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2021 (5) TMI 139 - Tri - Companies LawInitiation of contempt proceedings against the Respondents/Contemnors for wilful disobedience - Section 425 of the Companies Act, 2013 read with the Contempt of Courts Act, 1971 - HELD THAT - The Respondents especially Respondent Nos. 4 5 have breached their own undertakings given by way of Affidavit of undertaking before the Tribunal, and the interim orders passed by NCLAT in question. It is general principle of law that any one, who intentionally violate orders of Court/Tribunal, whether they are party to proceedings or not in question, are liable to be hauled up for Contempt. However, principles of natural justice demands that those parties to be given opportunity before initiating action against them to defend. Since Respondent Nos. 4 5, have furnished their undertakings in question, and basing on that NCLAT passed interim orders in question, other Respondents cannot be directly be taken up contempt proceedings, and Respondent Nos. 4 5 should be held responsible for the contemptuous actions of other Respondents also. The Respondent Nos. 4 5 are committed Contempt of the orders dated 27.08.2019 and 17.02.2020 passed by Hon'ble NCLAT and also earlier Affidavit undertaking dated 17.08.2019 filed before NCLT - Respondent Nos. 4 5 are committed Contempt of the orders dated 27.08.2019 and 17.02.2020 passed by Hon'ble NCLAT and also earlier Affidavit undertaking dated 17.08.2019 filed before NCLT. Post the Contempt case for further hearing on 03rd May, 2021.
Issues Involved
1. Territorial jurisdiction of the Tribunal. 2. Applicability of agreements and undertakings to foreign companies. 3. Compliance with orders and undertakings given to NCLT and NCLAT. 4. Alleged contempt by the Respondents. 5. Interim and main relief sought by the Petitioner. Detailed Analysis 1. Territorial Jurisdiction of the Tribunal The Tribunal addressed the Respondents' claim that it lacks territorial jurisdiction to entertain the main company petition and the contempt petition. The Tribunal found this argument untenable, emphasizing that the Respondents, having entered into a business contract with an Indian company, are bound by Indian laws. The Tribunal clarified that its jurisdiction extends to ensuring compliance with contractual obligations that affect the business interests of the Petitioner, Triveni Turbines Ltd. (TTL). 2. Applicability of Agreements and Undertakings to Foreign Companies The Tribunal examined whether foreign companies are bound by agreements/contracts entered with Indian companies and the orders/directions passed by Indian courts. It concluded that the Respondents, including their affiliates, are obligated to comply with the terms of the Equity Joint Venture Contract (EJVC) dated 15th April 2010, and subsequent agreements. The Tribunal emphasized that the Respondents' undertakings before NCLT and NCLAT are binding and enforceable. 3. Compliance with Orders and Undertakings Given to NCLT and NCLAT The Tribunal reviewed the Respondents' compliance with their undertakings and the interim orders passed by NCLT and NCLAT. It found that the Respondents had violated their undertakings and the orders by issuing termination letters and altering shareholding structures. The Tribunal highlighted that these actions were contrary to the explicit terms of the undertakings and the interim orders, which required the agreements to remain fully enforceable and the business interests of TTL and GETL to be protected. 4. Alleged Contempt by the Respondents The Tribunal determined that Respondents Nos. 4 and 5 committed contempt by willfully disobeying the orders dated 27.08.2019 and 17.02.2020 passed by NCLAT, and the undertaking dated 17.08.2019. The Tribunal noted that the Respondents' actions, including the issuance of termination letters and the transfer of shares, were in blatant breach of the undertakings and adversely affected the business interests of TTL and GETL. 5. Interim and Main Relief Sought by the Petitioner The Tribunal directed the Respondents to comply with their obligations as on 12th June 2019, as per the NCLAT orders. This includes reversing the impugned sale of shares and staying the effect of the termination letters dated 24.04.2020, 18.05.2020, and 01.11.2020. The Tribunal warned that failure to comply would result in the imposition of penalties under the Contempt of Courts Act, 1971. Conclusion The Tribunal found that the Respondents, particularly Respondents Nos. 4 and 5, were in contempt of the NCLAT orders and their own undertakings. It directed the Respondents to reverse the sale of shares and stay the termination of agreements, failing which penalties would be imposed. The Tribunal scheduled further hearings to ensure compliance and address any outstanding issues.
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