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2020 Supreme(Cal) 35
IN THE HIGH COURT OF CALCUTTA
Soumen Sen, J.
Federal Agency For State Property Management Of The Russian Federation (rosimushcestvo) - Appellant
Versus
Saraf Agency Pvt. Ltd.. And Others - Respondents
C.C. No. 117 of 2017; Arbitration Petition No. 1013 of 2016
Decided On : 19-05-2020
Ratnanko Banerjee, Advocate, Sakabda Roy, Advocate, Jishnu Saha, Advocate, Jishnu Chowdhury, Advocate, Soumabho Ghosh, Advocate, S.K. Singhi, Advocate, Riti Basu, Advocate, Chandrani Das, Advocate
Wilful disobedience of an interim order passed by a court restraining alienation, encumbrance and/or creating any third party interest over its fixed assets and properties amounts to contempt of court.
Headnote:
CONTEMPT - ARBITRATION AND CONCILIATION ACT, 1996 - SECTION 9 - INTERIM ORDER - RESTRAINING ALIENATION, ENCUMBRANCE AND/OR CREATING ANY THIRD PARTY INTEREST OVER ITS FIXED ASSETS AND PROPERTIES - WILFUL DISOBEDIENCE AND DISREGARD OF THE ORDER - EXECUTION OF TERM LOAN AGREEMENT AGAINST HYPOTHECATION OF MOVABLES - EXECUTION OF AGREEMENT-CUM-LETTER OF HYPOTHECATION/PLEDGE FOR PACKING CREDIT ADVANCES - EXECUTION OF SUPPLEMENTARY LETTER CONFIRMING DEPOSIT OF TITLE DEEDS - EXECUTION OF DEED OF CORPORATE GUARANTEE TO SECURE A BORROWING - CREATION OF FLOATING CHARGE - VIOLATION OF INTERIM ORDER - CONTEMPT OF COURT - PUNISHMENT.
Fact of the Case:
The alleged contemnors, directors of Saraf Agency Pvt. Ltd., executed a Term Loan Agreement against Hypothecation of Movables, Agreement-cum-Letter of Hypothecation/ Pledge for Packing Credit Advances, Supplementary Letter confirming deposit of Title Deeds, and Deed of Corporate Guarantee to secure a borrowing, and created a floating charge, in violation of an interim order passed by the court restraining alienation, encumbrance and/or creating any third party interest over its fixed assets and properties.
Finding of the Court:
The court found that the alleged contemnors had wilfully disobeyed the interim order by creating charges and extending charges over the assets of the contemnor No.1 in February 2017, in addition to the already existing charge of 2014 over the assets of the contemnor No.1. The court also found that the contemnors had created a floating charge over the assets of the contemnor No.1 pursuant to executing a deed of corporate guarantee in June 2017, even when the interim order was in force.
Issues: Whether the alleged contemnors had wilfully disobeyed the interim order passed by the court restraining alienation, encumbrance and/or creating any third party interest over its fixed assets and properties.
Ratio Decidendi: The court held that the alleged contemnors had wilfully disobeyed the interim order by creating charges and extending charges over the assets of the contemnor No.1 in February 2017, in addition to the already existing charge of 2014 over the assets of the contemnor No.1. The court also found that the contemnors had created a floating charge over the assets of the contemnor No.1 pursuant to executing a deed of corporate guarantee in June 2017, even when the interim order was in force. The court held that the alleged contemnors were guilty of contempt of court and imposed exemplary costs on each of the contemnors.
Final Decision: The court imposed exemplary costs of Rs.30,000/- on each of the contemnors to be deposited with the learned Registrar General within six weeks from the date of the order. On such deposit being made, a sum of Rs.1 lakh shall be transferred to the State Legal Service Authority and the balance amount of Rs.80,000/- shall be transferred to the West Bengal State Emergency Relief Fund. In case of non-payment, the contemnor found to be in breach shall suffer simple imprisonment for three weeks. Any third party right created after the order dated 29th November, 2016 is void and is of no consequence.
JUDGMENT
Soumen Sen, J. - This is a contempt application.
2. This application is filed against the alleged contemnors for wilful, deliberate, intentional and contumacious disobedience and disregard of the order dated 29th November, 2016 passed by this Court in A.P. 1013 of 2016 filed under Section 9 of the Arbitration and Conciliation Act, 1996. The said order was an interim order. By the interim order I had restrained the contemnor no. 1 namely, Saraf Agency Pvt. Ltd. from alienating, encumbering and/or creating any third party interest over its fixed assets and properties. The contemnors no. 2 to 7 are the directors of contemnor no.1. It is alleged that the directors of the contemnor no.1 have in pursuance of the Board Meeting dated 6th February, 2017 taken a decision to act contrary and in violation and contumacious disregard to the interim order by the following acts:
(i) Executed a Term Loan Agreement against Hypothecation of Movables for a Term Loan of Rs.140.39 crores, on February 7, 2017 creating a charge in favour of M/s. Allahabad Bank, Kolkata.
(ii) Executed Agreement cut letter of Hypothecation/ Pledge for packing Credit Advances for a Packing Credit of Rs.55 crores on February 7, 2017 creating a charge in favour of M/s Allahabad Bank, Kolkata
(iii) Executed a Supplementary Letter confirming deposit of Tile Deeds through constructive delivery of properties situate at Chhatarpur, District Ganjam, Odisha on February 21, 2017 creating charge in favour of M/s Allahabad Bank, Kolkata.
(iv) Executed a Deed of Corporate Guarantee to secure a borrowing of Rs.70 crores by a Saraf group company namely Forum Projects Private Ltd. on June 14, 2017 and as per the Master Data of Contemnor No.1 available at the MCA website, contemnor no.1 has also created a floating charge worth Rs.70,00,00,000 (Rs.70 crores) in favour of Union Bank of India on June 14, 2017.
3. It is thus contended that the contemnors have wilfully breached the interim order by the aforesaid acts.
4. It is stated in the petition that contemnor no.1 has on 7th February, 2017, executed a Term Loan Agreement against Hypothecation of Movables (Term Loan Hypothecation Agreement) in favour of M/s Allahabad Bank, Industrial Finance Branch. The recital to the Term Loan Hypothecation Agreement states that contemnor no.1 has applied for and is being sanctioned Term Loan Facility of Rs.140.30 crore and contemnor no.1 has hypothecated and charged to the Bank:
(a) All machinery/plant/capital goods/assets purchased or to be purchased out of the loan as set out in Annexure A (1) to the Agreement and all existing and future machinery, plant, vehicles, capital goods, assets and those assets/ movable properties capable of passing by delivery as specified in Schedule A(2).
(b) Exclusive charge on 39 acres of land related to Titanium Slag Plant and movable and immovable assets relating to Titanium Slag Plant on pari passu basis and an exclusive on 57.30 acres of land and all movable and immovable assets related to captive plant on pari passu basis. Further the Bank shall have exclusive charge on Corporate Office Land and Building at 4,4/1 Red Cross Place Kolkata on pari passu basis.
(c) Exclusive charge on all the bank accounts into which all the operating cash flows, other incomes, and revenues/receivables would be deposited. Exclusive charge over a FDR of Rs.6 .32 crores has been created.
(d) Bank has a general line and set off on the other accounts of contemnor no.1 with the Bank.
5. As ascertained from the Term Loan Hypothecation Agreement the same has been signed for and on behalf of contemnor no.1 "pursuant to Board Resolution passed at the Board Meeting dated 6th February, 2017 of contemnor no.1. The Term Loan Hypothecation Agreement has been signed by and on behalf of contemnor no.1 by Mr. Ajeet Raj Mehta, Director, contemnor no.4".
6. Furthermore, on 7th February, 2017 an Agreement-cum-Letter of Hypothecation/ pledge for Packing Credit Advances has also been entered into by
