the foreign awards were enforceable as decrees of the Court and for a direction to enforce and/or execute the awards. The respondent initiated proceedings for enforcement and execution of the awards in the US and other countries. The petitioner alleged willful breach of the court order dated 8th September 2015 and sought action under the Contempt of Courts Act, 1971.
Finding of the Court:
The court found that the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 do not have extra territorial application and do not extend to properties outside India. The court held that the observations made in the judgment were not in the nature of a command or authoritative instruction and thus any alleged non-compliance would not attract the provisions of the Contempt of Courts Act, 1971. The court dismissed the contempt petition as the steps taken by the respondents in execution of the foreign awards against the petitioner in respect of the properties situated outside India cannot be considered as contemptuous conduct.
Issues: The key issues included the interpretation of the order dated 8th September 2015 and whether the respondents were required to obtain permission of the BIFR under Section 22 of the SICA for seeking enforcement of the foreign awards and to file garnishee proceedings in respect of the properties of the petitioner judgment debtor situated outside India. The court also considered whether the observations made in the judgment constituted a command or authoritative instruction and whether the alleged non-compliance would attract the provisions of the Contempt of Courts Act, 1971.
Ratio Decidendi: The court held that the provisions of the SICA do not have extra territorial application and do not extend to properties outside India. The court also observed that the observations made in the judgment were not in the nature of a command or authoritative instruction and thus any alleged non-compliance would not attract the provisions of the Contempt of Courts Act, 1971. The court dismissed the contempt petition as the steps taken by the respondents in execution of the foreign awards against the petitioner in respect of the properties situated outside India cannot be considered as contemptuous conduct.
Final Decision: The court dismissed the contempt petition and held that the steps taken by the respondents in execution of the foreign awards against the petitioner in respect of the properties situated outside India cannot be considered as contemptuous conduct.
1. By this petition filed under the provisions of Contempt of Courts Act, 1971, the petitioner herein (original respondent in Arbitration Petition No.1359 of 2010) seeks declaration that the respondents herein (original petitioners in Arbitration Petition No.1359 of 2010) have committed willful breach and are in contempt of the order dated 8th September 2015 passed by this Court in Arbitration Petition No.1359 of 2010 along with Arbitration Petition No.1360 of 2010 and seeks initiation of an action against the respondents for allegedly having committed willful breach of the said order dated 8th September 2015 passed by this Court under the provisions of the Contempt of Courts Act, 1971.
2. The following important questions of law arise in this matter:-
(i) Whether this Court in the order dated 8th September 2015 had issued a direction in the nature of a command or authoritative instruction to the respondent no.1 herein not to take any steps in execution of the foreign awards and seek any relief in violation of Section 22 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short 'SICA') without permission of the Board for Industrial and Financial Reconstruction (BIFR) or had only made its observations against the respondent no.1 not to proceed against the petitioner herein or to take steps in execution of the foreign awards without permission of the BIFR ?
(ii) Whether the respondents were bound to obtain permission of the BIFR under Section 22 of the SICA for seeking enforcement of the foreign awards and to file garnishee proceedings in respect of the properties of the petitioner judgment debtor situated outside India ?
(iii) Whether there was any genuine difference of opinion between the petitioner and the respondents on the issue whether prior permission of the BIFR was mandatory before taking any steps in execution of the foreign awards against the petitioner in respect of the properties of the petitioner situated outside India on the ground that provisions of the SICA cannot have extra territorial application or on the ground that in the order dated 8th September 2011, this Court had granted injunction against the respondent no.1 from executing the foreign awards without obtaining prior permission of the BIFR under the provisions of the SICA or not ?
(iv) If there was difference of opinion on interpretation of the order passed by this Court, whether any action under the provisions of Contempt of Courts Act, 1971 can be initiated against the contemnors based on the alleged willful breach of the order passed by this Court ?
(v) What is the standard of proof required for initiating the action for contempt of the orders passed by this Court against the alleged contemnors under the provisions of the Contempt of Courts Act, 1971 ?
3. Some of the relevant facts for the purpose of deciding this petition are as under :-
4. There was a dispute between the parties arising out of a Contract of Affreightment dated 12th April 2008 which was referred to arbitration. The said dispute culminated into two separate foreign awards both dated 16th February 2010. The respondent no.1 herein filed proceedings before the Queen's Bench, UK and obtained an ex parte injunction against the petitioner herein restraining the petitioner from breaching the arbitration agreement in terms of clause 28 of the said Contract of Affreightment.
5. On 16th February 2010, the arbitral tribunal made final awards and directed the petitioner herein to make payment to the respondents in the sum of US$ 28,196,000 along with interest thereon and costs and US$ 37,353,524.10 with interest thereon and costs. Since the Corporate Head Quarter of the petitioner is in Mumbai, the bank accounts with various banks of the petitioner are in Mumbai, monies payable under the awards was at Mumbai, the respondent no.1 herein filed the Arbitration Petition Nos.1359 of 2010 and 1360 of 2010 in this Court under Sections 47, 48 and 49 of the Arbitration and Conciliation
