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TMI Blog2019 (2) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... g to INR 1 crore for each Company must also be paid to the Registry of this Court within four weeks from today. This sum will be paid over to the Supreme Court Legal Services Committee. In default of payment of such fine, the Chairmen of these Companies will suffer one month’s imprisonment. - WRIT PETITION (CIVIL) NO. 845 OF 2018, CONTEMPT PETN. (C) NO. 1838 OF 2018 IN W.P. (C) NO. 845 OF 2018, CONTEMPT PETN. (C) NO. 55 OF 2019 IN W.P. (C) NO. 845 OF 2018 ANDCONTEMPT PETN. (C) NO. 185 OF 2019 IN W.P. (C) NO. 845 OF 2018 - - - Dated:- 20-2-2019 - R. F. Nariman And Vineet Saran, JJ. JUDGMENT R. F. Nariman, J. 1. Three contempt petitions are before us, having been filed by Ericsson India Pvt. Ltd. [ Ericsson ] against Reliance Communications Ltd. [ RCom ], Reliance Telecom Ltd. [ RTL ], and Reliance Infratel Ltd. [ RITL ] [hereinafter, collectively referred to as the Reliance Companies or Companies ]. 2. The brief facts necessary to appreciate these matters are as follows: On 25.01.2013, Ericsson and RCom entered into a Managed Service Agreement whereby Ericsson agreed to provide RCom managed services, i.e., operation, maintenance, and management of RCom s netw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of the Companies concerned. The undertakings that were given by the Chairmen of these Companies, pursuant to this order, were dated 09.08.2018 and are a serious bone of contention between the parties in that these undertakings stated that the sum of INR 550 crore will be paid upon sale of assets of the company . This being the case, a contempt petition, being Contempt Petition No. 1838 of 2018 [ first contempt petition ], dated 01.10.2018, was moved by Ericsson, in which it was expressly stated that the undertakings were not in terms of this Court s order and that the Companies aforestated have no intention of abiding by their commitment to pay the necessary sum of money within the time stated. Meanwhile, on 27.09.2018, the Reliance Companies applied for extension of time for payment by 60 days, expressly stating that since sale of other spectrum had not reached a stage of completion, in order to enable the Companies to make payments, they would require this extension. Both the application for extension and the contempt petition came up for hearing before this Court on 23.10.2018, and it was made clear, as a last opportunity, that the aforesaid amount must be paid on or before 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been sought to be interfered with by the Reliance Companies in two ways. First and foremost, the payment of INR 550 crore to his client was not conditional upon sale of spectrum as is clear from all the orders passed. In fact, this was the understanding of the NCLAT order dated 30.05.2018 by the Reliance Companies, as was clear from the undertakings that were filed by their Directors pursuant to this order. However, mischievously, the undertakings filed pursuant to this Court s order dated 03.08.2018 brought in this condition for the first time, and was directly contrary to this Court s order dated 03.08.2018. He argued that this was the occasion for moving the first contempt petition on 01.10.2018 in which this was pointed out. He also argued that the reply made to the contempt petition, together with the correspondence between the parties, would show that no bona fide efforts were made to pay this sum of INR 550 crore at any stage, and that the plea that the Companies were unable to pay is clearly belied by their own advocates letter dated 21.01.2019, in which it was stated that full payment would be made within a period of 10 days. He, therefore, argued that both on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of income tax refunds, which can be further adjusted. Also, an extremely recent refund order of INR 134 crore can also be used in part payment of the sum of INR 550 crore. Thus, a total sum of INR 391 crore, out of INR 550 crore, can, in fact, be paid as of today. All this would show that they are doing their best to make this payment, and therefore, cannot be characterized as wilful defaulters. They also made a fervent prayer that the special leave petition and the writ petition should be dismissed as withdrawn, as the inevitable has now occurred, and the corporate insolvency resolution process has to now go forward. They also cited various judgments to buttress their submissions. 5. Shri Neeraj Kishan Kaul, learned Senior Advocate appearing on behalf of the Chairman, SBI, has argued that the Joint Lenders Forum, being allowed to sell assets outside of the corporate insolvency resolution process has nothing to do with the Ericsson transaction. According to him, prayers (c) and (j) of the Contempt Petition No. 185 of 2019 are not reliefs that can be given in a contempt petition. Also, it is wholly unnecessary to file an affidavit stating the total amount received from sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Standard Chartered Bank has also taken similar plea and supported the stand taken by the learned Senior Counsel for the Joint Lenders Forum . 6. Mr. Kapil Sibal, learned Senior Counsel appearing on behalf of the Appellants submitted that if the impugned order is stayed and/or set aside, the parties may settle the matter. 7. The case was taken up yesterday (29th May, 2018) and on the request of the parties, the case was adjourned to find out whether the Appellants and the Operational Creditors can settle the matter. 8. Mr. Salman Khursid, Mr. Arun Kathpalia and Mr. Anil Kher, learned Senior Counsel appear on behalf of the Operational Creditors in the respective cases. They submitted that the Respondent- Ericsson India Pvt. Ltd. - ( Operational Creditor ) has agreed to settle the matter if affront payment of ₹ 600 Crores (Rupees Six hundred Crores Only) is made by the Appellants/ Corporate Debtors . 9. Mr. Kapil Sibal, learned Senior Counsel for the Appellants informed that the Appellants have agreed to pay a sum of ₹ 550 Crores (Rupees five hundred fifty Crores only) (jointly) in favor of Ericsson India Pvt. Ltd. - ( Operational Credito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommunications Ltd. are directed to pay a sum of ₹ 550 Crores (Rupees Five Hundred Fifty Crores Only) (jointly) in favour of Ericsson India Pvt. Ltd. within 120 days i.e. by 30th September, 2018. In case of non-payment of the amount and part of the same, the concerned appeal(s) may be dismissed and this Appellate Tribunal may direct to complete the Corporate Insolvency Resolution Process and may pass appropriate order. The payment of ₹ 550 Crores (Rupees Five Hundred Fifty Crores Only) in favour of the Operational Creditor shall be subject to the decision of these appeals. If the appeals are dismissed, the Operational Creditor will pay back the amount to the Corporate Debtors . 12. The Appellants and the Operational Creditors are directed to file their respective affidavits of undertaking in terms of their statement as made and recorded above within 10 days. Let the appeals be listed for admission on 3rd October, 2018. 13. In the meantime, it will be open to the parties to file Interlocutory Application if orders and directions given above are not complied. Interlocutory Application Nos. 701-702, 709-710 and 712-713 of 2018 stand disposed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e beyond 15.12.2018, in any case, will be given. We also make it clear that Mr. Dave may revive his I.A. for contempt, if payment is not made. I.A. stands disposed of accordingly. C.A. Nos. 9337-9338/2018: The Civil Appeals are dismissed in terms of the signed order. Pending applications, if any, stand disposed of. xxx xxx xxx The order of the Supreme Court, dated 13.12.2018, states: IA No. 180453/2018 in W.P. (C.) No. 845/2018 is dismissed as withdrawn. List the matters on Friday, the 14th December, 2018. xxx xxx xxx 7. A perusal of the NCLAT order dated 30.05.2018 would show that the financial creditors /Joint Lenders Forum stated that they have reached an agreement with the corporate debtors for the sale of assets of the corporate debtors, pursuant to which they can recover a sum of INR 18,100 crore. Also, from restructuring and sale of further assets, a further sum of INR 37,000 crore could be recovered, which would then suffice to pay off the entire debt of the secured creditors. This order also recorded that Ericsson had agreed to settle the debt in its favour (which amounted to roughly INR 1500 crore) for the sum of INR 550 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This undertaking makes it clear that the understanding of the three Reliance Companies with regard to the NCLAT order dated 30.05.2018 was that a sum of INR 550 crore will be paid by 30.09.2018 without there being any linkage to sale of assets, as separately stated in the order. Even otherwise, reading the order as a whole, it is clear that whereas INR 550 crore had to be paid within 120 days, sale of assets could take place at any time in the future without any time limit being mentioned. This being the case, it is futile to contend that this order itself made it clear that the sum of INR 550 crore was to be obtained only from sale of assets. Both the undertakings as well as a plain reading of the NCLAT order, militate against any such linkage. 9. On 03.08.2018, the writ petition that was filed before this Court was taken up. It is important to note that this writ petition expressly states that this Court was approached so that it could pass orders under Article 142 of the Constitution of India to quash/close the corporate insolvency resolution process, which no other court or tribunal could do. This was done on the footing that the parties have fully, mutually, and fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions filed before this Hon ble Court for orders under Article 142 of the Constitution of India to be able to proceed with the sale and to effectuate the settlement, this Hon ble Court passed the following order: ......In the meanwhile, the undertaking that is to be given by the Chairman of the Company concerned shall be given within a period of one week from today. 4. Accordingly, in light of the order of this Hon ble Court dated 3rd August, 2018, read with the order of the Hon ble NCLAT dated 30th May, 2018, I hereby undertake that upon the sale of the assets of the Company, the Company and its directors will honour their undertaking extracted above. Similar undertakings were filed on behalf of the Chairmen of the other two Reliance Companies. A perusal of these undertakings would show that they are contrary to the undertakings given by the authorized persons of these very Companies pursuant to the NCLAT order dated 30.05.2018. We have seen that whereas those undertakings were unconditional, these undertakings are now conditional upon sale of assets of the Companies. These undertakings have obviously not been given in accordance with this Court s order dated 03. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, it was pointed out that this NOC could only be given according to certain guidelines, one of which mandated that the buyer of the spectrum would have to undertake that it would be responsible for payment of the erstwhile debts of the seller. The sale of spectrum to Reliance Jio, therefore, did not fructify, not because the DoT wrongfully refused to give its NOC, as has been alleged by the Reliance Companies in their pleadings filed in this case. It fell through only because the prospective buyer, Reliance Jio, refused to give the undertaking that if called upon, it would pay the erstwhile debts of the seller of the spectrum. 13. We now come to two other contempt petitions that were filed. Contempt Petition No.55 of 2019 dated 02.01.2019 was filed in view of non-payment of the sum of INR 550 crore on or before 15.12.2018. Contempt Petition No.185 of 2019 dated 05.02.2019 was filed pointing out two subsequent facts. First, that by a letter dated 21.01.2019, the Reliance Companies were willing to pay the entire sum of INR 550 crore with interest if two conditions were met, namely, withdrawal of contempt petitions and withdrawal of arbitration proceedings. Ericsson replied on 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requirements of that law must be strictly complied with before any person can be committed for contempt. However, as we have pointed out, respondent 1 gave an undertaking based on an implication or assumption which was false to its knowledge and to the knowledge of respondent 2. Respondent 2 was equally instrumental in the giving of this undertaking. This implication or assumption was made explicit by the clarification given by the learned counsel for respondent 1 as set out earlier. Respondent 2 was equally responsible for instructing counsel to give this clarification which was false to the knowledge of both, respondents 1 and 2. Both respondent 1 and respondent 2 have tried to deceive the court and the appellant. In view of this, we fail to see how it can be said that they are not guilty of contempt. Finally, the Court directed the court receiver to take possession of the suit premises from the tenant/sub-tenant and hand it over to the landlord, as agent, so that the contempt committed be purged. 17. We have seen from the above narration of facts that the undertakings given on 09.08.2018 by the three Chairmen of the three Reliance Companies were neither as per the Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, 2019 is ₹ 570.016 crores. 4. Out of the total settlement payment set out in para 3 above, the RCom Group has deposited an amount of ₹ 118 crores with the Registry of the Supreme Court on 9 January, 2019 (Deposited Payment), pursuant to the Hon ble Supreme Court s order dated 7 January, 2019. 5. The RCom Group will make the balance net settlement payment of ₹ 452.016 crores (Balance Settlement Payment) in favour of Ericsson on 31 January, 2019 to complete all their payment obligations to Ericsson. 6. Ericsson is therefore required to: a. Withdraw Contempt Petition (Civil) Diary No.122/2019 and Contempt Petition (C) No.1838/2018 in W.P.(C) No.845/2018 filed on its behalf, immediately upon receipt of the Balance Settlement Payment and towards the same, prepare and send for our consideration and for us to mutually agree by 29 January, 2019, the draft application to be made to the Hon ble Supreme Court for withdrawal of the said Contempt Petitions; b. Withdraw all its claims and contentions as per the Arbitration between RCom and its affiliates, and Ericsson, pending before the Hon ble Arbitral Tribunal comprising Justice Mr. S.B. Sinha, Jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is reply affidavit clearly demonstrates the cavalier attitude of the deponent of this affidavit to the highest court of the land. 21. However, Shri Rohatgi and Shri Sibal relied upon the following judgments: (i) Babu Ram Gupta v. Sudhir Bhasin, (1980) 3 SCC 47 was a case where an express undertaking to hand over possession to a receiver was not given. In this view of the matter, it was held that it would not be possible to state that the appellant had wilfully disobeyed or committed breach of such undertaking. This case has no application on facts to the present case. (ii) In Ashok Paper Kamgar Union v. Dharam Godha, (2003) 11 SCC 1, this Court held: 17. Section 2(b) of the Contempt of Courts Act defines civil contempt and it means wilful disobedience to any judgment, decree, direction, order, writ or other process of a court or wilful breach of undertaking given to a court. Wilful means an act or omission which is done voluntarily and intentionally and with the specific intent to do something the law forbids or with the specific intent to fail to do something the law requires to be done, that is to say, with bad purpose either to disobey or to disregard the law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court of Orissa [AIR 1961 SC 1367 : (1961) 2 Cri LJ 438] that mere unintentional disobedience is not enough to hold anyone guilty of contempt and although disobedience might have been established, absence of wilful disobedience on the part of the contemnor, will not hold him guilty unless the contempt involves a degree of fault or misconduct. Thus, accidental or unintentional disobedience is not sufficient to justify for holding one guilty of contempt. It is further relevant to bear in mind the settled law on the law of contempt that casual or accidental or unintentional acts of disobedience under the circumstances which negate any suggestion of contumacy, would amount to a contempt in theory only and does not render the contemnor liable to punishment and this was the view expressed also in State of Bihar v. Rani Sonabati Kumari [AIR 1954 Pat 513] and N. Baksi v. O.K. Ghosh [AIR 1957 Pat 528]. This judgment also has no application to the facts of this case as the only reasonable or rational interpretation of the orders involved in this case leads to the result that INR 550 crore plus interest was to be paid without any linkage to sale of assets within a fixed time limit. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in Supreme Court Bar Assn. v. Union of India, (1998) 4 SCC 409, this Court had held: 34. The object of punishment being both curative and corrective, these coercions are meant to assist an individual complainant to enforce his remedy and there is also an element of public policy for punishing civil contempt, since the administration of justice would be undermined if the order of any court of law is to be disregarded with impunity. Under some circumstances, compliance of the order may be secured without resort to coercion, through the contempt power. For example, disobedience of an order to pay a sum of money may be effectively countered by attaching the earnings of the contemner. In the same manner, committing the person of the defaulter to prison for failure to comply with an order of specific performance of conveyance of property, may be met also by the court directing that the conveyance be completed by an appointed person. Disobedience of an undertaking may in the like manner be enforced through process other than committal to prison as for example where the breach of undertaking is to deliver possession of property in a landlord-tenant dispute. Apart from punishing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order to purge the contempt by directing respondent 1-contemnor to deliver vacant possession immediately and issuing necessary further and consequential directions for enforcing the same. 24. Given the facts as aforesaid, we are of the view that the contempt of this Court needs to be purged by payment of the sum of INR 550 crore together with interest till date. As stated by the letter dated 21.01.2019, subject to any calculation error, an amount of INR 453 crore must be paid to Ericsson in addition to the deposit of INR 118 crore made in the Registry of this Court. The Registry of this Court is directed to pay over the sum of INR 118 crore to Ericsson within a period of one week from today. The RCom group is directed to purge the contempt of this Court by payment to Ericsson of the sum of INR 453 crore within a period of four weeks from today. In default of such payment, the Chairmen who have given undertakings to this Court will suffer three months imprisonment. In addition to the aforesaid sum being paid, a fine amounting to INR 1 crore for each Company must also be paid to the Registry of this Court within four weeks from today. This sum will be paid over to the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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