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TMI Blog2021 (5) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 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. - Contempt Application No. 02 of 2021 in C.P. No. 102/BB/2019 - - - Dated:- 20-4-2021 - Rajeswara Rao Vittanala, Member (J) And Ashutosh Chandra, Member (T) For the Appellant : S. Ganesh, Senior Counsel, Himanshu Satija and Aditya Prasad For the Respondents : Vishwajith Sadananda, Arun Kumar, Senior Counsel, Amogh, CA, C.K. Nandakumar, Raghuram Cadambi and Arjun Rao ORDER Rajeswara Rao Vittanala, Member (J) 1. The Contempt case bearing CC No. 02 of 2021 in CP No. 102 of 2019 (hereinafter referred to as Contempt case/Petition/Application) is filed on behalf of the Petitioner namely Triveni Turbines Ltd. ( TTL ) under Section 425 of the Companies Act, 2013 read with the Contempt of Courts Act, 1971 for initiating contempt pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of partnership was between the Petitioner and G.E. G.E. had nominated its affiliate to enter into the joint venture and subsequent ancillary agreements dated 01.10.2010 for technology license, marketing etc. [Marketing and Sales Services Agreement ( GE MSA ), Technology License Agreement ( GE TLA ), Administrative Services Agreement ( GE ASA ). (4) Since the Petitioner had apprehended that in breach of the understanding, G.E./Respondent No. 5 would walk out of the joint venture by inter alia selling its shares in BHGE, the Petitioner sought for an injunction restraining G.E. from altering the shareholding. G.E. and BHGE assured this Hon'ble Tribunal as well as the Hon'ble NCLAT, vide an undertaking dated 17.08.2019, as described hereinafter that they will continue to support the joint venture as per the obligations in the various contracts and on this assurance, the Tribunal to permitted sale of shares in question. (5) Initially, this Hon'ble Tribunal vide its order dated 12.06.2019, while issuing notice to the Respondents therein in the said Company Petition, (i) restrained GE from altering the shareholding composition of BHGE in any manner and; (ii) directed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t dated November 1, 2010 Trade and Trade name Agreement dated November 1, 2010 Service Legal Agreement dated April 6, 2017; and Ancillary Agreements to the Joint Venture Agreement dated April 15, 2010 will remain fully enforceable on their terms. (8) It is of crucial importance to note that the said Undertaking was acted upon by this Hon'ble Tribunal, and, accordingly, in pursuance of the said Undertaking, the said ad-interim injunction dated 12.06.2019 was vacated by this Hon'ble Tribunal by its order dated 23.08.2019. The said undertaking clearly and unequivocally sought to give assurance to this Hon'ble Tribunal that the status-quo which was then prevailing, in respect of not only the shareholding composition of Respondent No. 4, but also regarding the continued operation of the Technology License Agreement, the Marketing and Sale Service Agreement and Administrative Services Agreement dt. 01.11.2010, and continued provision of services under these three Agreements to GETL (Respondent No. 7 company), would continue uninterrupted and undisturbed. The Respondents however, in blatant breach of the said undertaking have altered the shareholding of BH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low the agreements to continue, instead of terminating the same. Further, the termination letters have gravely and prejudicially affected the business of GETL which is in clear contravention and breach of the Order dated 27.08.2019 and amounts to the contempt of the said Order. Therefore, the Tribunal not only should Respondent No. 4 and 5 be punished appropriately and severely for the gross acts of the contempt committed by them, but also should grant further appropriate interim orders and reliefs for the purpose of ensuring:- (a) That the supply of services under the GE-TLA, GE-MSA and GE-ASA continue, by not only staying the operation of the said Notices of Termination dated 24.04.2020 and 18.05.2020, but also by issuing appropriate orders against Respondents and Respondent No. 5 (GE) in particular, specially requiring the continuation of these services, so that the business of Respondent No. 1 Company is not brought to an abrupt and grinding halt. (b) That the continued financial ownership of the shares of GETL by Respondent No. 5 is ensured by mandatorily directing transfer of these shares either to Respondent No. 5 or to a fully owned affiliate of Respondent No. 5, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -quo, to the devastating and drastic detriment of the Petitioner and directly contrary to the express commitments and assurances contained in the said Affidavit undertaking dated 17.08.2019. (12) It is further stated that Respondent No. 5 is itself fully conscious of the effect of said termination of the Agreements, as is clear from the following passage contained in its letter dated 11.11.2020 to Bombay Stock Exchange (BSE), Securities and Exchange Board of India (SEBI), National Stock Exchange of India Ltd. (NSE), and the Ministry of Corporate Affairs, Government of India: Separately NP has on 24.04.2020 communicated its decision not to renew the Technology License Agreement dated November 01, 2010, beyond its original term, which expired on October 31, 2020. Similarly, NP has communicated its decision to terminate the Administrative Services Agreement, and the Marketing and Sales Services Agreement, effective October 31, 2020. Pursuant to the expiry of the Agreements, GETL will not have access to the technology and other services essential for its business. It is our belief that, without access to these services, GETL will not be able to continue meaningful presence i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by nominees of the GE group. In fact, in the Board Meeting of GETL dated 30.10.2019, the GE nominee Directors assured that 'all licence agreements are provided'. Further, in the said meeting the nominee Directors of the Petitioner, clearly conveyed their intention to renew their set of the ancillary agreements with GETL on the same terms and conditions. (14) The wilful disobedience by the Contemnors squarely falls within the definition of Civil Contempt as defined in Section 2(b) of the Contempt of Courts Act, which reads as under: (b) civil contempt means wilful disobedience to any judgment, decree, direction, order, writ or other process of a court or wilful breach of an undertaking given to a court; The present act of the Contemnors is a classic example of giant foreign players like Contemnor Nos. 4 and 5 making a mockery of orders and directions of Indian Courts. That despite categorical directions of the Hon'ble NCLAT, the Petitioner herein is made to suffer from the malicious and mala fide behaviour of non-Indian, foreign entities such as the Contemnor No. 4 herein, who are taking unfair advantage of the Foreign Direct Investment ( FDI ) pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e last date of hearing before this Hon'ble Tribunal on March 23, 2021, however, such service of the Contempt Application by email is improper and not as per the procedure established by law. (3) Without prejudice to the foregoing, it is stated that the present Contempt Application is wholly false and vexatious, and constitutes an abuse of the judicial process. The Contempt Application lacks bona fides and is liable to be dismissed with exemplary costs. Through the frivolous threat of contempt proceedings, the Petitioner seeks to browbeat the Respondents and coerce them to terms. Such a course ought not to be permitted by this Hon'ble Tribunal. The mala fides of the Petitioner are evident from their act of arraying Answering Respondent, who was not a party in the Appeal filed before the Hon'ble NCLAT, and who is not in any manner directly concerned with the present proceedings, as a Respondent to the Contempt Application. (4) The Answering Respondent has not, in any manner whatsoever, disobeyed or violated any order(s) or directions(s) passed by this Hon'ble Tribunal or the Hon'ble NCLAT. In fact, in so far as the Fifth Respondent (of which the Answerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent in the Fourth Respondent Company. It is well-settled that so long as an alleged contemnor has taken some steps to comply with the order/undertaking said to be in breach of, and the compliance could not be effected on account of the actions of a third party, no contempt will lie. Further, the Fifth Respondent sold its controlling interest in the Fourth Respondent in September 2019 and therefore no longer controls the Fourth Respondent or the Third Respondent. Therefore, it is urged to dismiss the Application/Petition with exemplary costs. 4. The Respondent Nos. 2 to 4 have filed their statement of objections dated 22nd March, 2021 by inter alia contending as follows: (1) They have denied allegations made in the Petition are false, baseless and vexatious. The Respondent No 2 was ready and willing to transfer GETL Shares to an affiliate of Respondent No. 5, in terms of the Undertaking and also acted on its intent. However, the Applicant itself has prevented such transfer from occurring. The Respondent No. 2, on September 18, 2019 and October 14, 2019, immediately following the 2019 NCLAT Order, wrote to and requested the Applicant as well as GETL to dematerialise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Undertaking stipulated that Respondent No. 5 would procure an affiliate to acquire the GETL Shares within 21 (twenty-one) days of such divestment; Respondent No. 5 completed the divestment of a portion of the shares it held in Respondent No. 4 on September 16, 2019 and consequently ceased to hold more than 50% of the voting rights in Respondent No. 4. A press release was also issued in this regard. (b) Respondent No. 2 on September 18, 2019, wrote to the Chairman of GETL (who is also the chairman and managing director of the Applicant) requesting the dematerialisation of GETL Shares in terms of Rule 9A of Companies (Prospectus and Allotment of Securities) Rules, 2014. As per the said rule, all unlisted public companies such as GETL are required to dematerialise all shares before any transfer of shares can take place. Therefore, under law, unless dematerialized, the GETL Shares cannot be transferred. On September 23, 2019, Mr. Arun Mote who is the CEO and an Executive Director of the Applicant and also the Applicant's nominee on the board of GETL, responded to the above letter dated September 18, 2019 inter alia stating that GETL was aware of the relevant rules and would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egation of breach of the Undertaking is therefore hit by Section 20 of the Contempt of Courts Act, 1971. The Petition is filed to delay the hearing and disposal of the applications (i.e., IA Nos. 494/2019 and 495/2019) filed by Respondent Nos. 2 and 3 under section 45 of the Arbitration and Conciliation Act, 1996 ( Section 45 Applications ) and, to further harass the Answering Respondents. (5) The Applicant cannot even decide who the actual contemnors are, let alone make out a case for contempt. Before the Hon'ble NCLAT, the Applicant had impleaded one Mr. John Leonard Flannery (as Respondent No. 1), one Mr. Massimiliano Maneschi (as Respondent No. 6), one Mr. Thomas Herrmann Kurt (as Respondent No. 7), one Mr. Luca Maria Rossi (as Respondent No. 8), one Mr. Vishal K. Wanchoo (as Respondent No. 9) and one Mr. Ashish Bhandari (as Respondent No. 10), while in the present Contempt Application, the Applicant has changed the array of parties and made Mr. H. Lawrence Culp as Respondent No. 1 while removing the others after NCLAT had granted the Applicant leave to file the same contempt Application before this Hon'ble Tribunal, if admissible under law. Further in the Contempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se ( TLA ), for marketing and sales services ( MSA ) and for administrative services ( ASA ) executed with GETL ( Ancillary Agreements ), unconditionally, until the disposal of the Company Petition. (3) The Answering Respondent was served with a notice of the present Contempt Application, dated March 15, 2021 (as issued by this Hon'ble Tribunal), via email from the counsel of the Applicant on March 18, 2021. The Answering Respondent is not a party in the main Company Petition in which the present Contempt Application has been filed or the abovementioned orders passed (the contempt of which has been alleged by the Applicant); There is no specific allegation of violation or contumacious conduct as against the Answering Respondent. Answering Respondent has acted as per the law and legal advice when acting in the capacity of a representative of Respondent No. 3. The intention not to renew the said Ancillary Agreements with GETL were only on account of GETL and the Applicant having failed to discuss the terms of renewal of these Ancillary Agreements with the Respondent No. 3 which were due to expire on October 31, 2020, on their own terms. The following facts with respect to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer its shareholding in GETL to an affiliate of Respondent No. 5, in terms of the Undertaking and also acted on its intent. However, it is the Applicant itself who prevented such transfer from occurring by ensuring that the shares of GETL are not dematerialized. Having prevented Respondent No. 2 from complying with the Undertaking, the Applicant cannot now allege contempt of the same. Therefore, it is urged to dismiss the Application. 6. Heard Shri S. Ganesh, learned Senior Counsel learned Counsel for the Petitioner, Shri Arun Kumar, learned Senior Counsel for R-2 to R-4, Shri C.K. Nandakumar learned Counsel for R-5, Shri Vishwajith Sadananda, learned Counsel for R-l, and Shri Arjun Rao, learned Counsel for R-6. We have carefully perused the pleadings of all the Parties and extant provisions of the Companies Act, 2013, the Rules made thereunder and have carefully perused various orders passed by NCLT/NCLAT and the case laws as relied upon by the Parties. 7. Shri S. Ganesh, learned Senior Counsel for the Petitioner, while reiterating various elaborate averments made in the instant case, has further inter alia submitted that the Agreements in question viz. Party B Techno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have jurisdiction over the Respondents, it cannot take cognizance of the instant Contempt case. Therefore, he has urged the Tribunal to dismiss the Contempt Case with exemplary costs. 9. Shri C.K. Nandakumar, learned Counsel for the Respondent No. 5, has also once again reiterated various averments made in the Reply filed on behalf of Respondent No. 5, as briefly stated supra. While supporting and adopting the arguments of Shri Arun Kumar, has further argued that the instant Petition lacks merits and it is liable to be dismissed. 10. Shri Vishwajith Sadananda, learned Counsel for Respondent No. 1, has also filed Written Arguments, dated 07th April, 2021, by inter alia contending as follows: (1) At the outset, the Contempt Petition is false, untenable and misleading - especially in relation to Respondent No. 1. In this regard, Respondent No. 1 has filed his statement of objections and the same may be read as part and parcel of these written submissions. Specifically, this Hon'ble Tribunal must dismiss the Contempt Petition against Respondent No. 1 because: (a) This Hon'ble Tribunal has categorically held that it has no territorial jurisdiction over the Respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espondent No. 5 in Respondent No. 4. It is settled law that to hold a person guilty of contempt, there must be wilful disobedience of the order of the court. In Ashok Paper Kamgar Union v. Dharam Godha (2003) 11 SCC 1, the Hon'ble Supreme Court has 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. It signifies a deliberate action done with evil intent or with a bad motive or purpose. Therefore, in order to constitute contempt the order of the court must be of such a nature which is capable of execution by the person charged in normal circumstances. It should not require any extraordinary effort nor should be dependent, either wholly or in part, upon any act or omission of a third party for its comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent No. 3 and Petitioner in this regard. The Petitioner has also failed to show that Respondent No. 1 directed either Respondents No. 3 or 4 in connection with the non-renewal of the ancillary agreements. (8) In McDonald's India Private Limited Anr. v. Union of India Ors. the procedure to be followed by the Hon'ble National Company Law Tribunals while dealing with proceedings under Section 425 of the Companies Act, 2013 has been set out. The Hon'ble Delhi High Court has held that only after arriving at a prima facie view, formal cognizance of a potential offence and the procedure under Section 17 of the Contempt of Courts Act, 1971 would follow [Paragraphs 24-27 and 48]. The Applicant has however, even without making out such a prima facie case sought for a direct criminal consequence to be visited on the Applicant by finding him guilty of contempt by adopting a summary procedure. Such a course of action is not permissible in law and consequently the Application ought to be dismissed as not maintainable. 11. Shri Arjun Rao, learned Counsel for the Respondent No. 6, after arguing the case, has also filed written gist of arguments, dated 12th April, 2021, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view to bypass the procedure under law. They have relied upon judgment of Hon'ble Delhi High Court in McDonald's India Private Limited Anr. v. Union of India Ors., in support of the case. Hence, the Petition is not maintainable and also lacks merits as against the Respondent No. 6. 12. In the light of various rival contentions raised for and on behalf of Parties, as briefly stated supra, the following main questions arise for consideration of this Tribunal: (1) Whether the Respondents are justified to take plea that the Tribunal do not have territorial jurisdiction, after having validly executed initial Equity Joint Venture Contract (EJVC for brief) dated 15th April, 2010 between Triveni Engineering and Industries Limited and GE Pacific Mauritius, Limited and after giving undertakings in question before NCLT and NCLAT and the orders of NCLAT in question; (2) Whether lack of jurisdiction over foreign Company, as held by this Tribunal, will apply to business interest of such foreign Company/companies over the affairs being conducted in foreign Countries or to apply to affairs and contract(s) executed in India in respect of Petitioner, with reference to acts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein it is inter alia stated that it will fully comply with and will procure that its Affiliates comply with, standards and requirements set forth in its guide titled Integrity..., etc. Therefore, GE is under obligations to ensure the terms and conditions of the Contract should not only be implemented by itself, it should also ensure its implementation through its various Affiliates; (2) Subsequently, in terms of said Contract, GE Triveni Limited, a joint venture between TTL and GE was incorporated on 20th May, 2010. And its Memorandum of Association incorporated various terms and conditions in consonance with the terms and conditions of said Contract. (3) The said TEIL, being flagship Company of Triveni Group and comprises of various businesses, has framed Scheme of Arrangement, Under sections 391 to 394 of the Companies Act, 1956, wherein it had demerged with Resulting Company namely Triveni Turbine Limited (the Petitioner herein) Accordingly, the scheme was sanctioned by Hon'ble High court of Judicature at Allahabad vide its order dated 19th April, 2011. 14. Aggrieved by the order dated 23rd August, 2019 passed by this Tribunal by vacating the interim order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veni Limited' for 'General Electric Company's providing relevant technology; and (b) Marketing Services Agreement for providing 'General Electric Company's international sales and marketing network to 'GE Triveni Limited'. 'GE Triveni Limited' was also granted a license to use General Electric Company's trademarks and tradenames. In October 2016, 4th Respondent- 'Baker Hughes LLC, A GE Company' was incorporated for the purpose of facilitating the merger of Baker Hughes Inc. and the oil and gas operating segment of 'General Electric Company' ( Merger ). In 2017, 'General Electric Company' informed 'GE Triveni Limited' that as part of the integration plan for the intended GE Oil Gas merger with Baker Hughes Inc. GE Mauritius proposed to transfer its shareholding to 2nd Respondent- 'DI Netherlands BV. 'GE Triveni Limited' was however specifically assured that this will not change the business relationship in any way. Ultimately all entities will be (and will remain) controlled affiliates of General Electric Company. As a result of the Merger, the relevant steam turbine business of 'General Electr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... int Venture Agreement dated April 15, 2010 will remain fully enforceable on their terms. However, on the contrary, the Respondents started taking unilateral action, without waiting for decision in main Company Petition, took steps to terminate those agreements and thus contended that it was due to failure of Petitioner to respond to various correspondence to renew them, the Agreements in question were terminated. The Respondents failed to understand that they are facing allegations of acts of oppression and mismanagement in the main company Petition and while pending the main Petition, the Tribunals have passed various interim orders protecting the interest of Petitioner. Therefore, various actions of Respondents, as detailed supra, aggravates and adversely affect the business interest of Petitioner, which violate Undertakings and orders of Tribunals in question and thus the Respondents have committed contempt necessitating the Tribunal to take cognizance of the same and initiate necessary steps as per law. 18. The contention of the Respondents that the Tribunal do not have territorial jurisdiction to entertain even the main company petition and much less the instant Contempt p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce with published laws of India, however, that to the extent the laws of India do not stipulate otherwise, relevant foreign laws and regulations shall be applied...., etc. 19. So far as contention of the Respondents that the Agreements in question stand terminated on their own terms, due to the conduct of Petitioner itself, is baseless and un-tenable. The Petitioner aggrieved by various acts of Oppression and Mismanagement on the part of Respondents, and those actions adversely affecting their interest, has filed the main Company Petition and the Agreements in question are fundamental for implementation of contractual terms. However, in order to deny and deprive the Petitioner fair business treatment, in terms of Contract and various agreements in question, GE along with its Affiliate further aggravating the situation taking adverse decisions by writing various letters, facilitating to transfer shares in its Group Companies, so as to plead that it do not have power to protect business interest of Petitioner, contrary to its contractual obligations. The issue of demat of shares in question etc., are not much relevant to the issue. The letter dated 11.11.2020, as referred to abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal, 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. And their undertaking is in no ambiguity which says Upon vacating of interim order dated 12.06.2019, the Respondents No. 04 05 shall with in a period of 21 days from the date of which Respondent No. 05 ceases to have controlling interest in Respondent No. 04, ensure that full title to all the shares of Respondent No. 01 (Currently held by Respondent No. 02) shall be transfer to a fully owned affiliate of Respondent No. 05. The agreements entered into with Respondent No. 1 Company ..... X X X X Extracts X X X X X X X X Extracts X X X X
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