Full Text
HIGH COURT OF DELHI
TRANSPORT CORPORATION OF INDIA LTD ..... Petitioner
Through: Ms. Diya Kapur and Mr. Aditya Ladha, Advocates
Through: Mr. Sandeep Sethi, Sr. Advocate with Mr. Neeraj Yadav, Advocate for D-2
JUDGMENT
1. The instant petition has been filed by the petitioner under the Contempt of Courts Act, 1971 (hereinafter referred to as “the Act”) on account of wilful breach and disobedience by the alleged contemnor herein of the order dated 2nd May, 2018 passed by this Court in O.A. NO. 81/2017 in CS(OS) No. 361/2012, inter-alia, seeking the following reliefs: “a) Initiate appropriate contempt proceedings against the Respondent/ Contemnor and award appropriate punishment for disobeying the final Order dated 02.05.2018, passed by this Hon'ble Court in O.A. 81/ 2017 in CS (OS) NO. 361/2012 titled 'Transport Corporation of India Ltd. v. Reserve Bank of India and Anr.'; b) Pass appropriate Orders directing the Respondent to comply with the Order dated 02.05.2018 passed by this Hon'ble Court in O.A. 81/2017 in CS (OS) No. 361/2012; and c) Pass any other such order(s) as this Hon'ble Court may deem fit and proper in the interest of justice.”
FACTUAL MATRIX
2. The petitioner herein had filed a suit seeking a declaration, a mandatory injunction, and the recovery of Rs 6,92,55,342/- in relation to a Foreign Exchange Derivative Transaction involving a USD-CHF transaction on 20th September, 2007 between the petitioner and the Yes Bank Ltd, i.e., the alleged contemnor/defendant No. 2.
3. The petitioner firm is engaged in the business of multi-modal transport and logistics, including supply chain solutions, periodically required term loans and working capital loan facilities from several banks. In 2006, the petitioner firm had around Rs. 226 crores in outstanding loans on which it was paying interest between 6.50 % and 11% per annum. During the same year, the defendant No. 2 convinced the petitioner to participate into Foreign Exchange Derivative Transactions that were supposed to save the petitioner herein 2% in interest charges on its loan, but were in fact meant to generate profits for the nonapplicant/defendant No. 2.
4. The alleged contemnor/defendant No. 2 herein convinced the petitioner to "notionally" convert its Rupee loan into a Swiss Franc (CHF) loan by claiming that interest rates were significantly lower in CHF and, as a result, the petitioner would incur fewer interest expenses. Also, it is stated that there was no forex risk associated with this notional conversion, as the CHF was a very stable currency, and that any potential forex risk associated with this notional conversion was mitigated by an "option protection".
5. On 23rd October, 2006, the petitioner approved a resolution permitting certain business officials to accept the terms and circumstances of bank offers for derivative transactions that are in the firm's best interests. On 20th September, 2007, the petitioner entered into an interest-saving transaction with the defendant No. 2 in which Rs. 15,00,00,000/- was ostensibly swapped for CHF 44,43,467/-, with the maturity date was set for 24th September, 2009 and the petitioner was to receive a sum equal to 2% of Rs. 15,00,00,000/-, which was ostensibly a savings in interest due to the swap into Swiss Francs (CHF).
6. It has been stated on behalf of the petitioner herein that the said transactions were in fact very risky and the said fact was actively concealed by the non-applicant/defendant No. 2 despite being under a fiduciary relationship with the petitioner herein.
7. It has been stated on behalf of the petitioner that on 26th April, 2011, the Reserve Bank of India issued a circular imposing a penalty on several banks in relation to foreign exchange derivative transactions of the same nature, as was entered into by the petitioner company, on the grounds of contravention of various instructions issued by the Reserve Bank of India in respect of derivatives, such as failure to conduct due diligence with respect to the suitability of products, selling derivative products to unregistered entities, etc. Being aggrieved by the malafide acts of the defendant No. 2 herein the petitioner herein filed the present suit for recovery.
8. Pursuant to the completion of pleadings, this Court vide order dated 24th August, 2015 framed the following issues. The same are reproduced hereunder: “1. Whether the USD/CHF transaction dated 20.09.2007 is voidable at the option of the plaintiff (under Section 19 and/or Section 19A of the Indian Contract Act? OPP
2. Whether defendant No.2 is liable to the plaintiff for an amount of Rs.6,92,55,342/- with interest, from the date of payment? OPP
3. Whether the Banking Licencee of defendant No.2 is liable to be cancelled by defendantNo.1? OPP
4. Whether the USD/CHF transaction dated 20.09.2007 is void under Section23 and/or Section 24 of the Indian Contract Act? OPP
5. Whether the present suit is barred by limitation? OPD
6. Whether this Court has no territorial jurisdiction to adjudicate the present suit? OPD
7. Whether there is accord and satisfaction achieved in respect of the transactions in issue or, discharge of the contract by virtue of performance of obligations undertaken therein or, by mutual agreement? OPD
8. Whether the transaction was conducted in pursuance to the ISDA agreement dated 06.-9.2007 and the deal confirmation dated 20.09.2007? GPP
9. Relief.” SUBMISSIONS
9. It has been submitted on behalf of the petitioner that the petitioner vide application bearing I.A. No. 25111/2015 sought discovery of certain documents which was allowed by the Learned Joint Registrar vide order dated 21st February, 2017 directed the Yes Bank to file the affidavit of discovery within 08 weeks therefrom. It is further submitted that Yes Bank acting through respondents herein filed a Chamber Appeal bearing O.A. No. 81/2017 against the order dated 21st February, 2017 passed by the learned Joint Registrar.
10. It has been submitted on behalf of the petitioner herein that during the course of arguments advanced on 25th April, 2018, the petitioner herein confined its discovery sought from Yes Bank to the documents as contained in Para 9(f) of the abovementioned application. The said para is reproduced hereunder: "9(f) Records of 'exactly off-setting transactions'/ 'back-toback mirror transactions' entered into with other banks by Defendant No. 2, including details of the counter-parties involved and the profits/margins/ commissions or any other amounts received by Defendant No. 2 from these counter parties."
11. It has been submitted that in reply to the said paragraph, Yes Bank submitted that the said documents sought to be produced are confidential documents and are linked to a third party thereby affecting the third party. The relevant extract of reply is reproduced hereunder: "9....Further, the Plaintiff is seeking production of documents which are either third party documents or are confidential business documents which shall affect the unrelated third parties.... 9(f) The record is completely unrelated to the relief sought by the Plaintiff and it pertains to regulatory requirement. The Plaintiff is trying to step into shoes of the regulator while raising such unconnected issue in order to broaden the controversy."
12. It has been submitted on behalf of petitioner that this Court rejecting Yes Bank's objection allowed the aforementioned discovery vide order dated 2nd May, 2018 qua the documents contained in para 9(f) and disposed of the Chamber Appeal bearing O.A. No. 81/ 2017, with the observation that what was sought from Yes Bank (Defendant No. 2) in para 9(f) of the application was precisely what it had pleaded in its defence to the suit. The relevant extract of the said order is reproduced hereunder:
13. It has been submitted on behalf of the petitioner that pursuant to the order dated 2nd May, 2018, the respondents were required to produce the documents requested in paragraph 9(f) of the application I.A. 25111/ 2015 within the specified time frame.
14. It is submitted on behalf of the petitioner that Yes Bank requested further time to reveal the papers in accordance with the order dated 2nd May, 2018 when the issue was set for hearing before the learned Joint May 2018. Therefore, Yes Bank was permitted two weeks‟ time to disclose documents with the approval of the parties.
15. It has been submitted on behalf of the petitioner that because Yes Bank, although making an oral undertaking on 14th May, 2018, failed to reveal the requested documents within the allotted two-week period, the petitioner submitted a reminder notice on 31st May, 2018 to the counsel for Yes Bank.
16. It has been submitted on behalf of the petitioner that respondents opted not to file their affidavit until 1st August, 2018, in blatant defiance of this Court's order dated 2nd May, 2018 and the learned Joint Registrar's order dated 14th May, 2018. Even in the strangely delayed affidavit of discovery, the respondents chose not to make any disclosure in conformity with the order of 2nd May, 2018 and they continue to mock the system with their frivolous affidavit. It is further submitted that although having conceded that the aforementioned papers are in the authority and possession of Yes Bank, the unreasonable delay and suppression is indicative of the respondents' intentional non-compliance. In light of the orders of this Court, which dismissed the respondents' objection, it was not possible for the respondents to assert that the aforementioned discovery violates the rights of a third person.
17. It has been submitted on behalf of the petitioner that the counsels for the respondents declined to accept service of the aforementioned application and filed the affidavit only after the counsels for the petitioner sought to serve them with an application under Order XI Rule 21 of Code of Civil Procedure, 1908 seeking the dismissal of the defence of Yes Bank.
18. It has been submitted on behalf of the petitioner that the objectives of the said discovery are as under: i. To elicit Admission; ii. To obviate necessity of leading lengthy evidence; and iii. To expedite trial of the suit and thereby assist Courts in administration of justice.
19. It is argued that when a discovery order is issued, the party receiving the order is required to file an affidavit of discovery in accordance with the Court's order. In addition thereto, a party may only request the production of papers after the other party has filed an affidavit of discovery, allowing the former and the Court to learn whatever documents are in the hands of the latter. However, the respondents have decided to suppress the discovery in order to conceal their mala fides and significant facts, therefore interfering with the administration of justice and causing harm to the petitioner.
20. Learned counsel appearing on behalf of the petitioner further submitted that it is abundantly evident to the petitioner that the respondents have no intention of disclosing the documents for which discovery was authorised by this Court in its order dated 2nd May, 2018. It is further submitted that infuriated by the respondents' refusal to divulge the aforementioned papers, the petitioner has no alternative but to approach this Court. It is asserted that the respondents continue to behave in blatant disdain, deliberate violation, and disobedience of the Court's orders.
21. Per Contra, Mr. Sandeep Sethi, learned senior counsel appearing on behalf of the respondent submitted that the documents sought to be produced are confidential in nature and as such the respondent is in difficulty to produce the same. It has been further submitted that the learned Joint Registrar vide order dated 2nd May, 2018 directed the defendant no. 2 to file an affidavit that has been duly filed.
22. Learned senior counsel appearing on behalf of the respondent further submitted that the said order is silent and does not highlight the need for production of the documents as alleged by the petitioner herein.
23. In view of the foregoing submissions, it has been submitted on behalf of the contemnor/ defendant No. 2 that the instant petition being devoid of any merit should be dismissed at threshold.
FINDINGS AND ANALYSIS
24. Heard the learned counsel for the parties and perused the record.
25. In order to adjudicate the dispute in question, this Court finds it imperative to discuss the scope of the „wilful disobedience‟ with respect to contempt of courts. Section 2(b) of the Act defines „wilful disobedience‟, the same is reproduced hereunder: “(b) “civil contempt” means wilful disobedience to any judgment, decree, direction, order, writ or other process of a court or wilful breach of an undertaking given to a court;”
26. In order to hold a person as guilty of contempt, it must be proven that their disobedience was "wilful." The term "wilful" signifies a mental aspect, necessitating an examination of the mind of a person/alleged contemnor by analysing his conduct, which reveals his state of mind. "Wilful" means deliberately purposeful, conscious, conducted with full awareness of the resulting consequences. It eliminates accidental, inadvertent, genuine, or accidental conduct, as well as actual incapacity. Wilful acts do not include involuntary or negligent behaviour.
27. This Court is further of the view that in order to initiate contempt against the alleged contemnor, the act committed by him must be voluntary in nature. A person's purposeful behaviour implies that he is aware of what he is doing and intends to continue in the same manner. Hence, he must have acted deliberately and with a malicious intent. Even if there is disobedience of an order, the contemnor cannot be penalised if such disobedience is the consequence of compelling circumstances that made it impossible for the contemnor to comply with the order. Committal or confinement will not be issued unless the contempt entails a degree of non-compliance or misbehaviour.
28. Contempt of the Court can either be criminal or civil. In both instances of contempt, the procedure outlined in Section 14 of the Act applies. Section 14 of the Act reads as follows: “14. Procedure where contempt is in the face of the Supreme Court or a High Court.—(1) When it is alleged, or appears to the Supreme Court or the High Court upon its own view, that a person has been guilty of contempt committed in its presence or hearing, the Court may cause such person to be detained in custody, and, at any time before the rising of the Court, on the same day, or as early as possible thereafter, shall— (a) cause him to be informed in writing of the contempt with which he is charged; (b) afford him an opportunity to make his defence to the charge;
(c) after taking such evidence as may be necessary or as may be offered by such person and after hearing him, proceed, either forthwith or after adjournment, to determine the matter of the charge; and
(d) make such order for the punishment or discharge of such person as may be just. (2) Notwithstanding anything contained in sub-section (1), where a person charged with contempt under that subsection applies, whether orally or in writing, to have the charge against him tried by some Judge other than the Judge or Judges in whose presence or hearing the offence is alleged to have been committed, and the Court is of opinion that it is practicable to do so and that in the interests of proper administration of justice the application should be allowed, it shall cause the matter to be placed, together with a statement of the facts of the case, before the Chief Justice for such directions as he may think fit to issue as respects the trial thereof. (3) Notwithstanding anything contained in any other law, in any trial of a person charged with contempt under subsection (1) which is held, in pursuance of a direction given under sub-section (2), by a Judge other than the Judge or Judges in whose presence or hearing the offence is alleged to have been committed, it shall not be necessary for the Judge or Judges in whose presence or hearing the offence is alleged to have been committed to appear as a witness and the statement placed before the Chief Justice under subsection (2) shall be treated as evidence in the case. (4) Pending the determination of the charge, the Court may direct that a person charged with contempt under this section shall be detained in such custody as it may specify: Provided that he shall be released on bail, if a bond for such sum of money as the Court thinks sufficient is executed with or without sureties conditioned that the person charged shall attend at the time and place mentioned in the bond and shall continue to so attend until otherwise directed by the Court: Provided further that the Court may, if it thinks fit, instead of taking bail from such person, discharge him on his executing a bond without sureties for his attendance as aforesaid.”
29. The concept of „wilful disobedience‟ has been discussed by the Hon‟ble Supreme Court in its judgement titled as Pushpaben vs. Narandas v. Badiani reported as (1979) 2 SCC 394 held that „wilful disobedience‟ is defined as failing to honour a commitment submitted to the court on the basis of which the case was compromised and settled, it was ruled, constitutes civil contempt upon demonstrating wilful defiance of the court's order.
30. In order to further elaborate the concept of the „wilful disobedience‟, it would be relevant to discuss the verdict of the Hon‟ble Supreme Court in its judgement titled as Rosnan Sam Boyce vs. B.R. Cotton Mills Ltd. reported as (1990) 2 SCC 636 whereby it was held that the contempt proceedings are quasi-criminal in nature. Before a person may be condemned for contempt, the law of disobedience must be rigorously understood and its conditions must be strictly met.
31. Applying the principles laid down by the Hon‟ble Supreme Court to the merits of the instant case, this Court has scrutinised the affidavit submitted by the defendant No. 2 in compliance of order dated 2nd May, 2018 and 14th May, 2018. This Court is of the prima facie opinion that defendant No. 2 has refused to furnish the documents in blatant defiance of the aforementioned orders. The relevant extract from the said affidavit is reproduced hereunder:
32. The perusal of the affidavit makes it clear that the defendant No. 2 despite of the order passed by this Court has not complied with the same.
CONCLUSION
33. The judiciary is vested with the power to punish for its contempt to protect the authority and esteem of the Courts and so that interest of justice is protected and served without obstructions. However, it is a settled law that the punishment for contempt is to be sparingly invoked. Thus, the Courts must assure a careful and circumspect application of contempt jurisdiction.
34. This Court, in order to secure the ends of justice and for adjudication of the issues framed by this Court vide order dated 24th August, 2015, finds it appropriate to direct the alleged contemnor i.e., the defendant No. 2 to grant a final opportunity to comply with the said order. However, taking into consideration the averments raised on behalf of the defendant No. 2 with respect to confidentiality of the said documents, it is directed that the said documents be submitted in a sealed cover before the Deputy Registrar (Original) of this Court before the next date of hearing.
35. The Deputy Registrar (Original) of this Court is directed to keep the said documents in safe custody and produce the same in sealed cover before this Court on the next date of hearing of the captioned suit.
36. With the aforesaid directions, the present petition is disposed of.
37. The judgment be uploaded on the website forthwith.
JUDGE MARCH 29, 2023 gs/ug