# ASHISH SETH v. SUMIT MITTAL AND OTHERS

- **Citation:** [2020] 9 S.C.R. 412
- **Court:** Supreme Court of India
- **Decided:** 2020-04-24
- **Case number:** Contempt Petition No. 34 of 2016
- **Bench:** Ashok Bhushan, M. R. Shah
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/ashish-seth-v-sumit-mittal-and-others-34872
- **Pages:** 30

## Headnote

Contempt of Court - Dispute in the instant case was between
the two groups of a Joint Venture (JV) Company - Seth Group and
Mittal Group - The JV Company had acquired some land including
Sector 89, Faridabad and also availed licences from competent
authorities with an intent to develop Sector 89 land - Subsequently,
both the groups agreed that development in the said land be divided
and carried out separately and thereupon the development rights
in Sector 89 were sold - Dispute arose between both the groups in
respect of payment of liabilities out of the JV Company which gave
rise to various litigations including Writ Petition 5/2015 and 11/
2015 - Dispute was referred to arbitration - Memorandum of
Settlement (MoS) dated 04.05.2015 was executed between the Seth
Group, Mittal Group and JV Company whereunder both the groups
were to fulfill the reciprocal obligations - Writ Petition 5/2015 was
disposed of in terms of MoS dated 04.05.2015 - In the Contempt
Petitions filed by Seth Group, the grievance of Seth Group was that
Mittal Group failed to comply with the obligations under the MoS
and the order passed by the Court and the non-compliance was
wilful and intentional - Held: In view of the relevant clauses of the
MoS and the obligations to be fulfilled by the respective parties to
the MoS, Seth Group fully complied with their obligations, except
deposit of the total amount of Rs.25.27 crores - payment to DTCP
towards initial liability of Rs.59.05 crores of JV Company - Seth
Group already paid Rs.9.40 crores against the liability of Rs.25.27
crores towards EDC liability against the total liability of Rs.59.05
crores of JV Company as per Clause 1.2 - The balance amount was
not deposited by the Seth Group as the Mittal Group had not fulfilled
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their obligations under the MoS - The material on record showed
that the Mittal Group did not fulfill their obligations as per Clause
1.2, Clause 5.3 and Clause 8 - Neither the Mittal Group nor JV
Company deposit the balance amount to be paid towards EDC
liability of Rs.59.05 crores (deducting Rs.25.27 crores to be paid
by the Seth Group) - Mittal Group in Contempt Petition No. 34 of
2016 deliberately and willfully did not fulfill their obligations under
the MoS dated 04.05.2015 and as such they rendered themselves
liable for action under the Contempt of Courts Act - However,
further two months' time is given to the respondents to fulfill their
part of obligations under the MoS dated 04.05.2015 failing which,
proceedings under the Contempt of Courts Act would be initiated.
Listing Contempt Petition (C) No.34/2016 in Writ Petition
(Crl.) No. 5 of 2015 after three months while dismissing Contempt
Petition (C) Nos. 257 of 2016 and No. 889 of 2017, the Court
HELD: 1. The relevant clauses of the MoS and the
obligations to be fulfilled by the respective parties to the MoS
showed that Seth Group have fully complied with their obligations,
except deposit of the total amount of Rs.25.27 crores - payment
to DTCP towards initial liability of Rs.59.05 crores of TFIPL.
Seth Group have already paid Rs.9.40 crores against the total
liability of Rs.25.27 crores towards EDC liability against the total
liability of Rs.59.05 crores of JV Company. The balance amount
is not deposited by the Seth Group as the Mittal Group have not
fulfilled their obligations under the MoS. It is stated at the bar
that the Seth Group is always ready and willing to fulfill their
obligations in terms of the MoS, i.e. their liability as per Clause
1.2, subject to Mittal Group fulfill its obligations. The material
on record showed that the Mittal Group have not fulfilled their
obligations as per Clause 1.2, Clause 5.3 and Clause 8. Neither
the Mittal Group nor TFIPL have deposited the balance amount
to be paid towards EDC liability of Rs.59.05 crores (deducting
Rs.25.27 crores to be paid by the Seth Group as per Clause 1.2).
It is the case on behalf of the Mittal Group that in the Mo

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ASHISH SETH
v.
SUMIT MITTAL AND OTHERS
(Contempt Petition (C) No. 34/2016)
IN
(Writ Petition (Criminal) No.5/2015)
APRIL 24, 2020
[ASHOK BHUSHAN AND M. R. SHAH, JJ.]
Contempt of Court - Dispute in the instant case was between
the two groups of a Joint Venture (JV) Company - Seth Group and
Mittal Group - The JV Company had acquired some land including
Sector 89, Faridabad and also availed licences from competent
authorities with an intent to develop Sector 89 land - Subsequently,
both the groups agreed that development in the said land be divided
and carried out separately and thereupon the development rights
in Sector 89 were sold - Dispute arose between both the groups in
respect of payment of liabilities out of the JV Company which gave
rise to various litigations including Writ Petition 5/2015 and 11/
2015 - Dispute was referred to arbitration - Memorandum of
Settlement (MoS) dated 04.05.2015 was executed between the Seth
Group, Mittal Group and JV Company whereunder both the groups
were to fulfill the reciprocal obligations - Writ Petition 5/2015 was
disposed of in terms of MoS dated 04.05.2015 - In the Contempt
Petitions filed by Seth Group, the grievance of Seth Group was that
Mittal Group failed to comply with the obligations under the MoS
and the order passed by the Court and the non-compliance was
wilful and intentional - Held: In view of the relevant clauses of the
MoS and the obligations to be fulfilled by the respective parties to
the MoS, Seth Group fully complied with their obligations, except
deposit of the total amount of Rs.25.27 crores - payment to DTCP
towards initial liability of Rs.59.05 crores of JV Company - Seth
Group already paid Rs.9.40 crores against the liability of Rs.25.27
crores towards EDC liability against the total liability of Rs.59.05
crores of JV Company as per Clause 1.2 - The balance amount was
not deposited by the Seth Group as the Mittal Group had not fulfilled
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their obligations under the MoS - The material on record showed
that the Mittal Group did not fulfill their obligations as per Clause
1.2, Clause 5.3 and Clause 8 - Neither the Mittal Group nor JV
Company deposit the balance amount to be paid towards EDC
liability of Rs.59.05 crores (deducting Rs.25.27 crores to be paid
by the Seth Group) - Mittal Group in Contempt Petition No. 34 of
2016 deliberately and willfully did not fulfill their obligations under
the MoS dated 04.05.2015 and as such they rendered themselves
liable for action under the Contempt of Courts Act - However,
further two months' time is given to the respondents to fulfill their
part of obligations under the MoS dated 04.05.2015 failing which,
proceedings under the Contempt of Courts Act would be initiated.
Listing Contempt Petition (C) No.34/2016 in Writ Petition
(Crl.) No. 5 of 2015 after three months while dismissing Contempt
Petition (C) Nos. 257 of 2016 and No. 889 of 2017, the Court
HELD: 1. The relevant clauses of the MoS and the
obligations to be fulfilled by the respective parties to the MoS
showed that Seth Group have fully complied with their obligations,
except deposit of the total amount of Rs.25.27 crores - payment
to DTCP towards initial liability of Rs.59.05 crores of TFIPL.
Seth Group have already paid Rs.9.40 crores against the total
liability of Rs.25.27 crores towards EDC liability against the total
liability of Rs.59.05 crores of JV Company. The balance amount
is not deposited by the Seth Group as the Mittal Group have not
fulfilled their obligations under the MoS. It is stated at the bar
that the Seth Group is always ready and willing to fulfill their
obligations in terms of the MoS, i.e. their liability as per Clause
1.2, subject to Mittal Group fulfill its obligations. The material
on record showed that the Mittal Group have not fulfilled their
obligations as per Clause 1.2, Clause 5.3 and Clause 8. Neither
the Mittal Group nor TFIPL have deposited the balance amount
to be paid towards EDC liability of Rs.59.05 crores (deducting
Rs.25.27 crores to be paid by the Seth Group as per Clause 1.2).
It is the case on behalf of the Mittal Group that in the MoS there
is no specific term and the obligation that the said amount is to
be paid by the Mittal Group. [Para 9.1][438-G-H; 439-A-C]
2. The liability of Rs.59.05 crores was with respect to the
entire land - 48.03 acres at Sector 89, Faridabad. Therefore, the
ASHISH SETH v. SUMIT MITTAL AND OTHERS
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liability of the Seth Group would be with respect to their share
out of 48.03 acres which, as agreed between the parties, would
come to Rs.25.27 crores and therefore the balance was required
to be paid by Mittal Group/JV Company. Unless and until the
entire amount is deposited with the DTCP towards EDC, the
aforesaid licenses cannot be renewed and after renewal they are
required to be bifurcated and transferred. As the Mittal Group
has refused to deposit the balance amount of EDC (after deducting
Rs.25.27 crores which is the liability of Seth Group as per Clause
1.2), the licenses are not being renewed thereafter. If the
contention and the submission on behalf of the Mittal Group is
accepted, in that case, the entire MoS would be unworkable and
the purpose and object of the MoS to resolve all the disputes
would be frustrated. As the Mittal Group has not fulfilled its
obligations it appears that the Seth Group has not deposited the
balance amount of EDC liability. At this stage, it is required to be
noted that as per Clause 5.8 Mittal Group shall not resign from
the Board of Directors of JV Company and shall not transfer
majority/controlling shareholding in TFIPL till renewal of licenses.
As per the case of Seth Group, Mittal Group have retired from
the Directorship of TFIPL and the balance sheet since then is
being signed by the proxies. [Para 9.2][439-G-H; 440-A-D]
3. As per MoS dated 04.05.2015 and even as per the order
passed by this Court 05.05.2015, all the parties to the MoS are
bound to fulfill their respective obligations. Seth Group have
fulfilled their obligations, except the payment of DTCP i.e.
Rs.25.27 crores as per Clause 1.2 of the MoS (except Rs.9.49
crores which is paid). The respondent Mittal Group in Contempt
Petition No. 34 of 2016 have deliberately and willfully not fulfilled
their obligations which they are required to fulfill under the MoS
dated 04.05.2015 and as such they have rendered themselves
liable for the action under the Contempt of Courts Act. However,
before taking any action, further two months' time is given to the
respondents to fulfill their part of obligations under the MoS dated
04.05.2015, more particularly, (i) To pay the entire EDC liability
of TFIPL with interest in relation to license Nos. 34, 35 and 36
other than the share of the EDC liability which the Seth Group
has undertaken to pay as per Clause 1.2 of the MoS; (ii) As per
Clause 1.2, EDC liability of the Seth Group is to the extent of
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Rs.25.27 crores, out of the total EDC liability of TFIPL in relation
License Nos. 34, 35 and 36 as on 24.03.2015 together with
interest accrued thereon from 24.03.2015. Therefore, the Seth
Group shall make the entire payment of Rs.25.27 crores towards
their EDC liability in respect of License Nos. 34, 35 and 36 of
2007; (iii) The Mittal Group is further directed to renew the
license Nos. 34, 35 and 36 of 2007; to execute GPA by JV
Company (as per Clause 5.3), Board Resolution by TFIPL for
availing benefit under EDC Relief Policy (as per Clause 1.2.1),
NOC without any conditions (as per Clause 8) to the Seth Group.
(iv) Thereafter, the DTCP to bifurcate the Seth Group's portion
of the land in accordance with law and as per the policy and/or the
rules and regulations, if any. It will be open to the respective
parties to avail the benefit of the applicable EDC Relief Policy,
which may be considered by the DTCP in accordance with the
applicable EDC Relief Policy, if any. The aforesaid entire exercise
shall be completed within a period of two months from the date of
lifting of lockdown in the concerned area, failing which, this Court
shall proceed to pass appropriate further order/orders under the
Contempt of Courts Act for non-fulfillment of the obligations by
the respondents. [Paras 9.2, 10, 10.1][440-E-H; 441-A-E]
INHERENT JURISDICTION: Contempt Petition (C) No. 34 of
2016 in Writ Petition (Crl.) No. 5 of 2015.
Under Article 32 of the Constitution of India
With
Contempt Petition (C) No.257/2016 In Writ Petition (Crl.) No.5/
2015
Contempt Petition (C) No.889/2017 In Writ Petition (Crl.) No.5/
2015
Anil Grover, AAG, Ms. Meenakshi Arora, Ms. Vibha Datta
Makhija, Sr. Advs., Abhimanyu Bhandari, Ms. Nattasha Garg, Ram
Kaushik, Kaushlendra Singh, Ms. Namitha Mathews, Rajnish Singh,
Ms. Aashima Singhal, Piyush Kant Roy, Pulkit Malhotra, Mrs. Priya
Puri, Akshay Girish Ringe, Sanjay S. Chhabra, Deepak Agarwal, Ms.
Vijay Laxmi, Ms. Swati Tiwari, Ms. Garima Prashad, T.A. Khan, Praveen
Gaur, Ms. Priyanshi Agarwal, B.V. Balram Das, Ms. Noopur Singhal,
Satish Kumar, Sanjay Kumar Visen, Abhishek, Govind Goel, Ankit Goel,
ASHISH SETH v. SUMIT MITTAL AND OTHERS
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R.K. Gupta, Ayush Sharma, Akhilesh Kumar Pandey, P. N. Gupta, Gaurav
Goel, Rahul Sharma, Ashish Gautam, Snehal Sandil, Bankey Bihari,
Birendra Bikram, Sachin Mittal, Advs. for the appearing parties.
The Judgment of the Court was delivered by
M. R. SHAH, J.
1. All these Contempt Petitions being Contempt Petition(C) No.
34/2016, Contempt Petition (C) No. 257/2016 and Contempt Petition
(C) No. 889/2017 are preferred by the respective applicants who as
such were parties to Writ Petition (Criminal) No. 5 of 2015 and also
parties to the Memorandum of Settlement dated 4.5.2015 which
ultimately was made a part of the order passed by this Court dated
5.5.2015 disposing of Writ Petition (Criminal) No. 5/2015 and Writ Petition
(Criminal) No.11/2015, to initiate the contempt proceedings against
concerned respective respondents for non-compliance of the order passed
by this Court in the aforesaid writ petition.
2. The facts leading to the present contempt petitions in nutshell
are as under:
That one Triveni Ferrous Infrastructure Private Limited
(hereinafter referred to as 'TFIPL') was a joint venture company
constituted of two groups - one being the Seth Group [consisting of Mr.
Surrender Seth, Mr. Ashish Seth, M/s Ferrous Forging Ltd., M/s Ferrous
Alloys Forging Pvt. Ltd. (FAFPL), M/s Ferrous Township Pvt. Ltd.
(FTPL) and M/s Ferrous Infrastructure Pvt. Ltd. (FIPL)] and the second
being the Mittal Group [consisting of Mr. Sumit Mittal and Mr. Madhur
Mittal].
2.1 That TIFPL acquired some land at Sector 70 and some 48.05
acres of land at Sector 89, Faridabad. The said TIFPL also availed licences
Nos. 34, 35 and 36 from competent authorities in the year 2007 in respect
of the land bearing Sector 89 with an intent to develop the said Sector 89
land. Subsequently both the parties being Seth Group and Mittal Group
agreed that the development in the said land be divided and carried out
separately and thereupon the development rights in Sector 89 land, parcel
of 48.03 acres of land belonging to TIFPL, was sold in the following
manner:
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TFIPL
48.03 acres

TIDCO
(in liquidation)
14.80 acres
(Mittal Group)
ORS
Limited
5.5 acres
(third party)
FIPL
14.80 acres
(Seth Group)
Ferrous City
Project
Heritage
2.8 acres
(third
party)
Pal
Infrastructure
10.48 acres
(third party)
2.2 That certain disputes arose between both the groups in respect
of the payment of liabilities out of TFIPL which gave rise to various
litigations including Writ Petition (Criminal) No. 5/2015 and Writ Petition
(Criminal) No. 11/2015. The disputes were referred to mediation. A
Memorandum of Settlement dated 4.5.2015 (hereinafter referred to as
'MOS') was executed between the Seth Group, Mittal Group and TFIPL.
The said MOS was produced before this Court in Writ Petition (Criminal)
No.5/2015 and this Court disposed of the aforesaid writ petition in terms
of the MOS. Under the MOS and the order passed by this Court in the
aforesaid writ petition which was disposed of in terms of MOS dated
4.5.2015 reciprocal obligations were to be fulfilled by both the Seth Group
and the Mittal Group. The obligations of the Seth Group were as
mentioned in paragraph 1 to 4 of the Contempt Petition No. 34/2016 and
the obligations of the Mittal Group and TFIPL were as per Clauses 5.1
to 5.9 of the contempt petition. Broadly speaking the obligations of the
Seth Group and the obligations of the Mittal Group under the MOS and
the order passed by this Court were as under:
OBLIGATIONS OF THE SETH GROUP
Sr. No.
Particulars
Amount in Rs. (Crores)
MoS Clause No.
1.
Payment to TFIPL/Mittal group towards
settlement of disputes
10
(court deposit)
28.50 (by four cheques
38.50
1.1
1.1.2
2.
License Renewal fee to DGTCP on
behalf of TFIPL/Mittal group
1.47
1.3
3.
Bank Guarantee to secure EDC
6.65
1.2.1
4.
Bank
Guarantee
to
secure
IDW
performance
3.55
1.4
ASHISH SETH v. SUMIT MITTAL AND OTHERS
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5.
One time consultancy charges for
renewal of license
0.25
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6.
Transfer 50% shareholding of Seth group
in TFIPL at a price of Rs.50,000/-
50.00
1.5
7.
Total Financial commitment under the
MOS and complied by the Seth Group
100.42
8.
Payment of DTCP on behalf of TFIPL
towards EDC liability of Rs.59.05 Cr of
TFIPL.
Seth Group has and is and shall always
be willing to fulfill their obligations in
terms of the MoS subject to the Mittal
Group fulfilling its obligations.
25.27
On deferred payment
basis
1.2
OBLIGATIONS OF MITTAL GROUP
SR. NO.
PARTICULARS
MOS CLAUSE NO.
1.
Board Resolution to be issued by TFIPL
authorizing Seth Group to avail the benefits under
EDC relief policy of 12.04.2012 or any other
future EDC relief policy announced by the DTCP
1.2.1 Board Resolution
2.
General Power of Attorney to be issued by TFIPL
in favour of FIPL (Seth Group) by 20.05.2015 i.e.
within 15 days of execution of MoS to enable
application
for
Occupancy
Certificate
and
Completion.
53 (GPA
Annexure 13)
3.
Bifurcation of license- TFIPL is the license holder
in respect of 48.03 acres Sector 89 Land and has
sold development rights of 14.8 acres to Seth
Group -
Application was to be made within 30 days for
renewal for bifurcation/recording of beneficial
interest. Mittal Group/TFIPL along with the Seth
Group was to submit the same latest by
30.10.2015
Seth Group has already applied in terms of the
renewal letter dated 01.10.2015 on 30.10.2015
and have already made the payment towards
administrative charges to the DGTCP.
8
4.
Renew the license till 2017 and as per undertaking
on 26.10.2015 to renew till 2018.
Clause 17 and Court
order dated 26.10.2015
2.3 It is the case on behalf of the Seth Group - the petitioner in
Contempt Petition (Civil) No. 34/2016 that the Seth Group has duly
complied with/fulfilled its obligations under the said MOS and the order
passed by this Court, however, the Mittal Group has failed to comply
with the same. It is the case on behalf of the Seth Group that noncompliance of the MOS by the Mittal Group has been wilful and
intentional. It is the case on behalf of the Seth Group that the Mittal
Group has failed to comply with/fulfill the following obligations which
they were required to be complied with/fulfilled as per MOS dated
4.5.2015:
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SR. NO.
PARTICULARS
1.
Board Resolution to be issued by TFIPL authorizing
Seth Group to avail the benefits under EDC relief
policy of 12.04.2012 or any other future EDC relief
policy announced by the DTCP
2.
General Power of Attorney to be issued by TFIPL in
favour of FIPL (Seth Group) by 20.05.2015 i.e. within
15 days of execution of MoS to enable application for
Occupancy Certificate and Completion.
3.
Bifurcation of license- TFIPL is the license holder in
respect of 48.03 acres Sector 89 Land and has sold
development rights of 14.8 acres to Seth Group -
Application was to be made within 30 days for
renewal
for
bifurcation/recording
of
beneficial
interest. Mittal Group/TFIPL along with the Seth
Group was to submit the same latest by 30.10.2015
Seth Group has already applied in terms of the
renewal letter dated 01.10.2015 on 30.10.2015 and
have
already
made
the
payment
towards
administrative charges to the DGTCP.
4.
Renew the license till 2017 and as per undertaking on
26.10.2015 to renew till 2018.
2.4 It is the case on behalf of the Seth Group that as agreed and
as per clause 1.2.1 of the MOS, Board resolutions were to be passed by
TFIPL authorizing the Seth Group to avail the benefits under EDC relief
policy of 12.04.2012 or any other future EDC relief policy announced by
the DTCP, which resolution is not passed. It is the case on behalf of the
Seth Group that as per clause 5.3 of the MOS, TFIPL was required to
issue General Power of Attorney in favour of FIPL (Seth Group) by
20.05.2015, i.e., within 15 days of execution of the MOS to enable
applicants for occupation and completion certificate. It is submitted that
no such General Power of Attorney has been executed. It is also the
case on behalf of the Seth Group that as per clause 8 of the MOS, the
licencees were required to be bifurcated in respect of 48.03 acres Sector
89 land to the extent of 14.8 acres for which the development rights
were sold to the Seth Group. It is the case on behalf of the Seth Group
that under clause 8 of the MOS, TFIPL was required to take steps for
recording of change of beneficial interest to delineate the share of the
Seth Group in the 48.03 acres land. According to the Seth Group, policy
ASHISH SETH v. SUMIT MITTAL AND OTHERS
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dated 08.02.2015 required that an NOC be given by TFIPL/Mittal Group
which should have been given within 30 days of renewal of licence. It is
the case on behalf of the Seth Group that TFIPL/Mittal Group instead
issued a conditional NOC dated 19.04.2016 with 22 frivolous conditions,
which conditions were contrary to the MOS and/or as per the requisite
format as required by the DGTCP. It is submitted that consequently the
said NOC was rejected by the DGTCP. It is submitted therefore that in
effect, there has been no substantial compliance of the MOS regarding
issuance of NOC by TFIPL/Mittal Group till date.
2.5 It is further the case on behalf of the Seth Group that under
clause 17 of the MOS, it was the responsibility of the Mittal Group to
obtain renewal of licence granted by DTCP in respect of the entire
48.03 acres of Sector 89 land. It is the case on behalf of the Seth Group
that without any intention to actually renew the licence and to only comply
with the order on paper, the Mittal Group applied for renewal of licence
vide application dated 7.1.2016 without complying with any of the
conditions of renewal. It is submitted that one of the conditions by the
DTCP was the payment of EDC charges in terms of the EDC relief
policy dated 12.04.2012. It is submitted that the said EDC charges were
payable for the entire license land by TFIPL and as on that date amounted
to Rs.59.05 crores. It is submitted that the Seth Group undertook to pay
Rs.25.27 crores out of the total liability of Rs.59.05 crores on behalf of
TFIPL of which Rs. 9.4 crores was already paid by the Seth Group.
However, the Mittal Group failed to make payment of a single penny to
the DTCP towards EDC either of the entire 59.05 crores or of the balance
share payable after providing for 25.27 crores offered to be paid by the
Seth Group on behalf of the Mittal Group 59.05 crores. It is submitted
that as a consequence of the action/in-action of the Mittal Group, the
application for renewal of licence was rejected by the DTCP.
2.6 It is the case on behalf of the Seth Group that the Mittal
Group and TFIPL have deliberately and willfully not complied with/fulfilled
their obligations under the MOS dated 4.5.2015 and therefore they have
rendered themselves liable for the action under the provisions of the
Contempt of Courts Act. It is submitted that non-compliance is deliberate
and wilful.
2.7 It appears that Director of M/s Maximal Infrastructure Private
Limited has also filed two separate contempt petitions being Contempt
Petition No. 257/2016 and Contempt Petition No. 889/2017 against the
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Seth Group alleging non-compliance of the relevant terms/clauses of the
MOS.
3. It is submitted by the learned counsel appearing on behalf of
the petitioner Seth Group that Clauses 1.2.1, 12 and 3.2 of the MoS
clearly contemplate that the Seth Group's liability as far as EDC liability
of TFIPL would be limited to an amount of Rs.25,27,92,000/- out of the
total liability payable by TFIPL to DTCP towards EDC being Rs.59.05
crores. It is submitted that immediately after entering into the MoS, Seth
Group has undisputedly paid Rs.9.40 crores against its assumed liability
of Rs.25,27,92.000/- in favour of the Chief Administrator, DTCP. Seth
Group in addition has also given a bank guarantee of Rs.6.65 crores to
DTCP towards its EDC liability. It is submitted that after paying such
huge amounts by Seth Group, the Mittal Group has not paid a single
penny towards their part of the EDC liability and did not renew the
license nor did it provide GPA, Board Resolution and/or unconditional
NOC, as was required under the MoS, which was to be given to the
Seth Group. This prevented Seth Group from getting DTCP to avail the
benefit of the EDC Relief Policy and work out the payment schedule in
order to clear its share of the EDC liability. It is submitted that as on the
date of MoS, an EDC Relief Policy was in existence which allowed
payment of EDC over various installments. The bank guarantee was
specifically given by the Seth Group so that they could avail the benefits
of the then existing EDC Relief Policy as specifically contemplated under
Clause 1.2.1 of the MoS. The Seth Group has been prevented from
availing the entitlement under the relief policy by the Mittal Group as the
Mittal Group had and till date has no intention to repay its own EDC
liability and /or to resolve the entire issue of bifurcation of Seth Group's
portion of land, which was clearly contemplated in the MoS.
3.1 It is further submitted that violations on the part of the Mittal
Group, namely, non-renewal of license bearing nos. 34, 35 and 36 of
2007; no steps are taken by the TFIPL to bifurcate the license; and nonissuance of GPA/NOC are deliberate and willful and contrary to the
MoS and the basic intent and purpose of entering into the MoS which
was to provide for complete severance of between the Seth Group and
the Mittal Group from TFIPL and from the development of the 48.03
acres of land. It is due to the non-compliance of the obligations by the
Mittal Group on the Seth Group and other stakeholders, the basic intent
under the MoS has not been achieved.
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3.2 It is submitted on behalf of the Seth Group that the effect of
the non-compliance of the obligations by the Mittal Group on the Seth
Group and other stakeholders is as under:
I.
The basic intent under the MoS was to provide for complete
severance of between the Seth Group and the Mittal Group
from TFIPL and from the development of the 48.03 acres of
land, which has not been achieved due to the defaults by the
Mittal Group.
II. The severance cannot take place without recording of change
of beneficial interest in the land, which in turn cannot be done
without renewal of the License and without complying with
the conditions stipulated by the DGTCP.
III. One of the conditions laid down by the DTCP for renewing
the license was issuance of an NOC as per the requisite
format. Since the NOC was conditional and not as per format,
the renewal of license too has been rejected and the change
in beneficial interest not being recording. This has rendered
the entire settlement under the MoS as otiose and has led to
parting of huge sums of money by the Seth Group without
having the desired effect at all.
IV. The most important consequence of all this is that because of
non-renewal of license coupled with non-bifurcation of the
license, the Seth Group has been unable to handover the
possession to 700 flat owners of its Project 'Ferrous City' on
the 14.80 acres of land falling in its share. It has further been
unable to sell and/or utilize the unsold stock of 126 flats which
can be utilized to generate funds to pay the only remaining
outstanding liabilities of the Seth Group under the MoS.
3.3 It is submitted that in terms of Clause 5.8 of the MoS, the
Mittal Group agreed not to resign from the board of directors of TFIPL
and not to transfer majority/controlling shareholding of TFIPL till renewal
of licenses. However, perusal of the recent Balance Sheets of TFIPL
shows that the said Balance Sheets have not been signed by the Mittal
brothers namely Mr. Sumit Mittal (Contemnor No. 1) and Mr. Madhur
Mittal (Contemnor No. 2), but has been signed by proxies of the
contemnors. This has been done in order to avoid sanctions from this
Court or any other Court.
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3.4 Making the above submissions, it is prayed to issue the following
directions:
(a) Direct Mr. Sumit Mittal (Contemnor No. 1) and Mr. Mathur
Mattal (Contemnor No. 2) and TFIPL to pay the entire EDC
liability of TFIPL in relation to License No. 34, 35 and 36
other than the share of the EDC liability which the Seth Group
has undertaken to pay.
(b) Declare that Seth Group's EDC liability was only up to an
amount of Rs.25,27,92,000/- out of the total EDC liability of
TFIPL, in relation to License No. 34, 35 and 36 as on 24.3.2015
together with interest accrued thereon from 24.03.2015. Out
of this, Seth Group has already paid Rs.9.40 crores vide DD
No. 501599 dated 01.08.2016 and has also given a bank
guarantee of Rs.6.65 Crores to DTCP towards its EDC
liability. Seth Group is not liable to any other EDC payment in
respect of License No. 34, 35 and 36.
(c) Direct DTCP to bifurcate the Seth Group's portion of the
land.
(d) Direct DTCP to raise a fresh demand on TFIPL for the entire
outstanding liability of TFIPL and set out the payment schedule
as per their applicable EDC relief policy.
(e) Direct Mittal Group to renew the licenses as per their
obligations set out under Clause 17, provide General Power
of Attorney by TFIPL (as per clause 5.3) Board Resolution
by TFIPL for availing benefit under EDC Relief Policy (as
per Clause 1.2.1), NOC without any conditions (as per Clause
8) to the Seth Group.
(f) Direct Mr. Sumit Mittal (Contemnor No. 1) and Mr. Mathur
Mittal (Contemnor No. 2) to deposit their passports in Court
and list the matter after a few weeks to determine if the
Mittal Group has complied with the orders passed by this
Court.
It is submitted that the above prayers will not only resolve the
various issues between the Mittal Group and Seth Group but will also
resolve the plight of various homebuyers who are suffering because of
the fraud played by the Mittal Group who are not complying with any of
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their obligations under the MoS and are conveniently resigning from the
companies which are owned and controlled by them after siphoning off
moneys paid by the Seth Group to them so that they can evade any
liability.
4. Miss Meenakshi Arora, learned senior advocate appearing on
behalf of the respondent Mittal Group has submitted as under:
(i) Mittal Group/TFIPL/Maximal have not committed any breach
or disobedience of the terms and conditions of the MoS dated 04.05.2015;
(ii) The contempt petition filed by the Seth Group is a farce,
motivated and a ruse/ploy so as to create artificial/imaginary
circumstances to cover up their willful and intentional acts of omission
and commission of having failed to fulfill their obligations qua their
allottees, who have invested in the project of the Seth Group, part of
which is incomplete and the remaining unsafe for habitation as per the
report of the Commission appointed by the RERA;
(iii) In view of the order dated 01.10.2019 passed by RERA in
Complaint No. 826/2018 - "Ferrous vs. Maximal" and Complaint No.
1402 of 2018 - "Maximal vs. Maximal", the present contempt petition
is rendered infructuous. The alleged issues/acts of disobedience raised
by Seth Group have been delineated and put to rest by the competent
authority - RERA, Haryana. RERA, Haryana has put to rest the
following issues:
i)
No objection to LC report filed;
ii)
Major violation in Zone A;
iii)
Grant of Occupation Certificate to the Developer in 48.038
acres of land under license No. 34-36/2007;
iv)
Quantification of EDC liability and Mode and manner of
payment of EDC liability qua respective developers including
that of FERROUS project (developed by Seth Group);
v)
Renewal of License qua each of developers;
vi)
Condition of obtaining NOC for bifurcation of License from
Licences i.e. MAXIMAL is no longer applicable;
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vii)
Direction to DTCP, Haryana to deal with flagrant deviations
and violation in the construction at the project site;
viii)
Prohibited from offering possession.
5. With respect to the obligations of the Seth Group, it is submitted
as under:
S. No.
Particulars
Amount
(Rs.
In
Crores)
Reply of contemnors
1.
Payment
to
Maximal
38.50
Seth Group defaulted in payment of
the last instalment compelling the
contemnors to file a Contempt Petition
before
this
Court
bearing
No.
714/2015. It is on filing of the
Contempt Petition that Seth Group in
obedience of MOS paid the last
instalment of Rs.6 Crore.
2.
License fee to
DTCP,
Haryana
in
terms
of
.clause 1.3
1.47
It is falsely stated that Rs.1.47 crores
was paid by Seth Group. Seth Group
paid Rs.93.50 lakhs approximately,
proportionate to their share of land out
of 48.038 acres situated in Sector-89,
Faridabad. Clause 1.3 relied upon is to
be read in conjunction with clause 2 of
the MOS.
3.
Bank
guarantee
to
secure
payment
of
EBC (External
Development
Charges)
6.65
Seth Group in discharge of his
obligation to pay furnished this BG,
which is returnable to Seth Group.
This condition is no longer applicable
in view of the order dated 01.10.2019
(RERA).
4.
Bank
guarantee
to
secure
IDW
(Internal
Development
Work)
3.55
Seth Group in discharge of his
obligation to construct the project in
accordance with law furnished this
BG, which is returnable to Seth Group.
5.
Consultancy
fee
0.25
The license was expired since the year
2009. There were enumerable
formalities
to
be
completed
for
renewal of license w.e.f. the date of its
expiry. It was unanimously agreed to
engage the services of a third party for
the renewal of the license.
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6.
Transfer
of
shareholding
50.00
It is falsely stated that Rs.50 Crores
was paid by Seth Group to Maximal.
Seth Group held 500 shares in
Maximal. Seth Group opted to divert
their shareholding to exit from the
Company. Mittal Group agreed to
acquire
the
shares
and
paid
consideration to Seth Group.
It
is
therefore
misleading
and
outrageous
to
mention
that
the
transferor of shares viz., Seth Group
paid any amount to the transferee
(Mittal Group).
7.
Total financial
commitment
100.42
That
the
amount
mentioned
is
misleading and blatantly false.
The Seth Group in lieu of land
admeasuring 66.77 acres situated in
Sector-70,
Faridabad,
which
was
fraudulently transferred have paid only
Rs.38.50 crores to former owner i.e.
Maximal against then market value of
the said land which is approximately
Rs.300 crores.
8.
Payment
to
DTCP,
Haryana
25.27
In terms of clause 1.2 of the MOS,
Additional
Document
filed
on
21.12.2029 (IA 197372), Seth Group
undertook to pay Rs.25.27 crores
together with
interest to DTCP,
Haryana on behalf of Maximal. In
view of the order dated 01.10.2019
(RERA) this condition is no longer
applicable.
5.1 Now, so far as the obligations of the Mittal Group, it is submitted
on behalf of Mittal Group as under:
S. No.
Particulars
MOS Clause
Reply of contemnors
1.
Board Resolution
1.2.1
A copy of the Board Resolution dated
29.05.2015 was forwarded to Seth Group.
Seth Group while acknowledging the receipt
approved the contents and sought cooperation,
if any, issue arises in the absence of original
resolution.
The original resolution is part of the minute
book and the extract thereof was shared with
Seth Group on 29.05.2015.
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ASHISH SETH v. SUMIT MITTAL AND OTHERS
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2.
GPA to be issued by
TFIPL in favour of
FIPL
5.3
Under Clause 5.3 Additional Document filed
on 21.12.2019 (IA 197372), it was agreed that
TFIPL would execute a registered GPA in
favour of FIPL. Till 29.05.2015 no one came
from FIPL to get the GPA registered.
An email was issued dated 29.05.2015
requiring Seth Group to furnish a Stamp Paper
for GPA and also make themselves available
before the office of Sub-Registrar.
In response to the said mail Seth Group vide
email dated 23.06.2015 informed that they do
not want to register the GPA. This was in
contravention to the agreed terms of MoS.
As an abundant caution the Mittal Group on
their own took the initiative of seeking
approval of DTCP, Haryana to execute a
registered GPA in favour of Seth Group to
enable them to deal with their project without
any impediment.
Since the Seth Group did not come forward
for collection of the GPA and its registration
the Mittal Group through their attorney
provided Seth Group duly executed GPA by
the executants vide letter dated 04.07.2016.
3.
Bifurcation of license &
Non grant of NOC by
Maximal
8
NOC was provided by the contemnors and
filed with DTCP, Haryana on 19.04.2016.
NOC is acknowledged DTCP, Haryana and
found in order vide note sheet dated
13.05.2016.
As per "Clause-8", parties agreed to jointly
apply for change of developer i.e. from
TFIPL, to FIPL in terms of the agreement
dated 15.06.2007 and in terms of policy of
DTCP, Haryana dated 18.02.2015.
As
per
email
dated
27.10.2015
the
contemnors reiterated that filing of application
is a joint obligation and all documents to be
submitted in that regard with DTCP, Haryana
are ready, however, as per conditions of
policy the new entity was also required to
submit
various
information,
which
the
contemnors were not aware much less being
shared with the said information.
Seth Group in contravention to the joint
obligation unilaterally applied for bifurcation
of license. The application got rejected on
13.10.2016 for various reasons including lack
of technical and financial capacity of the Seth
Group. The rejection order since not assailed,
attained finality.
Before RERA, Maximal not only agreed to
offer their cooperation for bifurcation of
license but submitted that all formalities on
the part of the land owner/licensee be
dispensed with to expedite the same. This
contention is accepted by RERA vide order
dated 01.10.2019.
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4.
Renewal of license
17
Maximal in terms of order dated 26.10.2015
agreed to apply for renewal of license on its
expiry.
Maximal applied for renewal of license on
07.01.2016 as license was expiring on
22.01.2016.
Since there was inaction on the part of the
department, Maximal filed a writ petition
before Chandigarh High Court for direction
against the department. While directing the
department the Writ Petition was posted for
hearing on 05.07.2016.
DTCP, Haryana vide order dated 04.07.2016
declined to renew the license for noncompliance of the conditions mentioned in
"Para 3 and 4" of the order.
The conditions mentioned in "Para 3" were
fully complied with as recorded in the office
note dated 25.01.2016.
However, Maximal was prevented from filing
any appeal/challenge against the said order
dated 04.07.2016, as the Seth Group declined
to pay EDC, which was a pre-requisite
condition and a ground of rejection as
mentioned in "Para-4" of the order dated
04.07.2016.
5.
Responsibility to defend
138 proceedings
20 of MOS
The Mittal Group and Seth Group were
acquitted and an appeal filed by the
complainant is pending adjudication .
The renewal of the license is as per the HUDA Act, Rules and
Regulations and not as per the requirement of the licensee. The license
was initially granted on 23.01.2007 and valid up to 22.01.2009. As per
then HUDA Rules, the license was renewable for a period of one year.
That as per subsequent amendment, the license was renewable for a
period of two years. In the present case, the license in question was
applied for renewal pursuant to settlement in the month of June 2015
and it got renewed by the department against payment of charges for
each renewal period. Mittal Group applied for renewal of license on
07.01.2016 for a period of two years in compliance of order dated
26.10.2015. However, the license could not be renewed for the reasons
set out in tabular form Serial No. 4 hereinabove.
That as per the letter dated 27.03.2015, EDC liability was divided
into two parts:
i.
Payable against 33.238 acres which includes project of 4
developers and;
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ii. Payable against 14.80 acres payable by TIDCO (Company
under Liquidation) through auction purchaser. This bifurcation
and quantification of EDC liability was accepted by OL.
Seth Group in willful defiance of the settlement did not pay the
EDC. The Seth Group influenced DTCP, Haryana to withdraw the order
dated 27.03.2015 to wriggle out of the settlement. DTCP, Haryana
arbitrarily without any basis, vide letter dated 10.01.2017 withdrew the
letter dated 27.03.2015. That the appellant authority has stayed the effect
of the letter dated 10.01.2017 and the division of liability vide letter dated
27.03.2015 is still in force and is now for all intents and purposes confirmed
by RERA vide order dated 01.10.2019. That the liability of developer
including that of the Seth Group will be determined by DTCP, Haryana
and paid to the department without the involvement of Mittal Group/
Contemnors.
5.3 That as per order dated 01.10.2019 passed by RERA, the
following has been ordered:
(a) Bifurcation/Division of licence of all the developers of 48.038
acres of land situated at Sector-89, Faridabad including that
of Petitioner i.e. their entity FIPL.
(b) Renewal of license for each of the developers by DTCP,
Haryana on bifurcation.
(c) Separate quantification of EDC and other statutory liabilities
of each of the developers proportionate to their share of land.
(d) Grant of occupation certificate, possession etc., as per law
on removal of all unauthorized and illegal construction to be
determined by DTCP, Haryana.
(e) All or any formality requiring involvement of Maximal has
been dispensed with.
In light of the subsequent development and order dated 01.10.2019
passed by RERA, as such, the contempt petition is liable to be dismissed.
6. Now, so far as submission on behalf of the Seth Group as
regards non-payment of EDC to DTCP by Maximal, it is submitted that
under the MoS dated 04.05.2015 there is no such condition and/or
obligation on the part of the Maximal to pay any EDC to DTCP. It is
submitted that as such the same was not even the case so prayed in the
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contempt petition.