Citicorp Finance India Limited vs Vikas Telecom Limited and Others

Shylendra Kumar, J.—This contempt petition under sections 10 and 12 of the Contempt of Courts Act, 1971 is on the premise that the respondents - accused numbering seven, 2 to 7 who are Directors of the first accused company have violated the order dated 15.9.2011 passed by the learned IV Additional City Civil & Sessions Judge, Mayohall Unit, Bangalore, in AA No. 25008/2011 in a proceeding u/s 9 of the Arbitration & Conciliation Act, 1996 [for short ''the Act'']. The operative portion of the order reads as under:

ORDER

Application is allowed in part.

The respondents shall furnish bank guarantee for Rs. 178,10,04,815/- (Rupees One hundred seventy eight crores ten lakhs four thousand eight hundred fifteen, only) within 15 days. Till the time of furnishing bank guarantee, the respondents shall not sell or dispose of or encumber the movable and immovable properties of first respondent company including the mortgaged property.

The respondents shall also furnish information to the applicant required to be furnished in terms of DSA within 15 days from the date the applicant furnish the details of the information required in terms of DSA.

Parties to bear their own cost

Appearing on behalf of the complainant, submission of Sri. Sreevatsa, learned senior counsel is that the respondents - accused persons have not furnished the bank guarantee as per the directions, but have nevertheless to the understanding and knowledge of the authorized signatory of the complainant - company, leased out some of its properties in favour of third parties and the complainant has obtained such information on applying for encumbrance certificate in respect of properties and that revealing the same etc.

Section 9 of the Act which reads as under:

Interim measures, etc., by Court.-

A party may, before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with Section 36, apply to a court.

(i) for the appointment of a guardian for a minor or a person of unsound mind for the purposes of arbitral proceedings; or

(ii) for an interim measure or protection in respect of any of the following matters, namely:

(a) the preservation, interim custody or sale of any goods which are the subject-matter of the arbitration agreement;

(b) securing the amount in dispute in the arbitration;

(c) the detention, preservation or inspection of any property or thing which is the subject-matter of the dispute in arbitration, or as to which any question may arise therein and authorising for any of the aforesaid purposes any person to enter upon any land or building in the possession of any party or authorising any samples to be taken or any observation to be made, or experiment to be tried which may be necessary or expedient for the purpose of obtaining full information or evidence;

(d) interim injunction or the appointment of a receiver;

(e) such other interim measure of protection as may appear to the Court to be just and convenient,

and the Court shall have the same power for making orders as it has for the purpose of, and in relation to, any proceedings before it.

is not the main proceeding but is only incidental in a pending arbitration proceedings between the parties and the subject matter of arbitration even as submitted by learned senior counsel for the complainant is recovery of a sum of about Rs. 200 crores which according to the complainant is due to them from the first accused.

We are unable to discern any violation of either the order or that it is fully covers the object of section 9 of the Act, particularly, as in a claim for money, the properties do not become subject shatter. In any view of the matter, we do not find any occasion to exercise our contempt jurisdiction in a matter of this nature. Contempt petition is dismissed.