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IN THE HIGH COURT OF DELHI
Rajiv Shakdher, Talwant Singh, JJ.
Jasmeet Singh Marwah - Appellant
Versus
Central Court Hotel - Respondent
FAO(OS) (COMM) 100 of 2021 & CM Nos. 24176-77 of 2021
Decided On : 04-08-2021
An appeal under Section 37 of the Arbitration Act is not maintainable if the Section 9 petition is still pending, and parties must comply with court orders to avoid punitive action.
Headnote:(A) Arbitration and Conciliation Act, 1996 - Section 37 - Appeal filed against orders under Section 9 - The court directed the appellant to disclose assets and shareholding in the respondent company - Appellant claimed not personally liable for obligations arising from a Settlement Agreement, executed between the respondents. (Paras 2-10)
(B) Judicial Discretion - A party cannot avoid compliance with a court's order; failure to comply may result in punitive action. (Paras 3, 6)
(C) Maintainability of Appeal - The appeal is not maintainable if the underlying petition is still pending in the lower court. (Paras 10-11)
Facts of the case:
The appeal arises from orders requiring the managing director to disclose personal and company financial details in respect of obligations under a Settlement Agreement. The appellant contended that he is not personally liable under the SA.
Findings of Court:
The appeal was found not sustainable in light of the pending Section 9 petition and obligations under the SA.
Issues: The key issues include whether the appellant is personally liable due to the undertaking provided and if the appeal is maintainable.
Ratio Decidendi: The court established that the appeal cannot be entertained as the underlying matters are unresolved and emphasized the necessity for a party to comply with court orders.
Result: Appeal disposed of with liberty to request consideration of pending petitions.
JUDGMENT
[Court hearing convened via video-conferencing on account of COVID-19]
Rajiv Shakdher, J. (Oral)
CM No.24177/2021
1. Allowed, subject to just exceptions.
FAO(OS) (COMM) 100/2021 & CM No.24176/2021
2. The instant appeal, filed under Section 37 of the Arbitration and Conciliation Act, 1996 [in short `1996 Act'] is preferred against the order dated 15.02.2021, and consequential orders dated 19.04.2021 and 05.07.2021, passed by the learned single judge, in a petition, instituted by the respondents, under Section 9 of the 1996 Act.
2.1. To be noted, via the order dated 15.02.2021, the learned single judge directed the appellant i.e. Mr. Jasmeet Singh Marwah, the Managing Director of respondent no. 2-company to file an affidavit disclosing the details of his assets. This direction was also issued qua respondent no. 2-company.
2.2. Furthermore, the appellant was also directed to disclose his shareholding in respondent no. 2-company, as maintained, during the previous three years. The affidavits were required to be filed within two weeks from the date of the said order. The matter was posted for further proceedings on 19.03.2021.
3. The record shows that the second impugned order, i.e., the order dated 19.04.2021 merely directed the appellant to comply with the court's earlier order dated 15.02.2021. This order, however, came to be passed in the review petition filed on behalf of the appellant i.e. Rev.P.No.55/2021. On that date, a request for accommodation was made on behalf of Ms. Avnish Ahlawat, who appears on behalf of the appellant/review petitioner. The matter was, thus, directed to be re-listed on 05.07.2021.
4. On 05.07.2021, Ms. Ahlawat contended before the learned single judge that she had moved an application for deletion of the appellant from the array of parties in the Section 9 petition.
4.1. Ms. Ahlawat, at this hearing also, reiterated the fact that the review petition filed qua the order dated 15.02.2021 was pending consideration.
4.2. The learned single judge in the order passed on 05.07.2021, recorded that via his earlier order dated 19.04.2021, he had clarified that the appellant was required to comply with the order dated 15.02.2021, notwithstanding the pendency of the review petition. Furthermore, since there was no compliance made concerning the directions contained in the order dated 15.02.2021 [which were reiterated in the order dated 19.04.2021], the learned Single Judge called upon the appellant to show cause as to why "an appropriate punitive action for wilful disobedience of the Court's orders be not taken against him". Besides this, the appellant has also been directed to join the proceedings on next date of hearing.
5. Ms. Ahlawat says that the action filed by respondent no. 1 emanates from a Settlement Agreement dated 10.12.2018 [in short `S.A.'] to which the appellant is not party, in his personal capacity.
5.1. To be noted, the SA was executed between the parties via the intercession of the mediator appointed by the Delhi High Court Mediation and Conciliation Centre (in short `the Centre').
6. It appears that the obligations undertaken under the SA were not discharged either by respondent no.2-company or the appellant.
7. The record shows that an undertaking by way of an affidavit was filed by the appellant with the Court, in the Section 9 petition, i.e., OMP(I)(COMM)No.245/2018. The appellant, inter alia, stated the following in paragraph 6 of the undertaking:
"6. That in terms of the aforesaid terms of the settlement agreement dated 10.12.2018, the deponent, being Managing Director of the respondent company (Second Party in the settlement agreement) does hereby unconditionally undertake on behalf of the respondent company to comply with the terms of the settlement agreement dated 10.12.2018."
8. Given this backdrop, Ms. Ahlawat reiterates her contention, which is that, the appellant, who is the Managing Director of respondent no.2-company, is not personally liable qua t
