# HSBC PI HOLDINGS (MAURITIUS) LIMITED v. PRADEEP SHANTIPERSHAD JAIN & ORS

- **Citation:** [2022] 15 S.C.R. 430
- **Court:** Supreme Court of India
- **Decided:** 2022-07-11
- **Case number:** Civil Appeal No. 5158 of 2016
- **Bench:** M. R. Shah, Aniruddha Bose
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/hsbc-pi-holdings-mauritius-limited-v-pradeep-shantipershad-jain-ors-35594
- **Pages:** 28

## Headnote

Contempt of Courts Act, 1971 - Contempt of Court - When -
Held: Sufficient opportunities have been given to the respondents
to deposit the shortfall amount so as to maintain a sum of USD 60
million in their Corporation Bank account - Defence on their behalf
lacks bona fides - Respondents cannot be permitted to make the
same submissions which have not been accepted and/or rejected
earlier - Repetitive submissions which have not been accepted
earlier by court that itself is a wilful disobedience and tantamount
to contempt showing the conduct on the part of the contemnors -
Respondents are guilty of deliberate and wilful disobedience of
judgment and order dated 19.08.2020 passed in Civil Appeal No.
5158/2016 as well as order dated 06.05.2021 passed in the present
petition - They have rendered themselves liable for suitable
punishment under the provisions of the Contempt of Courts Act for
wilful disobedience - However, before any further order of
punishment/conviction is passed, an additional opportunity is given
to the respondents to comply with order dated 06.05.2021 as well
as judgment and order dated 19.08.2020 passed by this Court to
deposit the shortfall amount so as to maintain a balance of USD 60
million in their Corporation Bank account within a period of four
weeks from today - This would have a direct bearing on the
punishment to be imposed - Matter be put up for further order on
punishment.
R.N. Dey Vs. Bhagyabati Pramanik (2000) 4 SCC 400: [2000]
3 SCR 172 - distinguished.
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431
Welset Engineers & Anr. Vs. Vikas Auto Industries &
Ors. (2015) 10 SCC 609; SEBI Vs. Sahara India Real
Estate Corp. Ltd. & Ors. (2014) 5 SCC 429 - relied on.
KK Modi Vs. KN Modi and Ors. (1998) 3 SCC 573 :
[1998] 1 SCR 601; Firm Ashok Traders Vs Gurumukh
Das Saluja (2004) 3 SCC 155 : [2004] 1 SCR 404;
Delhi Development Authority Vs. Skipper Construction
CO. (P) Ltd. (1996) 4 SCC 622 : [1996] 2 Suppl. SCR
295; Rajinder Kumar Malhotra Vs. Paresh Biharilal
Vyas; 2016 SCC Online Bom 89; Rama Narang Vs.
Ramesh Narang and Anr. (2006) 11 SCC 114 : [2006]
3 SCR 1068; M/s Terra Manufacturing & Sales Vs. M/
s Alagendiraa Apparels 2011 SCC Online Del 4458;
Kunhayammed Vs. State of Kerala; (2000) 6 SCC 359 :
[2000] 1 Suppl. SCR 538; Maninderjit Singh Bitta Vs.
Union of India; (2012) 1 SCC 273 : 2011 (11 ) SCALE
634; Vedanta Ltd. (formerly 26 known as M/s. Sesa
Sterlite Ltd) Vs. Goa Foundation and Ors. 2021 SCC
Online SC 476; Food Corpn. of India Vs. Sukh Deo
Prasad (2009) 5 SCC 665; Court Liquidator Employees'
Assn. Vs. P.G. Mankad (2002) 10 SCC 477; Rama
Narang Vs. Ramesh Narang and Ors. (2021) SCC
Online SC 29; Ram Kishan Vs. Tarun Bajaj (2014) 16
SCC 204 : [2014] 1 SCR 538; Kanwar Singh Saini Vs.
High Court of Delhi (2012) 4 SCC 307 : [ 2011] 15
SCR 972; Kapildeo Prasad Sah Vs. State of Bihar (1999)
7 SCC 569 : [1999] 1 Suppl. SCR 725; Rita Markandey
Vs. Surjit Singh Arora (1996) 6 SCC 14 : [1996] 7
Suppl. SCR 56; Bank of Baroda Vs. Sadruddin Hasan
Daya; (2004) 1 SCC 360 : [2003] 6 Suppl. SCR 764 -
referred to.
Case Law Reference
[2000] 3 SCR 172
distinguished
Para 5.4
[1998] 1 SCR 601
referred to
Para 4.7
[2004] 1 SCR 404
referred to
Para 4.13
[1996] 2 Suppl. SCR 295
referred to
Para 4.14
HSBC PI HOLDINGS (MAURITIUS) LIMITED v. PRADEEP
SHANTIPERSHAD JAIN & ORS.
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SUPREME COURT REPORTS
[2022] 15 S.C.R.
[2006] 3 SCR 1068
referred to
Para 4.15
[2000] 1 Suppl. SCR 538
referred to
Para 4.19
[2014] 1 SCR 538
referred to
Para 5.14
[2011] 15 SCR 972
referred to
Para 5.14
[1999] 1 Suppl. SCR 725
referred to
Para 5.14
[1996] 7 Suppl. SCR 56
referred to
Para 8.1
[2003] 6 Suppl. SCR 764
referred to
Para 8.1
CIVIL ORIGINAL CONTEMPT JURISDICTION: Contempt
Petition (Civil) No.624 of 2020 In Civil Appeal No.5158 of 2016.
Petition filed for willful disobedience of Court's Order dated
19.08.2020 and 06.05.2021 passed by the Supreme Court of India in
Contempt Petition (Civil) No.624 of 2020 in Civil Appeal no. 5158 of
2016.
Neeraj Kishan

## Text

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SUPREME COURT REPORTS
[2022] 15 S.C.R.
[2022] 15 S.C.R. 430
430
HSBC PI HOLDINGS (MAURITIUS) LIMITED
v.
PRADEEP SHANTIPERSHAD JAIN & ORS.
(Contempt Petition (Civil) No. 624 of 2020)
IN
(Civil Appeal No. 5158 of 2016)
JULY 11, 2022
[M. R. SHAH AND ANIRUDDHA BOSE, JJ.]
Contempt of Courts Act, 1971 - Contempt of Court - When -
Held: Sufficient opportunities have been given to the respondents
to deposit the shortfall amount so as to maintain a sum of USD 60
million in their Corporation Bank account - Defence on their behalf
lacks bona fides - Respondents cannot be permitted to make the
same submissions which have not been accepted and/or rejected
earlier - Repetitive submissions which have not been accepted
earlier by court that itself is a wilful disobedience and tantamount
to contempt showing the conduct on the part of the contemnors -
Respondents are guilty of deliberate and wilful disobedience of
judgment and order dated 19.08.2020 passed in Civil Appeal No.
5158/2016 as well as order dated 06.05.2021 passed in the present
petition - They have rendered themselves liable for suitable
punishment under the provisions of the Contempt of Courts Act for
wilful disobedience - However, before any further order of
punishment/conviction is passed, an additional opportunity is given
to the respondents to comply with order dated 06.05.2021 as well
as judgment and order dated 19.08.2020 passed by this Court to
deposit the shortfall amount so as to maintain a balance of USD 60
million in their Corporation Bank account within a period of four
weeks from today - This would have a direct bearing on the
punishment to be imposed - Matter be put up for further order on
punishment.
R.N. Dey Vs. Bhagyabati Pramanik (2000) 4 SCC 400: [2000]
3 SCR 172 - distinguished.
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B
C
D
E
F
G
H
431
Welset Engineers & Anr. Vs. Vikas Auto Industries &
Ors. (2015) 10 SCC 609; SEBI Vs. Sahara India Real
Estate Corp. Ltd. & Ors. (2014) 5 SCC 429 - relied on.
KK Modi Vs. KN Modi and Ors. (1998) 3 SCC 573 :
[1998] 1 SCR 601; Firm Ashok Traders Vs Gurumukh
Das Saluja (2004) 3 SCC 155 : [2004] 1 SCR 404;
Delhi Development Authority Vs. Skipper Construction
CO. (P) Ltd. (1996) 4 SCC 622 : [1996] 2 Suppl. SCR
295; Rajinder Kumar Malhotra Vs. Paresh Biharilal
Vyas; 2016 SCC Online Bom 89; Rama Narang Vs.
Ramesh Narang and Anr. (2006) 11 SCC 114 : [2006]
3 SCR 1068; M/s Terra Manufacturing & Sales Vs. M/
s Alagendiraa Apparels 2011 SCC Online Del 4458;
Kunhayammed Vs. State of Kerala; (2000) 6 SCC 359 :
[2000] 1 Suppl. SCR 538; Maninderjit Singh Bitta Vs.
Union of India; (2012) 1 SCC 273 : 2011 (11 ) SCALE
634; Vedanta Ltd. (formerly 26 known as M/s. Sesa
Sterlite Ltd) Vs. Goa Foundation and Ors. 2021 SCC
Online SC 476; Food Corpn. of India Vs. Sukh Deo
Prasad (2009) 5 SCC 665; Court Liquidator Employees'
Assn. Vs. P.G. Mankad (2002) 10 SCC 477; Rama
Narang Vs. Ramesh Narang and Ors. (2021) SCC
Online SC 29; Ram Kishan Vs. Tarun Bajaj (2014) 16
SCC 204 : [2014] 1 SCR 538; Kanwar Singh Saini Vs.
High Court of Delhi (2012) 4 SCC 307 : [ 2011] 15
SCR 972; Kapildeo Prasad Sah Vs. State of Bihar (1999)
7 SCC 569 : [1999] 1 Suppl. SCR 725; Rita Markandey
Vs. Surjit Singh Arora (1996) 6 SCC 14 : [1996] 7
Suppl. SCR 56; Bank of Baroda Vs. Sadruddin Hasan
Daya; (2004) 1 SCC 360 : [2003] 6 Suppl. SCR 764 -
referred to.
Case Law Reference
[2000] 3 SCR 172
distinguished
Para 5.4
[1998] 1 SCR 601
referred to
Para 4.7
[2004] 1 SCR 404
referred to
Para 4.13
[1996] 2 Suppl. SCR 295
referred to
Para 4.14
HSBC PI HOLDINGS (MAURITIUS) LIMITED v. PRADEEP
SHANTIPERSHAD JAIN & ORS.
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SUPREME COURT REPORTS
[2022] 15 S.C.R.
[2006] 3 SCR 1068
referred to
Para 4.15
[2000] 1 Suppl. SCR 538
referred to
Para 4.19
[2014] 1 SCR 538
referred to
Para 5.14
[2011] 15 SCR 972
referred to
Para 5.14
[1999] 1 Suppl. SCR 725
referred to
Para 5.14
[1996] 7 Suppl. SCR 56
referred to
Para 8.1
[2003] 6 Suppl. SCR 764
referred to
Para 8.1
CIVIL ORIGINAL CONTEMPT JURISDICTION: Contempt
Petition (Civil) No.624 of 2020 In Civil Appeal No.5158 of 2016.
Petition filed for willful disobedience of Court's Order dated
19.08.2020 and 06.05.2021 passed by the Supreme Court of India in
Contempt Petition (Civil) No.624 of 2020 in Civil Appeal no. 5158 of
2016.
Neeraj Kishan Kaul, Nikhil M. Sakhardande, Sr. Advs., Rajendra
Barot, Ms. Liz Mathew, Ms. Vidhi Barot, Ms. Priyanka Shetty, Ms.
Apoorva Gupta, Dhruv Sharma, Ms. Sonali Jain, Ayush Chaddha, Dhaval
Arora, Ms. Vasudha Jain, Advs. for the Petitioner.
Mukul Rohatgi, Sr. Adv., Ankur Yadav, Adv. for the Respondents.
The Judgment of the Court was delivered by
M. R. SHAH, J.
1. Present contempt petition has been preferred by the petitioner
herein, alleging wilful, intentional and deliberate disobedience of the
directions issued by this Court by the alleged contemnors - respondents
herein in not depositing the shortfall amount so as to maintain a balance
of USD 60 million in the Corporation Bank account maintained by Avitel
Post Studioz Limited (hereinafter referred to as the "Avitel"), a company
owned by the alleged contemnors. It is alleged that the alleged contemnors
are in wilful breach of two orders of this Court dated 19.08.2020 and
06.05.2021.
2. The facts leading to the present contempt proceedings in a
nutshell are as under: -
2.1 A Share Subscription Agreement (SSA) was entered into on
21.04.2011 between HSBC - petitioner herein and Avitel and others
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(original appellant(s) before this Court in Civil Appeal No. 5145/2016).
HSBC made an investment in the equity capital of Avitel India for a
consideration of USD 60 million in order to acquire 7.8% of its paid-up
capital. That the said SSA contained an arbitration clause.
2.2 That thereafter, both the parties entered into a Shareholders
Agreement (SHA) on 06.05.2011, which defined the relationship between
the parties after SSA dated 21.04.2011 had been entered into. The said
SHA also contained an arbitration clause. As disputes arose between
the parties, on 11.05.2012, notices of arbitration were issued by HSBC
to the Singapore International Arbitration Centre (SIAC) to commence
arbitral proceedings. The SIAC appointed an Emergency Arbitrator. The
Emergency Arbitrator passed two interim awards dated 28.05.2012 and
29.05.2012, in the SSA and SHA, respectively, in favour of HSBC,
directing the alleged contemnors - Avitel Dubai to refrain from disposing
of or dealing with or diminishing the value of their assets up to USD 50
million, and permitting HSBC to deliver a copy of the interim awards to
financial institutions in India and the UAE with which any of them hold
or may hold or be signatory to accounts, together with a request that the
financial institutions freeze such accounts consistent with the interim
awards. On 27.07.2012, the Emergency Arbitrator made an amendment
to interim awards granting further relief to HSBC. That thereafter on
30.07.2012, HSBC filed Arbitration Petition No. 1062/2012 under Section
9 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to
as the Act, 1996) in the Bombay High Court, inter-alia, seeking directions
to call upon the alleged contemnors to deposit a security amount to the
extent of HSBC's claim in the arbitration proceedings that had begun
under both the SSA and SHA.
2.3 On 03.08.2012, the learned Single Judge of the Bombay High
Court passed an interim order under Section 9 petition, inter-alia, directing
the Corporation Bank to allow the alleged contemnors to withdraw a
sum of INR 1 crore from their account on or before 09.08.2012, but not
to allow any further withdrawals until further orders, till which time, the
account was to remain frozen. Meanwhile, the alleged contemnors
challenged the jurisdiction of the three-member Arbitral Tribunal set up
under the auspices of the SIAC. The Arbitral Tribunal on 07.12.2012
passed a unanimous "final partial award on jurisdiction", dismissing the
jurisdictional challenge.
2.4 That thereafter in Section 9 petition pending before the Bombay
High Court, the learned Single Judge passed an order dated 22.01.2014,
HSBC PI HOLDINGS (MAURITIUS) LIMITED v. PRADEEP
SHANTIPERSHAD JAIN & ORS. [M. R. SHAH, J.]
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in which the respondents herein - alleged contemnors were directed to
deposit any shortfall in their account with the Corporation Bank so as to
maintain a balance of USD 60 million. An appeal against the order of the
learned Single Judge was disposed of by the Division Bench of the High
Court vide judgment and order dated 31.07.2014. The order passed by
the learned Single Judge directing the alleged contemnors to deposit the
shortfall in their account with the Corporation Bank so as to maintain a
balance of USD 60 million was the subject matter of further appeal
before the Division Bench. By judgment and order dated 31.07.2014,
the Division Bench of the High Court partly allowed the said appeal and
modified the order passed by the learned Single Judge and directed the
alleged contemnors to deposit an additional amount equivalent to USD
20 million in the Corporation Bank account, so that the total deposit in
the said account is maintained at half the said figure of USD 60 million,
i.e., at USD 30 million (instead of USD 60 million as ordered by the
learned Single Judge).
2.5 Feeling aggrieved and dissatisfied with order dated 31.07.2014
passed by the Division Bench of the High Court, both Avitel and HSBC
preferred appeals before this Court. (being Civil Appeal No. 5145/2016
by Avitel and Civil Appeal No. 5158/2016 by HSBC). By a common
judgment and order dated 19.08.2020, this Court set aside the order
passed by the Division Bench of the High Court, directing the Avital to
deposit USD 60 million and restored the order dated 22.01.2014 passed
by the learned Single Judge. Thus, by the judgment and order dated
19.08.2020, the alleged contemnors - respondents herein - Avitel and
others were required to deposit and/or maintain USD 60 million in the
Corporation Bank account. It is alleged that not depositing the shortfall
amount and/or maintaining USD 60 million in the Corporation Bank
account, the respondents herein have rendered themselves liable for
suitable punishment under the Contempt of Courts Act.
2.6 At this stage, it is required to be noted that in the meanwhile
the Arbitral Tribunal in Singapore had passed a final award dated
27.09.2014, awarding USD 60 million as damages in favour of the HSBC
and against the respondents herein. The same foreign award was
challenged by the respondents herein - alleged contemnors in Section
34 proceedings before the Bombay High Court. By a judgment and order
dated 28.09.2015, the learned Single Judge dismissed Section 34
application/proceedings and an appeal under Section 37 of the Act, 1996
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also came to be dismissed on 05.05.2017. Meanwhile, HSBC had moved
the Bombay High Court to enforce the foreign final award dated
27.09.2014 in the SSA, of which enforcement proceedings were reported
to be pending.
2.7 It appears that thereafter and pursuant to the judgment and
order dated 19.08.2020 passed by this Court, the HSBC addressed a
legal notice dated 04.09.2020 to the alleged contemnors and Avitel, calling
upon them to inter-alia deposit the shortfall amount in the Corporation
Bank account to maintain a total of USD 60 million. The alleged
contemnors replied to the said notice by their reply dated 09.09.2020
and refused to deposit the shortfall amount on the ground that they were
contemplating remedies under Article 137 of the Constitution of India.
2.8 That thereafter, the petitioner had filed the present petition
against the respondents herein on 26.09.2020, alleging wilful, intentional
and deliberate disobedience of August Judgment. This Court issued notice
in the contempt petition on 06.11.2020.
2.9 On 30.04.2021, HSBC filed an Interim Application bearing
No. 59119/2021, inter-alia, seeking to restrain the alleged contemnors
from diverting their assets and/or creating third party rights during the
pendency of the contempt petition with a view to secure its interests.
2.10 At next hearing on 06.05.2021, the alleged contemnors
volunteered to give an undertaking not to sell or encumber any of their
and Avitel's assets during the pendency of this contempt petition as well
as the enforcement petition pending before the Bombay High Court.
The same proposal was rejected by this Court. This Court further directed
the respondents herein - alleged contemnors to deposit the shortfall amount
within a period of six weeks (i.e., by June, 2021).
2.11 That thereafter instead of complying with the directions of
this Court, on 15.06.2021 the respondents filed an IA seeking exemption
from the payment of the shortfall amount, inter-alia, on the ground that
they are unable to liquidate their assets and offered the same undertaking,
which was earlier rejected by this Court on 06.05.2021 (IA No. 68388/
2021). The said exemption application was opposed by HSBC vide their
reply dated 01.07.2021. This Court dismissed the exemption application
vide order dated 02.07.2021 and directed the alleged contemnors to file
their counter affidavit to the contempt petition in two weeks. It is the
case on behalf of HSBC that instead of complying with the judgment
HSBC PI HOLDINGS (MAURITIUS) LIMITED v. PRADEEP
SHANTIPERSHAD JAIN & ORS. [M. R. SHAH, J.]
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and order dated 19.08.2020 and subsequent order dated 06.05.2021, the
alleged contemnors have filed another application being I.A. No. 82521/
2021 (application for directions) raising the same grounds that were earlier
rejected by this Court.
2.12 As the respondents herein - alleged contemnors have failed
to comply with the order passed by the learned Single Judge and the
judgment and order passed by this Court dated 19.08.2020 and subsequent
order dated 06.05.2021 in not depositing the shortfall of approx. USD 42
million (approx. INR 3,09,07,88,400 as on 18.09.2020), so as to maintain
a sum of at least USD 60 million (approx. 4,41,54,12,000 as on 18.09.2020)
in the Corporation Bank account, the petitioner herein - HSBC has
preferred the present contempt petition.
3. Shri Neeraj Kishan Kaul, learned Senior Advocate has appeared
on behalf of the petitioner - HSBC and Shri Mukul Rohatgi, learned
Senior Advocate has appeared on behalf of the respondents - alleged
contemnors. A counter is filed on behalf of the respondents - alleged
contemnors.
4. Shri Neeraj Kishan Kaul, learned Senior Advocate appearing
on behalf of the petitioner - HSBC has vehemently submitted that there
is wilful, intentional and deliberate disobedience of judgment and order
dated 19.08.2020 and subsequent order dated 06.05.2021 by the
respondents herein by not depositing the shortfall amount to a sum of
USD 60 million in the Corporation Bank account maintained by the Avitel.
It is submitted that the wilful, intentional and deliberate disobedience of
orders passed by this Court has rendered the respondents - alleged
contemnors liable for suitable punishment under the provisions of the
Contempt of Courts Act.
4.1 It is further submitted by Shri Kaul, learned Senior Advocate
appearing on behalf of the petitioner - HSBC that in the present case
after judgment and order dated 19.08.2020 passed by this Court confirming
the order passed by the learned Single Judge, directing the Avital and
others to deposit the shortfall amount so as to maintain a sum of USD 60
million in the Corporation Bank account maintained by the Avitel, the
respondents and the Avitel have filed number of proceedings on the
same grounds which were rejected by this Hon'ble Court time and again.
It is submitted that the respondents and the Avitel have continued to file
number of proceedings on the same grounds which were earlier not
accepted by this Hon'ble Court.
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4.2 It is submitted that the respondents - alleged contemnors have
siphoned off USD 60 million invested by the petitioner in Avitel to related
parties. It is submitted that the monies were siphoned off by the
respondents - alleged contemnors to Avitel Post Studioz FZ-LLC (Avitel
Dubai) through Avitel Holdings Limited (Avitel Mauritius). These amounts
were thereafter paid to Highend, Digital Fusion, etc. i.e., to companies
owned by alleged contemnors. It is submitted that out of the total amount
invested by the petitioner i.e., USD 59.2 million have been transferred to
Avitel Dubai's bank accounts and into the bank accounts, the majority of
which are controlled by the Jain Family. It is submitted that the same has
been upheld by the arbitral tribunal in the Foreign Final Award and prima
facie accepted by this Hon'ble Court in the August Judgment.
4.3 It is submitted that the respondents - alleged contemnors did
not challenge the final arbitral award in Singapore. However, they filed
a petition under Section 34 of the Act, 1996 before the Bombay High
Court, which has been dismissed on 28.09.2015. It is submitted that the
Division Bench of the Bombay High Court has confirmed the order
passed by the learned Single Judge dated 28.09.2015 rejecting Section
34 application. It is submitted that the Foreign Final Award has not been
challenged in Singapore, the findings made therein are final and binding
on the alleged contemnors.
4.4 It is submitted that despite the petitioner served a legal notice
to the respondents - alleged contemnors and Avitel, which was after
and pursuant to the August Judgment delivered by this Hon'ble Court,
calling upon them to inter-alia, deposit the shortfall amount in the
Corporation Bank account to maintain a total of USD 60 million, the
respondents - alleged contemnors have refused to deposit the shortfall
amount at that time on the ground that they were contemplating the
proceedings under Article 137 of the Constitution of India. It is submitted
that therefore and after this Hon'ble Court issued the notice in the present
contempt petition, this Hon'ble Court passed an order dated 06.05.2021
directing respondents - alleged contemnors to deposit the shortfall amount
within a period of six weeks. It is submitted that instead of depositing the
shortfall amount which expired on 17.06.2021, the respondents - alleged
contemnors filed an IA seeking exemption from the payment of the
shortfall amount which came to be dismissed by this Hon'ble Court. It is
submitted that the offer made by the respondents to file an undertaking
that they will not dispose of their assets in place of making deposit of the
HSBC PI HOLDINGS (MAURITIUS) LIMITED v. PRADEEP
SHANTIPERSHAD JAIN & ORS. [M. R. SHAH, J.]
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shortfall amount, has not been accepted and/or the said proposal has
been rejected by this Hon'ble Court.
4.5 It is further submitted that the case on behalf of the respondents
- alleged contemnors that they are unable to arrange and liquidate their
assets is nothing but a false attempt on the part of the respondents not to
deposit the shortfall amount. It is submitted that their inability to liquidate
their assets and/or their inability to deposit the requisite amount is nothing
but a lame excuse which as such is belated. It is submitted that though
the August Judgment was pronounced over ten months ago, the
respondents - alleged contemnors did not notify their inability to deposit
the amount until they made their exemption application.
4.6 It is submitted that in reply to the exemption application - IA
No. 68388/2011, it was specifically pointed out by the petitioner - HSBC
that if respondents - alleged contemnors - Avitel are granted the reliefs
prayed for in the application (exemption from making payment of the
shortfall amount) the August judgment, contempt petition, order dated
06.05.2021 and consequently, the enforcement proceedings before the
Bombay High Court, would be rendered infructuous. It is submitted that
thereafter, after hearing learned counsel appearing on behalf of both the
parties by order dated 02.07.2021 this Hon'ble Court had dismissed the
exemption application and directed the respondents to file their counter
affidavit to the contempt petition in two weeks. It is submitted that
however, thereafter and in continuous of its contemptuous conduct the
respondents - alleged contemnors filed yet another IA No. 82521/2021
(application for directions) raising the same grounds that were rejected
by this Hon'ble Court.
4.7 It is submitted that on 16.07.2021, respondents - alleged
contemnors also filed their counter affidavit, inter-alia, stating that they
are in the process of collecting offers in respect of their immovable and
movable assets including their shareholding in Avitel to arrange the shortfall
amount and have filed a review petition (Diary No. 20098/2020) against
the August Judgment which is pending before the Supreme Court. It is
submitted that all grounds raised by the respondents - alleged contemnors
in the counter affidavit have already been rejected by this Hon'ble Court
in this contempt petition itself. It is submitted that therefore, the
respondents - alleged contemnors are seeking to reagitate the same
issue again is abuse of process of the Court, as held by this Hon'ble
Court in the case of KK Modi Vs. KN Modi and Ors.; (1998) 3
SCC 573.
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4.8 It is further submitted by Shri Kaul, learned Senior Advocate
appearing on behalf of the petitioner - HSBC that as such the
respondents have accepted that are duty bound to comply with the
directions of this Hon'ble Court and order dated 06.05.2021. It is submitted
that as such the respondents have not raised the issue of maintainability
of the contempt petition.
4.9 It is submitted that while the alleged contemnors in the counter
affidavit state that they have been "in the process of collecting offers"
and "actively pursuing sale of their personal assets", the alleged
advertisements put up for sale of such assets have been published as
late as on 8th July, 2021 (i.e. one week before the filing of counter affidavit
and almost 11 months after the August Judgment and subsequent to the
order rejecting the exemption application on 02.07.2021), which is nothing
but an attempt to create an illusion of their attempts for compliance.
4.10 It is submitted that the list of assets provided by the alleged
contemnors is untrustworthy and may not be relied upon on the grounds
that: -
(i)
The list of assets submitted by alleged contemnors is not
verified / audited by neither any Chartered Accountant nor
the income tax returns of the Alleged Contemnors;
(ii)
Does not contain a list of liabilities. Fails to disclose whether
there are existing encumbrances on any of the assets
disclosed;
(iii)
The assets disclosed by the alleged contemnors only amount
to Rs 16.37 Crore (approx.). If permitted to dispose assets,
then in the best-case scenario only 16 Crores would be
deposited;
(iv)
The basis for the valuation of fixed assets is not clear nor
credible. For instance, the cost of depreciable items such
as computers, furniture, etc. has been maintained at the
same price since 2014. Such assets would obviously
depreciate with time and lead to decrease in value;
(v)
No independent valuation of Avitel or the Alleged
Contemnors share in Avitel has been provided. The same
is merely an eyewash;
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(vi)
The value of petitioner's investment of USD 60 Million in
Avitel was held to be nil in the Final Foreign Award.
Therefore, the net worth of Avitel and what actual amount
would be realizable from the sale of shares of Avitel remains
uncertain;
(vii)
Avitel holding shares worth Rs. 274 Crore in a subsidiary,
Avitel Mauritius is also completely unreliable and misleading.
The underlying value of Avitel Mauritius arose only from
the transfer of USD 60 Million that the Petitioners had
invested in Avitel or in any event is not supported by any
credible proof. No independent valuation report of Avitel
Mauritius has been provided to lend credence to the value
of the company;
(viii) In light of findings of the arbitral tribunal and the Supreme
Court in August Judgment that the petitioner's investment
of USD 60 Million was diverted to entities related to the
alleged contemnors; the list of assets owned by the alleged
contemnors and Avitel are even less reliable.
4.11 It is further submitted by Shri Kaul, learned Senior Advocate
appearing on behalf of the respondents that as such they have not raised
the issue of maintainability of the contempt petition either in its counter
or the two applications filed earlier. It is submitted that therefore, the
belated submissions challenging the maintainability of the present
contempt petition deserves to be dismissed on this ground alone. It is
submitted that even the Supreme Court has jurisdiction under Article
129 of the Constitution of India to punish any person for contempt of its
orders.
4.12 It is submitted that the submissions on behalf of the alleged
contemnors that the contempt petition cannot lie as the petitioner can
execute the August judgment passed under Section 9 of the Act, 1996
under the Code of Civil procedure, 1908 is misconceived, tenuous and
unsustainable in law. It is submitted that as such in addition the
respondents - alleged contemnors have further wilfully disobeyed order
dated 06.05.2021 passed by this Hon'ble Court.
4.13 It is submitted that this Hon'ble Court in the case of
FirmAshok Traders Vs Gurumukh Das Saluja (2004) 3 SCC 155
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has held that an application under Section 9 is not a suit and the order
passed under Section 9 would fall within the expression "interim measure
of protection" as opposed to all time or permanent protection. The
purpose of Section 9 is to provide expedited interim relief in support of
arbitration and safeguard the subject matter of the dispute so that
irreparable loss would not cause. It is submitted that an execution
application is to be filed for a default of Section 9 Order, then the whole
purpose of Section 9 of Arbitration Act to get expeditious interim protection
would be defeated. It is submitted that Section 9 proceedings are interim
proceedings in nature.
4.14 It is further submitted that the purpose behind contempt is
to bring violation of Court Orders to the notice of the Court and therefore
Contempt is a matter between the court and the person in contempt of
court. In contrast, the purpose behind execution proceedings is to enjoy
the fruits of the decree in his favour. It is submitted that in the present
case, the Hon'ble Court has directed the alleged contemnors to deposit
the shortfall amount in the bank account owned by Avitel India as an
interim relief for subject matter of the dispute and not make any payment
to the petitioner that would warrant execution proceedings. It is
submitted that the contempt proceedings and execution proceedings
are two separate remedies that can be invoked simultaneously. Reliance
is placed upon the decision of this Court in the case of Delhi
Development Authority Vs. Skipper Construction CO. (P) Ltd.;
(1996) 4 SCC 622 as well as the decision of the Bombay High Court
in the case of Rajinder Kumar Malhotra Vs. Paresh Biharilal Vyas;
2016 SCC Online Bom 89. It is submitted that in any event the
violation of order dated 06.05.2021 in this contempt petition is also in
itself contempt of court.
4.15 It is further submitted that it is a settled position of law that
merely because an order or decree of a court is executable, the same
would not take away the court's jurisdiction in contempt proceedings.
Reliance is placed on the decision of this Court in the case of Rama
Narang Vs. Ramesh Narang and Anr.; (2006) 11 SCC 114.
4.16 It is submitted that in order to constitute, the order of the
court must be of such a nature which is capable of execution by the
person charged in normal circumstances.
4.17 It is submitted that as observed and held by the Delhi High
Court in the case of M/s Terra Manufacturing & Sales Vs. M/s
HSBC PI HOLDINGS (MAURITIUS) LIMITED v. PRADEEP
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Alagendiraa Apparels 2011 SCC Online Del 4458, once an order
passed under Section 9 of the Arbitration Act is wilfully violated, the
person is liable for contempt.
4.18 It is submitted that the power of Court to punish for contempt
is wide and the recognized. A party in breach of any order of court
whether interlocutory or final is subject to being proceeded against in
contempt. It is submitted that as observed and held by this Hon'ble Court
in the case of Welset Engineers & Anr. Vs. Vikas Auto Industries
& Ors.; (2015) 10 SCC 609 and in the case of SEBI Vs. Sahara
India Real Estate Corp. Ltd. & Ors.; (2014) 5 SCC 429, noncompliance with the orders passed by the Hon'ble Supreme Court shakes
the foundation of judicial system and undermines rule of law.
4.19 Now so far as the submissions on behalf of the respondents
- alleged contemnors that as the August Judgment did not provide a
timeline for depositing the shortfall amount and therefore, the alleged
contemnors - respondents cannot be held to be in contempt of the orders
of this Hon'ble Court, it is submitted that the same is incorrect in facts
and in law. It is submitted that the August Judgment required the alleged
contemnors and Avitel to deposit the shortfall amount in Corporation
Bank account as an interim relief and in the manner suggested by the
learned Single Judge passed by the High Court i.e., within four weeks.
Reliance is placed upon the decision of this Court in the case of
Kunhayammed Vs. State of Kerala; (2000) 6 SCC 359. It is
submitted that therefore, when this Hon'ble Court confirmed the order
passed by the learned Single Judge, the respondents - alleged contemnors
were required to deposit the shortfall amount in their owned Corporation
Bank account at least within a period of four weeks from 19.08.2020. It
is submitted that as such the respondents have been given many
opportunities and ample time to comply with the August Judgment. They
continue to be in contempt of order dated 06.05.2021 for deposit in these
contempt proceedings, where an additional six weeks were provided to
them for deposit. It is submitted that inordinate delay in complying with
the orders of the Court, non-obedience by a passive and dormant conduct
has been held to be a contempt of court by this Hon'ble Court in the
case of Maninderjit Singh Bitta Vs. Union of India; (2012) 1 SCC
273.
4.20 It is submitted that compliance of an order/judgment was
never contingent on the non-availability of "liquid funds" of the alleged
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contemnors. It is submitted that an order for depositing the money cannot
be made contingent upon the funds available to the alleged contemnors.
They cannot contend that they will comply with the August Judgment
only when their assets are allowed to be sold.
4.21 It is submitted that non-availability of liquid funds/assets is
yet another deliberate tactic of the alleged contemnors that is intended
to deceive not only the petitioner but also this Hon'ble Court. Given the
findings by this Hon'ble Court and the SIAC that the alleged contemnors
are guilty of siphoning off funds to their families, the assets of their
families are not disclosed. The list of assets indicates that even if the
alleged contemnors are allowed to sell their assets; the same would not
fetch any substantial amount to match USD 60 Million, as under:
(i)
The total value of the assets of the alleged contemnors is
approximately Rs. 16 crores;
(ii)
Alleged contemnors have submitted that Avitel has assets
worth approx. Rs. 365 crores;
(iii)
Out of Rs. 365 crores, Rs. 84 crores approximately are the
monies lying in the Corporation Bank account Rs. 247
crores, is the value of investment of Avitel in the form of
shares in Avitel Mauritius.
(iv)
The submissions of alleged contemnors that Avitel holds
shares worth Rs. 274 Crore in a subsidiary called Avitel
Mauritius is also completely unreliable and misleading. The
underlying value of Avitel Mauritius arose only from the
transfer of USD 60 Million that the petitioners had invested
in Avitel or in any event is not supported by any credible
proof. The valuation of Avitel Mauritius is unreliable and no
independent valuation report of Avitel Mauritius has been
provided to lend credence to the value of the company.
(v)
The Foreign Final Award held that the value of investment
made by petitioner in Avitel was nil.
It is submitted that in light of the same it is uncertain what is the
actual value of Avitel and what actual amount would be realizable from
the sale of shares of Avitel. No independent valuation of Avitel or the
alleged contemnors' share in Avitel has been provided. The same is
merely an eyewash.
HSBC PI HOLDINGS (MAURITIUS) LIMITED v. PRADEEP
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4.22 It is further submitted that mere pendency of a review petition
cannot be a ground for non-compliance of judgment/ order of this Hon'ble
Court. It is submitted that the respondents - alleged contemnors and
Avitel have a history of non-compliance of the orders of judicial authorities
including the orders of the Arbitral Tribunal. It is submitted that the review
petition has been filed only to delay the compliance of the August
Judgment/order. It is submitted that although the review petition was
filed in month of September 2020, which has been into in defects at the
Registry due to want of procedural compliances. Such one-year delay in
curing the defects is a deliberate attempt to await (i) the retirement of
the Judge who rendered the August Judgment, and (ii) rely on the mere
filing of the review petition to argue against depositing of the amounts. It
is submitted that as this Hon'ble Court has held that such tactics in
delaying the filing of the review petition must be disapproved. Reliance
is placed on the decision of this Court in the case of Vedanta Ltd.
(formerly known as M/s. Sesa Sterlite Ltd) Vs. Goa Foundation
and Ors.; 2021 SCC Online SC 476.
4.23 It is submitted that the judgments of this Hon'ble Court relied
upon on behalf of the respondents - alleged contemnors shall not be
applicable to the facts of the case on hand as the present case is of
compliance of the order passed in Section 9 application of the Act, 1996
and the subsequent specific directions issued by this Hon'ble Court in
the contempt proceedings in order dated 06.05.2021.
4.24 Making the above submissions, it is vehemently submitted by
Shri Kaul, learned Senior Advocate appearing on behalf of the petitioner
- HSBC that the respondents - alleged contemnors have shown highest
form of wilful disobedience and contemptuous action and therefore, they
may be punished under the Contempt of Courts Act and they may be
sentenced to civil imprisonment at least unless and until they have purged
the contempt by full compliance of the August Judgment. It is submitted
that the petitioner has suffered irreparable loss due to the fraudulent
conduct of Avitel and alleged contemnors and in light of the same; the
petitioner's petition for enforcement of Foreign Award before the Bombay
High Court may be expedited by this Hon'ble Court; it is submitted that
the respondents have sought to employ dilatory tactics at every stage
and therefore, any further delay will continue to cause prejudice to the
petitioner. It is submitted that such delay would also discourage foreign
investors like the petitioner who has been waiting to enjoy fruits of the
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Foreign Final Award passed in its favour since 2014 and seeks to
safeguard the subject matter of its dispute as directed in the August
Judgment under Section 9 of the Act, 1996.
5. Present contempt proceedings are vehemently opposed by Shri
Mukul Rohatgi, learned Senior Advocate appearing on behalf of the
contesting respondents - alleged contemnors.
5.1 It is submitted that the present proceedings have been initiated
by the petitioner - HSBC alleging non-compliance of order dated
22.01.2014 passed by the learned Single Judge in Arbitration Petition
No. 1062/2012 by which the respondents are directed to deposit USD
60 million. It is submitted that the order passed by the learned Single
Judge has been confirmed by this Hon'ble Court by judgment and order
dated 19.08.2020 in Civil Appeal No. 5158/2016. It is submitted that as
such a review application being R.P. Diary No. 20098/2020 has been
filed by Avitel India requesting to recall/review the aforesaid judgment
and order dated 19.08.2020. It is submitted that the said review application
is pending for consideration by this Hon'ble Court.
5.2 It is submitted that in just about 37 days of the August Judgment,
the present contempt petition has been filed by the HSBC before this
Hon'ble Court on 26.09.2020 on expiry of three weeks' time granted by
HSBC. It is submitted on 30.04.2021, HSBC filed I.A. No. 59119/2021
for interim reliefs before this Hon'ble Court to direct the respondents
herein to restrain them from selling, alienating, encumbering, creating
third party rights, transferring or diverting their movable and immovable
assets during the pendency of the present contempt petition. It is submitted
that the same application is pending adjudication before this Hon'ble
Court.
5.3 It is submitted that the respondents have also filed one I.A.
No. 82521/2021 seeking the permission of this Hon'ble Court to sell
and/or encumber their assets and also the assets of the company, to
arrange the requisite shortfall amount to deposit the same in the bank
account of the company maintained with the Corporation Bank. It is
submitted that therefore the petitioner herein is taking contradictory stands
in as much as on one hand the petitioner is seeking appointment of receiver
on the assets of the respondents before the Bombay High Court and
filing an application to restrict the respondents from disposing of its assets,
but on the other hand the petitioner is using contempt jurisdiction to seek
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enforcement of the judgment of the learned Single Judge of the Bombay
High Court for deposit of the shortfall amount in the Corporation Bank
account. It is submitted that at present the respondent has not taken any
measures to dispose of any assets and the respondent is currently only
assessing the value of the assets owned in the name of the company and
its directors and will only sell/encumber their assets with due permission
of this Hon'ble Court, to comply with the direction to deposit the shortfall
amount in the Corporation Bank account. It is submitted that therefore
while considering the present contempt proceedings the aforesaid aspects
may be taken into consideration.
5.4 Shri Rohatgi, learned Senior Advocate appearing on behalf of
the respondents - alleged contemnors has further submitted that the
present contempt petition is not maintainable before this Hon'ble Court
on the grounds, inter-alia, (i) by way of the present proceedings in
contempt, the petitioner is seeking to execute the order of the learned
Single Judge dated 22.01.2014 in Arbitration Petition No. 1062/2012,
which is executable before appropriate court/forum; (ii) the contempt
proceedings cannot substitute the execution/enforcement proceedings
(already being availed by the petitioner) and as such the present contempt
proceedings are misconceived in law and facts. In support of above
submissions, Shri Rohatgi, learned Senior Advocate has relied upon the
decisions of this Court in the cases of Food Corpn. of India Vs.