2018 (5) TMI 574 - HC - Companies Law

Winding up petition filed during pendency of arbitration proceedings - Settlement Agreement entered - revival of winding up petition - case of the petitioner is that despite order dated 29.5.2017 passed by this court, the respondent has not abided by the settlement agreement and handed over the Trina Receipts - Held that - As in terms of the Settlement Agreement the petitioner had undertaken to make the payment of the settlement amount of USD 30.379 million in terms of the payment schedule. In the eventuality of default, the entire outstanding amount of USD 35,740,136/- less any amount paid alongwith interest @12% per annum was payable from the date of default till the date of payment. There is no dispute that clause 4 of the settlement agreement states that in case the petitioner is unable to make the payment within the stipulated schedule the entire outstanding of USD 35,740,136/- would become payable with interest. This court however in its order dated 29.5.2017 noted clause 4 of the settlement agreement but concluded that on account of the delay in making payment by the petitioner it would not be justifiable to vitiate the efforts made by the court to conclude the settlement as the amount had been received by the respondent. The court further concluded that the respondent cannot be made to suffer liquidation proceedings. Hence, essentially on facts this court came to a conclusion that there was no justification to revive the winding up petition. There is nothing in the two orders of this court, namely, order dated 12.01.2015 and 29.05.2017 on account of which we can conclude that the respondent has substantially interfered in the course of justice. In my opinion, the facts do not warrant coming to a conclusion that the respondent is guilty of wilful disobedience of the order of this court or of contempt of court. Petition dismissed.

Issues Involved:

1. Deliberate, intentional, and willful disobedience of court orders dated 12.01.2015, 19.02.2016, and 29.05.2017.
2. Compliance with the Settlement Agreement dated 08.01.2015.
3. Revival of winding up proceedings due to alleged default.
4. Release of Trina Solar Receipts.
5. Withdrawal of pending arbitral proceedings.
6. Jurisdiction and applicability of contempt proceedings.

Issue-Wise Detailed Analysis:

1. Deliberate, Intentional, and Willful Disobedience of Court Orders:

The petitioner filed a contempt petition under Article 215 of the Constitution of India and sections 11 and 12 of the Contempt of Courts Act, 1971, alleging deliberate, intentional, and willful disobedience of court orders dated 12.01.2015, 19.02.2016, and 29.05.2017. The court examined whether the respondents' actions constituted contempt by failing to comply with the terms of the Settlement Agreement and subsequent court orders.

2. Compliance with the Settlement Agreement Dated 08.01.2015:

The Settlement Agreement required the petitioner to pay USD 30.37 million in 12 installments. In case of default, the entire outstanding amount of USD 35,740,136/- would become payable immediately. The petitioner made payments as per the agreement but with delay. The court noted that the petitioner had made payments with interest for the delayed installments.

3. Revival of Winding Up Proceedings Due to Alleged Default:

Respondent No.3 sought to revive winding up proceedings due to the petitioner's default, relying on a clause in the Settlement Agreement. The court, by order dated 29.05.2017, dismissed the application for revival, noting that the respondent had accepted payments with interest for the defaulted installments. The court held that merely because there was a default in making payments, revival of the winding up petition was not justified.

4. Release of Trina Solar Receipts:

The petitioner argued that the respondents failed to release Trina Solar Receipts as per Clause 7 of the Settlement Agreement, which entitles the owners of the solar modules to a 25-year warranty. The respondents contended that they had no specific undertaking to release the receipts and had already released receipts for payments made. The court found no undertaking recorded in the orders to release the receipts.

5. Withdrawal of Pending Arbitral Proceedings:

The petitioner claimed that the respondents were obliged to withdraw pending arbitral proceedings as per Clause 6 of the Settlement Agreement. The respondents argued that no specific direction was passed in the court orders to withdraw the arbitration proceedings. The court found no undertaking recorded in the orders to withdraw the arbitration proceedings.

6. Jurisdiction and Applicability of Contempt Proceedings:

The court examined whether contempt proceedings were applicable in the context of a Settlement Agreement taken on record by the court. Citing Supreme Court judgments, the court noted that non-compliance with a consent decree or settlement agreement does not necessarily constitute contempt unless there is an express undertaking recorded by the court. The court concluded that the respondents' actions did not substantially interfere with the course of justice to warrant contempt proceedings.

Conclusion:

The court dismissed the contempt petition, concluding that there was no willful disobedience of the court orders or contempt of court by the respondents. The court observed that the petitioner could pursue other legal remedies, including execution proceedings, if necessary.

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