JUDGMENT
Gita Mittal, J.
1. The petitioner M/s Goyal MG Gases Pvt. Limited has filed the present petition under Sections 11 & 12 of the Contempt of Courts Act, 1971 read with Article 215 of the Constitution of India praying for initiation for contempt of court allegedly committed by the respondents. In order to appreciate the respective contentions, it becomes necessary to consider the factual matrix briefly.
2. According to the petitioner company, which was controlled by the “Goyal Group”, it was approached by M/s Air Liquide Deutschland GmbH and various other foreign parties who were looking at the prospects of entering the Indian market. A Share Purchase & Cooperation Agreement (referred to as the SPC hereafter) was entered into between the petitioner and the M/s Air Liquide Deutschland GmbH (respondent No. 1 hereafter) on the 12th of May, 1995, which was amended in November, 1996, as a result of which, 51% holding of the petitioner company remained with the Goyal Group while 49% shareholding went to respondent No. 1. Clause 9 of the agreement which is material deserves to be considered in extenso and reads thus:
9. GGL and all Goyal Group companies will cooperate in the Indian market with right to first refusal basis with MGG and will not for the duration of this cooperation support in any way – directly or indirectly – the activities of MGG’s competitors with regard to gas business. MGG will give written information to GGL about every business opportunity it plans to take in the Indian market in regard to industrial gases and related business and GGL may decide if it wants to participate in it (right of first refusal). In case GGL does not within a period of two months after receiving MGG’s notice declare in writing that it is willing and able to participate in the planned business, MGG is free to proceed with the business on its own. However, MGG will give due consideration to the interest of GGL being its group company. Such new business which MGG undertakes should be business of gas supply to few major dedicated customers only and not to general market supply.
3. The purport of this non-competition clause was that the Goyal Group or the MGG Group would not enter into any business of gas in India without offering opportunity to participate to the other Group and was aimed at preventing competition between the two groups as well as association of any other competitors with the two groups in the business of gas supply without affording the group associate, the right of first refusal, which was incorporated in Clause 9 of the agreement.
4. According to the petitioner, M/s Air Liquide S.A. (respondent No. 2 herein) is the holding company while Air Liquide Deutschland GmbH (respondent No. 1), Air Liquide India Holding Pvt. Ltd. (respondent No. 3 herein), Air Liquide International (respondent No. 4 herein) are all subsidiaries of Air Liquide S.A. (the respondent No. 2). The Goyal Group initially alleged that respondent No. 1-Air Liquide Deutschland GmbH by endeavoring to transfer its shareholding to Air Liquide S.A (respondent No. 2 the holding company) without first offering it to the Goyal Group, is not only violating the SPC agreement and its Articles of Association, but is also indirectly bringing petitioner’s competitors into the petitioner company. It was alleged that another subsidiary of respondent No. 2 namely the Air Liquide India Holding Pvt. Ltd. is in competition with the petitioner and the respondent No. 1 by transferring its share to respondent No. 2, was bringing the nominees of respondent Nos. 2 & 3 on the board of directors of the petitioner’s company.
5. The petitioner contended that the respondent No. 3 was a rival of the petitioner and respondent Nos. 1 & 2 had put themselves in a position in which they had interest in respondent No. 3 which was in breach of the letter and spirit of the agreement between the parties.
6. According to the respondent No. 2 before this Court, the petitioner on these allegations had caused a Civil Suit (OS) No. 582/2004 to be filed by Mrs. Ritu Aggarwal, daughter of Mr. Suresh Goyal of the Goyal Group. A share transfer by the respondents was injuncted by an ex parte order dated 25th May, 2004 passed in this suit.
7. In the meantime, in September, 2004, tenders were floated by the Steel Authority of India Ltd. (hereinafter referred to as `SAIL’) in a meeting held on 10th September, 2004 between the Steel Authority of India Ltd. & the suppliers of industrial gases in India. The petitioner company as well as Air Liquide India Holding Pvt. Ltd. (respondent No. 3) were found to be bidders. The petitioner, consequently, on allegations that the business interest of the three respondents are common and they are acting against the interest of the petitioner as well as in breach of the non-competition clause between the petitioner and the respondent No. 1, filed a petition under Section 9 of the Arbitration & Conciliation Act, 1996 in this Court which was registered as OMP No. 361/2004.
8. This petition was disposed of by this Court by a judgment dated 31st January, 2005. The present petition has been filed on allegations that the respondents have violated the specific order passed by the court on 31st January, 2005.
9. While OMP No. 361/2004 was filed only against three respondents, the present petition has been filed on or around the 25th November, 2005 arraying the following parties as respondents:
1. Air Liquide Deutschland GmbH Respondent No. 1 in OMP No. 361/2004
Having its Principal office at
D-47793 Krefeld, Germany
2. Air Liquide S.A. Respondent No. 2 in OMP No. 361/2004
75, Quai d' Orsay
75321, Paris, Cedex-07, France
3. Air Liquide India Holding Pvt. Limited Respondent No. 3 in OMP No. 361/2004
25, C-Commu8nity Centre, Janak Puri,
New Delhi.
4. Air Liquide International Not a party in OMP 361/2004
75, Quai d' Orsay
75321, Paris, Cedex-07
France
5. Markus They Thing Not a party in OMP 361/2004
Chairman of Management
Air Liquide Deutschland GmbH
Having its Principal office at
D-47793 Krefeld, Germany
6. Benoit Potier Not a party in OMP 361/2004
Executive Committee Members
Air Liquide S.A.,Quai d' Orsay
75321, Paris, Cedex-07, France.
7. Jean-Claude Buono Not a party in OMP 361/2004
Executive Committee Members
Air Liquide S.A., Quai d' Orsay
75321, Paris, Cedex-07, France.
8. Klaus-Jurgen Schmieder Not a party in OMP 361/2004
Executive Committee Members
Air Liquide S.A., Quai d' Orsay
75321, Paris, Cedex-07, France.
9. Pierre Dufour Not a party in OMP 361/2004
Executive Committee
Air Liquide S.A., Quai d' Orsay
75321, Paris, Cedex-07, France.
10. Jean-Marc de Royere Not a party in OMP 361/2004
Executive Committee Members
Air Liquide S.A., Quai d' Orsay
75321, Paris, Cedex-07, France.
11. John Glen Not a party in OMP 361/2004
Executive Committee Members of
Air Liquide S.A., Quai d' Orsay
75321, Paris, Cedex-07, France.
12. Jean Pierre Duprieu Not a party in OMP 361/2004
Executive Committee Members
Air Liquide S.A., Quai d' Orsay
75321, Paris, Cedex-07, France.
13. Francois Darchis Not a party in OMP 361/2004
Executive Committee Members
Air Liquide S.A., 75, Quai d' Orsay
75321, Paris, Cedex-07, France
14. Ron Labarre Not a party in OMP 361/2004
Executive Committee Members
Air Liquide S.A., 75, Quai d' Orsay
75321, Paris, Cedex-07, France
15. Larry Altobell Not a party in OMP 361/2004
Executive C, Air Liquide S.A.
75, Quai d' Orsay
75321, Paris, Cedex-07, France
16. Dominique MARIE Not a party in OMP 361/2004
Executive Committee Members
Air Liquide S.A., 75, Quai d' Orsay
75321, Paris, Cedex-07, France
17. Mr. G. Rao Rajeshwar Not a party in OMP 361/2004
Managing Directors
Air Liquide India Holding Pvt. Limited
25, C-Community Centre, Janak Puri, New Delhi.
18. Mr. Satish Chand Kochar Not a party in OMP 361/2004
Director, Managing Directors
Air Liquide India Holding Pvt. Limited
25, C-Community Centre, Janak Puri,New Delhi.
19. Mr. Colin Kennedy Not a party in OMP 361/2004
Director, Managing Directors
Air Liquide India Holding Pvt. Limited
25, C-Community Centre, Janak Puri, New Delhi.
10. I have heard learned senior counsel for both sides and given the matter detailed consideration. I find that the petition has been filed by the petitioner on the allegation that the petitioner learnt that, after passing of the above order dated 31st January, 2005, Air Liquide India Holding Pvt. Limited, the respondent No. 3 herein, which is alleged to be a 100% subsidiary of the respondent No. 4, Air Liquide International, enter into a supply agreement with SAIL to supply oxygen and nitrogen to SAIL’s steel plant in Bhilai, India, where the respondent No. 4 has agreed to provide a financial and technical guarantee, under the terms and conditions to be agreed between respondent No. 4 and SAIL. Copy of the letter dated 7th October, 2005 addressed to SAIL by respondent No. 4 is annexed as ANNEXURE-P6 to the petition. It is submitted that the respondent No. 4 being a subsidiary of Air Liquide S.A., respondent No. 2, is merely an agent of the respondent No. 2. In any event, it is contended that both are one economic unit as per the findings of this Hon’ble Court and therefore any business activity in gas business in India by the respondent No. 2 by itself, directly or through companies under its direct or indirect control as the respondent No. 4 or any other such company, is in violation of the above order dated 31/1/2005.
11. The submission on behalf of the petitioner is that vide order dated 31/01/2005, respondent No. 1 has been restrained from competing with the petitioner, directly or indirectly. Therefore, since respondent No. 4 is a 100% subsidiary of respondent No. 2 which is also 100% holding company of respondent No. 1, the guarantee given by respondent No. 4 vide its letter dated 7th October, 2005, is willful disobedience of the order dated 31/01/2005 passed by this Hon’ble Court. It is submitted that the above guarantee has been arranged to be given by respondent No. 4 since respondent No. 1 and respondent No. 2 have been restrained from doing so. Therefore, the guarantee by respondent No. 4 is merely a device designed by respondent No. 1 and respondent No. 2 to violate the above order.
12. According to Mr. Sandeep Sethi, learned senior counsel appearing for the petitioner, the respondent No. 4 is merely a holding/investment company of the Air Liquide Group whose business is not of dealing in gases and that this fact also clearly establishes that the guarantee issued through respondent No. 4 is merely a device to violate the order. It is submitted that what cannot be done directly, can also not be done indirectly. Therefore, when respondent No. 1 and respondent No. 2 could not have issued a guarantee letter in favor of respondent No. 3 because they were restrained from doing so, they also could not have done the same thing through the device of respondent No. 4 which is under full control of respondent No. 2. A copy of a document taken from the web site of the respondent No. 2 evidencing that the respondent No. 2 is the holding company of the respondent No. 4 has been placed before the court.
13. At this stage, it would been useful to also consider the letter dated 7th May, 2005 issued by M/s Air Liquide International (respondent No. 4 herein) which has been complained of as constituting willful disobedience of the order dated 31st January, 2005 in extenso. This communication which has been addressed to the SAIL, reads thus:
Should our one hundred percent owned subsidiary, Air Liquide India Holding Pvt. Ltd., a company organized under the law of India with its headquarters at 25, C-Block, Community Centre, Janak Puri, New Delhi – 110 058 INDIA (“AL India”)enter into the supply agreement with SAIL to supply oxygen and nitrogen to SAIL’s steel plant in Bhilai, India, Air Liquide International (“ALI”) hereby agrees as follows.
Upon signature of the supply agreement, Air Liquide International (“ALI”) shall provide a financial and technical guarantee, under terms and conditions to be agreed between ALI and SAIL, in the case that AL India shall fail to perform its obligations under such agreement.
This guarantee shall come into effect upon signature of the supply agreement and shall remain in force during the term of the supply agreement.
The guarantee shall be annexed to the supply agreement.
14. A perusal of this communication shows that it is respondent No. 3 M/s Air Liquide India Holding Pvt. Ltd. which proposes to enter into a supply agreement with the SAIL to supply oxygen and nitrogen to SAIL’s steel plant at Bhilai. Respondent No. 4 M/s Air Liquide International has agreed to provide a financial and technical guarantee under the terms and conditions which would be agreed between them in case Air Liquide India Holdings Pvt. Ltd., the respondent No. 3 shall fail to perform its obligation under the agreement with Steel Authority of India Ltd. The petitioner has pointed out that from the perusal of the annual returns of M/s Air Liquide S.A., the respondent No. 2, extracts whereof have been placed on record, Air Liquide International, the respondent No. 4, is the 100% subsidiary of Air Liquide S.A. and that the business in which it is engaged does not relate to supply of gases which is the business in which the respondent No. 3, Air Liquide India Holding Pvt. Ltd., is engaged.
15. In view of the rival contentions, it becomes necessary to notice the obligations which were imposed under the order dated 31st January, 2005 by this Court. So far as the respondent No. 1 Air Liquide Deutschland GmbH was concerned, it becomes necessary to notice the findings of the court which read as under:
A plain reading of this Clause shows that “Goyal Group” as well as “MGG Group”, now respondent No. 1, which were the two stake holders in the petitioner company agreed that they will cooperate in exploiting in the Indian market business of supply of industrial gases. It was also agreed that they would not support directly or indirectly any competitor in gas business. The respondent No. 1 (MGG) was required to give written intimation to petitioner company about every business opportunity it planned to take in Indian Market in regard to the industrial gases and related business so that in case the petitioner wanted to exercise the option of joining, it could join it within a period of two months of the receipt of the notice in writing. Even after the refusal of the petitioner company to join MGG in new operations, the obligation was still upon MGG to give due consideration to the interests of the petitioner company as it was its associate company. It cannot be held that this Clause pertained to some business other than the business of gas supply in India. Last para of the aforesaid clause makes it clear. Therefore, it has to be held that the respondent No. 1 having 49% share holding in petitioner company is not permitted to join hands with a competitor of the petitioner in India for the supply of the industrial gases as it directly affects the business interests of the petitioner company.
16. The court also noticed the further proceedings between the petitioner and the respondents before the Division Bench of this Court as well as in the Supreme Court of India and emphasized the prohibition upon the respondent No. 1 in the following terms.
A division Bench of this Court had passed an order on 23.10.1998 in FAO (OS) No. 251/1998 between the petitioner and respondent No. 1 in which Clause 9 of the SPC was upheld. This order was upheld by the Supreme Court also and ultimately a consent Award was passed between the parties. Therefore, the non-competition clause contained in Section 9 of the SPC has to be effectively enforced to safeguard the economic and commercial interests of the petitioner company. The respondent No. 1 cannot be permitted to wriggle out of it and be in competition with the petitioner directly or indirectly. To safeguard the business interests of the petitioner and given effect to the secrecy clause which is likely to be violated in view of the emerging relationship between the three respondents, this Court is of the considered view that there are good and sufficient grounds for proving protection to the petitioner in the matter of participation in tenders for the supply of industrial gases in India. The respondent No. 1 cannot enter into any competition with petitioner.
17. The order dated 31st January, 2005 also notices a plea of respondent Nos. 2 & 3 that they, not being party to the arbitration agreement, cannot be injuncted by this Court in the petition under Section 9 of the Arbitration & Conciliation Act, 1996. It was held by the court that in all those cases where group companies constitute one economic entity, the court may, instead of going by separate legal entities of the companies, look at the common economic entity of the group to which they belong. Placing reliance on the judgment of this Court in Chief Finances Construction Ltd. v. Puri Construction Ltd. 2000 (VI) AD Delhi 509, the court came to the conclusion that an equitable relief can be granted even between a non party to the arbitration agreement where there is commonality of interest between the parties to the arbitration agreement and such person and circumstances call for grant of such equitable relief with a view to ensure compete justice between the parties. In these circumstances, the court considered the apprehensions of the petitioners with regard to the presence of the directors of Air Liquide Deutschland GmbH who were on the board of the petitioners company in terms of the SPC agreement. It was noticed that such directors may be nominees of respondent No. 2 and also have connection with respondent No. 3 and consequently they may jeopardize the petitioner’s participation in the tenders. Placing reliance on Clause 11 of the SPC agreement relating to secrecy, the court was of the view that in case secrecy is not maintained, the respondent No. 3, which is the competitor of the petitioner, may steal a march over the petitioner in the matter of tenders for gas supply in view of the relationship between it and respondent No. 1 through their holding company, the respondent No. 2.
18. The court, thereafter, proceeded to consider the position on record to the effect that the respondent No. 2 Air Liquide S.A. was acquiring the shareholding of the petitioner through respondent No. 1. In these circumstances, it was observed thus:
Respondent No. 2 also cannot compete with petitioner as it is acquiring the shareholding of petitioner through respondent No. 1. However, respondent No. 3 being in the same business and already in competition with petitioner cannot be deprived of its ongoing business activities. Possibility cannot be ruled out that in case the Directors nominated by respondent No. 1 continue to attend the Board meetings of petitioner company when the tenders to be filed by the petitioner are discussed and approved, some vital information may be passed on to respondent No. 3, which in turn, may steal a march over the petitioner in the business of supply of gas. The interests of the petitioner company, therefore, have to be safeguarded by restraining the Directors nominated by respondent No. 1 from participating in those meetings in which any matter relating to the filing of tenders by the petitioner company is to be discussed or approved. The nominees of respondent No. 1 cannot be restrained from acting as Directors in the petitioner company altogether as prayed. So long they are having 49% share holding in the petitioner company, they can exercise their voting and other rights in accordance with Articles of Association and SPC.
19. Upon such conclusions and findings, the court granted the following injunction:
Accordingly, the petition stands disposed of by restraining the respondents No. 1 & 2 from entering into competition with the petitioner company in the matter of sale/supply of industrial gases in India. The Directors, officers and nominees of respondent No. 1 stand restrained from attending or participating in those meetings of the petitioner company in which any matter pertaining to the filing of the tenders by the petitioner company is scheduled to be discussed. This would ensure the secrecy of the petitioner’s tenders. These orders will remain in force till the disputes between the petitioner and respondent No. 1 are adjudicated by an Arbitrator by Arbitral Tribunal in terms of their agreement. In case there is any change in the circumstances, these orders may be modified by this Court or the Arbitral Tribunal. No further directions are required to be issued.
20. From a careful perusal of the above, it is evident that the court was not pursuaded by the submission on behalf of the petitioner that the respondent Nos. 1, 2 & 3 are one and the same merely because the respondent No. 2 is a holding company. The court has noticed and emphasized the individual entity of these companies as also the responsibilities of their directors to the petitioner as well as to Air Liquide Deutschland GmbH; Air Liquide S.A. & Air Liquide India Holdings Pvt. Ltd. The absolute prohibition sought by the petitioner was refused. The court also did not prohibit the directors of respondent No. 1 who may be directors in the other companies as well from acting as directors in the petitioner’s company.
21. The court has clearly refused to pass any order of injunction against Air Liquide India Holdings Pvt. Ltd., respondent No. 3 even upon the application of the doctrine of the piercing of the corporate veil.
22. It is an admitted position between the parties that there is no injunction against Air Liquide India Holding Pvt. Ltd., respondent No. 3 from carrying on such business. Despite detailed submissions on the aspect that Air Liquide India Holding Pvt. Ltd. was required to be injucted as it is the subsidiary of the respondent No. 2 before this Court in OMP 361/2004, the court has refused to pass any order of injunction against the respondent No. 3. By a communication dated 7th October, 2005, respondent No. 4, Air Liquid International has merely agreed to provide technical and financial guarantee in respect of any agreement which was proposed to be entered into between the respondent No. 3 and the SAIL. It is also the admitted case of the petitioner that the respondent No. 4 is not engaged in any competing business in gases in India or even abroad.
23. The entire edifice and thrust of the petitioner’s case in OMP No. 361/2004 rested on the submission that on application of the doctrine of piercing of corporate veil, the court would find that all the respondents were one and the same.
The petitioner contended that respondent No. 3 is also a subsidiary of respondent No. 2 which was the holding company of both respondent Nos. 1 & 3. This Court considered these submissions and still did not pass any interim order against respondent No. 3.
24. Both Air Liquide India Holding Pvt. Ltd., respondent No. 3 and the Air Liquide International, respondent No. 4, are stated to be subsidiaries of Air India Liquide S.A. respondent No. 2. This Court consciously refused to grant injunction in respect of the business of respondent No. 3, also a subsidiary of the respondent No. 2 in the order dated 31st January, 2005. In these facts and circumstances it would be too far fetched to say that respondent No. 4 would stand prohibited or injuncted from even providing a guarantee in respect of any business activities of the respondent No. 3 merely because its holding company No. 2 was injuncted.
In these facts, it has to be seen as to whether on the same pleas which did not find favor before the court on 31st January, 2005, Air Liquide International, respondent No. 4, herein can be held liable under the Contempt of Court Act, 1972.
25. This Court has carefully considered the responsibilities and liabilities of the respondents arrayed before it. It is trite that while considering a complaint alleging willful violation of an order, certainly, the petitioner cannot be permitted to expand the applicability of the order of injunction to injunct respondent No. 4 or the others who were not even parties before the court in OMP 361/2004.
26. Conscious of the legal responsibilities of the directors of the company, the court has carefully passed the order dated 31st January, 2005, clearly recognizing the distinct responsibility of a person who may be a director of more than one company. Despite the allegations of commonality of directors, injunction even against the respondent No. 3, which was admittedly carrying on competing business with the petitioner, has been refused.
27. By the judgment dated 31st of January, 2005, even so far as the nominee directors of the respondent No. 1 who were on the board of directors of the petitioner, the injunction sought against them was rejected except to the limited extent that the directors, officers and nominees of respondent No. 1 were restrained from attending or participating in those meetings of the petitioner company in which any matter pertaining to the filing of the tenders by the petitioner company was scheduled to be discussed.
Thus, the prayer of the petitioner seeking a restraint against the nominees and directors of respondent No. 1 from participating and interfering in the business and affairs of the petitioner company, was not granted.
28. Looked at from any angle, it cannot be held that merely because the respondent No. 4 is also a subsidiary of respondent No. 2 or there may be commonality of directors, respondent No. 4 stand injuncted from indulging in any competing activity with the petitioner.
29. There is also no dispute that the respondent No. 4 has no connection with the SPC agreement dated 12th May, 1995 which was amended in November, 1996 nor was it a party to the OMP No. 361/2004.
30. Even otherwise, in the facts noticed above, the action of the respondent No. 4 in merely agreeing to provide a technical and financial guarantee, cannot be an act prohibited either under the agreement between the petitioner and the respondent No. 1 or an act in violation of the order dated 31st January, 2005 in any manner. Therefore, in my view, the contentions of the petitioners are wholly without substance and deserve to be rejected outright.
31. In any case, this Court was also not impressed with these submissions of the petitioner and when the petition was listed on 29th November, 2005 had directed on the contempt petition as follows:
At the first instance, notice be issued to respondent No. 2, returnable on 16th January, 2006.
32. At this stage, it would be also useful to notice the allegations on which the petitioner has arrayed the respondents as parties in the contempt petition. In this behalf, para 10 of the petition makes interesting reading and reads thus:
10. That therefore the Respondent No. 1, 2 3 and 4 have willfully violated and disobeyed the order dated 31/1/2005 passed by this Hon’ble Court and therefore they and the Respondent No. 5 being the Chairman of the Management of Respondent No. 1, Respondent No. 6 to 16 being Member of executive committee of Respondent No. 3 are in change of and responsible for the affairs of the Respondent No. 1, to 3, it is pertinent to note that Respondent No. 7 is also in charge of and responsible for affairs of Respondent No. 4 as the Guarantee letter dated 7th October, 2005 has been signed by him on the behalf of Respondent No. 4 respectively and have thus committed the contempt of this Hon’ble Court for which they are liable to be punished.
33. In the petition, the petitioner has sought not only initiation of the proceedings under the Contempt of Courts Act against all the respondents but has also stated that till the respondents purge the contempt, they ought to be restrained from competing with the petitioner directly or through their agents, subsidiaries, associates etc. pending disposal of the petition.
34. A close reading of the petition does not show that all the respondents were even aware of the order dated 31st January, 2005 or that it was ever served upon them. On these bald allegations, this contempt petition has been filed in this Court arraying parties who were not party to the initial lis wherein the order dated 31st January, 2005 was passed.
35. The respondent No. 2 entered appearance in the matter after receipt of notice and has pleaded a strong objection on the grounds of jurisdiction of this Court to entertain and adjudicate upon the subject matter of the SPC agreement dated 12th May, 1995 and the submissions made on behalf of the petitioner. It has been pointed out that it has raised the jurisdictional issue even in the appeal filed by it. Apart from these objections, the respondent No. 2 has stated thus:
8. I say that the Respondent No. 2 is a company incorporated in France and is having its office at 75, Quai d’ Orsay, 75007, Paris, France. The Respondent No. 2 does not itself carry on the sale of industrial gases within the territorial jurisdiction of this Hon’ble Court nor does it have any office or agent related to such business within the territorial jurisdiction of this Hon’ble Court. Since the Hon’ble Court has no jurisdiction to pass any orders against the Respondent No. 2 therefore the OMP No. 361 of 2004 as well as the contempt proceedings are not maintainable against the Respondent No. 2 and the same be dismissed.
9. I say that the Respondent No. 2 is filing the present affidavit in reply only for the purpose of protesting the jurisdiction of this Hon’ble Court and the same does not constitute submissions to the jurisdiction of this Hon’ble Court either expressly or impliedly. Further, the Respondent No. 2 reserves its right to make submissions on merits if this Hon’ble Court comes to be conclusion that it has jurisdiction in the matter.
36. This affidavit has been deposed by one Mr. Laurent Blamoutier, Legal Manager of Air Liquide S.A. and has been sworn at Paris on 9th May, 2005.
37. The affidavit was filed without prejudice to such objections. It is also pointed out that even in O.M.P. No. 361/2004, the respondent No. 2 had filed an affidavit dated 14th December, 2004 challenging the territorial jurisdiction of this Court over the subject matter and in relation to the parties. Reliance was placed before the court on the pronouncement of the Supreme Court in entitled World Tanker Career Corporation v. SNP Shipping Services Pvt. Limited and Ors. It has been pointed out that this objection was not considered in the judgment dated 31st January, 2005 and that the respondent No. 2 has assailed the order passed by the court by way of FAO (OS) No. 71/2005 which is stated to be pending before the Division Bench. Without prejudice to the objection relating to the jurisdiction of this Court, the respondents have opposed the petition even on demurer. Mr. Prag P. Tripathi, learned senior counsel appearing for the respondent, has addressed detailed submissions on the contempt petition as has been laid before this Court which are considered herein.
38. It would be useful to notice the principles laid down by the Apex Court in entitled World Tanker Career Corporation v. SNP Shipping Services Pvt. Limited and Ors. The Apex Court was considering the territorial jurisdiction of the court to entertain and adjudicate upon the subject matter of the lis which was brought before it. In the case before the Apex Court, a collusion had occurred between the vessel in question and another vessel on high seas off the coast of a foreign country. Both the vessels were foreign vessels, all persons and/or companies claiming ownership rights either as owners or characters, managers or sub-managers were foreign companies save only one of the managers which was the company registered in India, and all claimants, defendants were foreigners neither doing any business in India, nor submitting to the jurisdiction to the court in India nor filing any liability action in India. The foreign defendants who appeared before the Indian court, appeared under protest to contest jurisdiction. The Supreme Court held that the Bombay High Court was not the domiciliary court of M/s Kara Mara or its vessel. Nor is any claim for liabiltiy which can be limited and filed against M/s Kara Mara in the Bombay High Court. None of the defendants to the suit was within the jurisdiction of the Bombay High Court. The fortuitous presence of the ship in the Bombay harbour would not entitle the owner to file a limitation action in the Bombay High Court in the absence of any claim being made or apprehended against him or the vessel in that court. Therefore, bringing the ship to the Bombay port in order to confer jurisdiction on the Bombay High Court, had the character of forum-shopping rather than anything else. The court observed that the presence of a foreign defendant who appears under protest to contest jurisdiction, cannot be considered as conferring jurisdiction on the court to take action. Unless a foreign defendant either resides within jurisdiction or voluntarily appears or has contracted to submit to the jurisdiction of the court, it is not possible to hold that the court will have jurisdiction against a foreign defendant. Further the court also observed thus:
It is true that an order passed by the High Court even though it may be without jurisdiction must be obeyed. If such an order is disobeyed, it amounts to contempt of court and proceedings can be taken in that connection against the contemnor.
39. In this behalf, the respondents before the Apex Court had placed reliance on the earlier pronouncement of the Supreme Court in entitled Tayabhai M. Bagasarwalla v. Wind Rubber Industries (P) Ltd.
40. In view of the principles laid down by the Apex Court in this judgment, the issue as to the maintainability of OMP No. 361/2004 before this Court, would have no bearing on the claim of the petitioner that the respondents had violated an order passed by this Court even if the same was without jurisdiction.
41. For the same reason, the pronouncement cited on behalf of the petitioner to the effect that the court dealing with an application for contempt of court, cannot traverse beyond the orders. If any party concerned is aggrieved by any order which in its opinion is wrong or against rules or its implementation is neither practicable nor feasible, it should always either approach the court that passed the order or invoke the jurisdiction of the Appellate Court. It is well settled that rightness or wrongness of the order cannot be urged in contempt proceedings and that the right or wrong order has to be obeyed. These principles are well settled and in this behalf, the petitioner has cited the pronouncement of the Apex Court in Prithawi Nath Ram v. State of Jharkhand (Paras 5 & 8) and K.G. Derasari and Anr. v. UOI and Ors.
42. This objection in any case loses importance in the light of the findings which are recorded hereinafter.
43. Mr. Prag Tripathi, learned senior counsel for the petitioner, has also placed reliance on the pronouncement of the Apex Court Shri Baradakanta Mishra v. The Registrar of Orissa High Court and Anr. in support of the contention that contempt jurisdiction should be exercised with scrupulous care and only when the case is clear and beyond reasonable doubt.
Placing reliance on Anil Ratan Sarkar and Ors. v. Hirak Ghosh and Ors., it was urged that a contempt jurisdiction should be sparingly and carefully utilised and that unless a court is satisfied beyond doubt, it would neither be fair nor reasonable for the lower courts to exercise jurisdiction in the suit. The burden and standard of proof in contempt action has to be beyond any reasonable doubt and that the power should be exercised only in the larger interest of the society and for proper administration of the justice delivery system in the country. If a doubt in the matter as regards the willful nature of the conduct, is raised, then the question of success in a contempt petition would not arise under any circumstances.
44. Placing reliance on Indian Airports Employees’ Union v. Ranjan Chatterjee and Anr. (VII), it has been contended that the action of the respondents was based on an interpretation of the orders by the respondents and could not be said to amount to willful disobedience of any order passed by the court.
45. In (1997) III All ER 159 Attorney General v. Newspaper Publishing Plc and Ors., the court held thus:
We do not accept that any conduct by a third party inconsistent with the order of the court is enough to constitute the actus reuse of contempt. Where it is sought to impose indirect liability on a third party, the justification for doing so lies in that party’s interference with the administration of justice. It is not in our view necessary to show that the administration of justice in the relevant proceedings has been wholly frustrated or rendered utterly futile. But it is, we think, necessary to show some significant and adverse effect on the administration of justice. Recognising that the restraints upon freedom of expression should be no wider than are truly necessary in a democratic society, we do not accept that conduct by a third party which is inconsistent with the court order in only trivial and technical way should expose a party to conviction for contempt.
46. Learned senior counsel on behalf of the respondents also placed reliance on the pronouncement of the Apex Court in Shri B.K. Kar v. The Hon’ble the Chief Justice and his companion Justices of the Orissa High Court & Another (Para 7) to urge that only such willful disobedience of an order can be held to be contumacious as is that the knowledge of the order. Urging that for this reason, no contempt proceedings can be initiated or maintained against persons who were not parties before the OMP No. 361/2004. It is contended that the present petition is wholly mala fide and devoid of merit which deserve to be rejected.
47. Mr. Prag Tripathi, learned senior counsel appearing for respondent No. 2 has submitted that the petitioner has also concealed the material fact that the respondent No. 1 had invested around Rs. 138.00 crores in order to meet its obligations in terms of the SPC agreement dated 12th of May, 1995 and that it has been compelled to sell its shareholding at a paltry rate of Rs. 19.00 crores to the Goyal Group. It is further submitted that as of now, even the respondent No. 1 has no shareholding and no directors on the Board of Directors of the petitioner. It has been pointed out that three suits had been caused to be filed by the Goyal Group seeking injunction with regard to shareholdings of the respondent No. 1 in the petitioner company and all these three suits stand settled on the 21st February, 2006. There is no dispute to this factual assertion.
48. If this is correct, then it would appear that even the order dated 31st January, 2005, so far as the respondent Nos. 1 & 2 is concerned, may also perhaps have ceased to have effect as per the agreement.
49. It is to be noted that at the time of closing of arguments on 13th September, 2006, no judgment had been cited on behalf of the petitioner. However, subsequently, along with written submissions which are dated 18th September, 2006, several judicial pronouncements have been filed on behalf of the petitioners. The petitioners were directed to furnish copies of these pronouncement to the other side as well. In the light of the view I have taken above and also for the reason that these pronouncements were not cited before this Court, the submissions made in the written submissions on behalf of the petitioner would not have deserved to be considered. However, in any case, I find that the same have no application to the facts and circumstances of the instant case.
50. In support of the contention that this Court has the jurisdiction to pierce the corporate veil even in the contempt proceedings, the petitioner has placed reliance on 89 Company Cases 362 entitled Delhi Development Authority v. Skipper Construction Company Pvt. Ltd. (Page 379, 380-381); 89 Company Cases 849 SC (Pages 869 to 872) entitled New Horizons Limited v. UOI & 1987 Crl. Law Journal 1281 Del. entitled Jyoti Limited v. Kanwaljit Kaur (Paras 14 to 21). It is well settled that the judicial precedents cannot be applied de hors the facts and circumstances of the case in which the same have been cited. In DDA v. Skippers Construction Company Pvt. Ltd., the court was concerned with the utilisation of a corporate entity which was evolved not to encourage and promote trade and commerce, but to commit illegalities and to defraud people. The court was considering the conduct of the directors of the Skipper Construction Company Pvt. Limited who were utilising and taking the shield of the corporate character of the respondent company for the purposes of committing illegalities and for acts of fraud. It was in these circumstances held that the court would ignore the corporate character and will look at the reality behind the corporate veil so as to enable it to pass orders to do justice between the parties concerned. In this case, the court held that if it is found that someone has acquired property by defrauding the people and if it is found that the persons defrauded should be restored to the position in which they would have been but for the said fraud, the court can make all necessary orders for the purposes. It was in the extreme circumstances of the case that the court observed, as noticed above, and also directed that all properties and bank account standing in the name of the contemnors and the directors of the respondent company, their wife, sons and unmarried daughters would stand attached. The court so held in exercise of its power under Articles 142 of the Constitution of India and observed that the same was meant to supplement the existing legal framework to do complete justice between the parties and not to supplant it. It is conceived to meet situations which cannot be effectively and approximately tackled by the existing provisions of law. The court had returned a specific findings that the contemnor and his family had created plots and devices in the form of corporate bodies which were merely cloaks behind which lurked him and members of his family and the device of incorporation was really a play adopted for committing illegalities to defraud people. The court had arrived at the finding that several properties in the name of corporation were really owned by the director; that the corporate veil and the change of directorships were all mere devices to screen the said property and its income from the creditors of one director and his family including the purchasers who had purchased the office space pursuant to the advertisements issued by these persons in violation of the orders of the Apex Court. The court held that “the reality is that Tejwant Singh, the contemnor, who is the author of all these deals and devices. The transfer of shareholding if any between the father and the son (and their respective wives) must also be treated as a sham transaction.
The instant case certainly has no parity with the facts of the case before the Apex Court and the present case.
51. Similarly, in New Horizons Limited v. UOI & 1987 Crl. Law Journal 1281 Del., the Apex Court was considering the challenge to the issuance and acceptance of a tender. The appellant company had pooled together resources with other companies who had made available equipment and organisation in different places. The court noticed that all the constituents of the company had thus contributed to the resources of the company showing that it was an association of the companies jointly undertaking a commercial enterprise wherein they would all contribute assets and share risks and had a community of interest. It was for the purposes of assessing the experience of the appellant company which had participated in the tendering process that the court held that the veil covering face of the appellant company had to be seen through and it would be found that it was in the nature of a partnership between an Indian Group of Companies and a foreign company, who had jointly undertaken the commercial enterprises wherein they would contribute to the assets and share risks.
This precedent has no application to the facts of the instant case.
52. The court while opposing the judgment dated 31st January, 2005 has considered these submissions of the petitioner and has passed a considered decision which has not been assailed by the petitioner in any manner. In the instant case, it is not the petitioner’s case that there is a community of interest that the respondents have jointly undertaken any commercial enterprises or are contributing to assets and sharing risks, on the contrary. Detailed submissions have been made on behalf of the petitioners before this Court pointing out that all the respondents are not even engaged in the same activities.
53. So far as the pronouncement of the Apex Court in 1987 Crl. Law Journal 1281 (Del.) Jyoti Limited v. Kanwaljit Kaur Bhasin and Anr. is concerned, it is to be noted that the respondents were Chairman & Managing Director in another company by the name of M/s Tower Height Builders Pvt. Ltd. which was incorporated only on 10th January, 1980. The injunction order dated 8th October, 1980 related to the third and fourth floor of a multi-storeyed building which was to be set up on plot No. 16, Nehru Place, New Delhi.
After the injunction order was confirmed on the 8th of October, 1980, lease hold rights in the plot No. 16, Nehru Place, New Delhi were transferred in favor of M/s Tower Height Builders Pvt. Ltd. on the 12th November, 1980.
It was in these facts that the court held that the corporate veil required to be pierced and it was found that the respondents were utilising corporate entity as a device of M/s Tower Height Builders Pvt. Ltd. to defeat the order passed by the court.
This case is clearly distinguishable upon facts urged by the petitioner in the present petition.
54. So far as the liability of the directors in the contempt action is concerned, the petitioner has placed reliance on the pronouncement in (1910) 2 Ch. 190 Stancomb v. Trowbridge Urban District Council and LR 5 RP 315 (1965) Re Galvanized Tank Manufacturers’ Association’s Agreement. It is to be noticed that in all these matters, the court was concerned with execution and enforcement of an order against the corporation. The courts were concerned with a Writ of Sequestration and the relevant provisions of the applicable provision of RSC Order 45 Rule 5. Sub-rule 1 specifically provides that where a person disobeys the judgment or order requiring him to abstain from doing an action then, subject to the provisions of the rule, the judgment or the order may be enforced, where that person is a body corporate, with the leave of the court, by a writ of sequestration against the property of any director or other officer of the body. No such provision has been relied upon before this Court.
55. The petitioner, therefore, cannot place reliance on the principles laid down in these judgment to urge that the respondents were guilty of contempt of the order dated 31st January, 2005 even though the relief specifically sought had not been granted.
56. In the light of the above discussion, the present petition is wholly devoid of merit. In my view, there is no violation of the order dated 31st January, 2005 by the respondent No. 2 on the allegations laid in the petition.
57. So far as the other respondents are concerned, notice was not issued by this Court. However, from the foregoing discussion, I have held that issuance of the letter dated 7th October, 2005 by the respondent No. 4 does not amount to a violation of the order dated 31st of January, 2005, let alone a willful violation which could be held to be contumacious on the part of respondent No. 4.
58. The petitioner has filed a wholly baseless, frivolous and mala fide contempt petition seeking initiation of contempt proceedings against the respondents who, other than respondent No. 3, are admittedly based abroad. The respondent No. 2 is located in France and has been constrained to contest such petition in this Court. There is substance in the submission on behalf of respondent No. 2 that the very array of parties would have considerably overawed the persons arrayed as respondents even though notice was not issued against them. Apart from other companies, the petitioner has also arrayed all persons holding any kind of office in the respondent No. 2 organisation. Undoubtedly, valuable time of the court has been wasted without any justification. Contempt proceedings are intended to protect the majesty of law and uphold the rule of law.
59. From the above, I find substance in the contention on behalf of the respondent No. 2 by Mr. Tripathi, learned senior counsel that the petition is mala fide and has been filed with the sole intent of pressurising the German companies into opting out of the Indian market under the threat of implication and conviction in contempt action. The same would be evident from the prayers which have been made in this petition. The contention of the petitioner in para 5 of the petition to the effect that the respondent No. 2 was injuncted because this Court considered the respondent Nos. 1 & 2 as one economic unit, is contrary to the specific findings of the court wherein the court has passed the order against respondent No. 2 holding that it cannot compete with the petitioner only “as it is acquiring the shareholding of petitioner through respondent No. 1”.
60. Vexatious and frivolous litigation poses a number of threats to the efficient operation of any civil justice system. Those threats stem from the manner in which the vexatious and frivolous litigant conducts litigation before the courts. Such proceedings, apart, from the oppression and the harassment inflicted on the adversary, are extremely damaging to public interest. Judicial resources are valuable and scarce. The resources of the court are not infinite, especially in terms of judicial time. Therefore, administration of justice and interests of equity and fair play mandate that a party which succeeds is compensated by award of costs in respect of false or vexatious claims or defenses. A faulting party may be required to pay to the other party such costs as would, in the opinion of the court, be reasonably sufficient to reimburse the other party in respect of the expenses incurred by him in attending the court on that date and payment of such costs on the next date following the date of such order if unreasonable adjournments are taken by the parties.
However, many unscrupulous parties take advantage of the fact that either costs are not awarded or nominal costs alone are awarded against the unsuccessful party.
61. The legislature has recognised the need for imposition of costs and consequently, so far as the civil proceedings are concerned, has enacted Section 35 of the Code of Civil Procedure which provides for imposition of costs. The Apex Court was concerned with the manner in which the costs are imposed resulting in undue advantage being taken by parties of the fact that notional costs are awarded which do not deter or discourage persons from filing vexatious or frivolous claims or defenses. In this behalf, in Salem Advocate Bar Association v. Union of India, the court observed thus:
37. Judicial notice can be taken of the fact that many unscrupulous parties take advantage of the fact that either the costs are not awarded or nominal costs are awarded against the unsuccessful party. Unfortunately, it has become a practice to direct parties to bear their own costs. In a large number of cases, such an order is passed despite Section 35(2) of the Code. Such a practice also encourages the filing of frivolous suits. It also leads to the taking up of frivolous defenses. Further, wherever costs are awarded, ordinarily the same are not realistic and are nominal. When Section 35(2) provides for cost to follow event, it is implicit that the costs have to be those which are reasonably incurred by a successful party except in those cases where the court in its discretion may direct otherwise by recording reasons therefore. The costs have to be actual reasonable costs including the cost of the time spent by the unsuccessful party, the transportation and lodging, if any, or any other incidental costs besides the payment of the court fee, lawyer’s fee, typing and other costs in relation to the litigation. It is for the High Courts to examine these aspects and wherever necessary make requisite rules, regulations or practice direction so as to provide appropriate guidelines for the subordinate courts to follow.
62. However, there are several proceedings which are not governed by the Code of Civil Procedure. The courts have recognised the inherent power of the court to award costs in the interest of justice.
63. In entitled State of Karnataka v. All India Manufacturers Organisation, a challenge was laid to a common judgment of the High Court of Karnataka disposing of three public interest litigations whereby a direction was issued to the State of Karnataka to continue to implement a certain project known as the “Bangalore-Mysore Infrastructure Corridor Project”. While dismissing the appeals, the Apex Court held that there was no merit in them. It was further directed that:
Considering the frivolous argument and the mala fides with which the State of Karnataka and its instrumentalities have conducted this litigation before the High Court and us, it shall pay Nandi costs quantified at Rs. 5,00,000/-, within a period of four weeks of this order.
The appellants in CA No. 3497/2005 (J.C. Madhuswami and Ors.) in addition to the costs already ordered by the High Court, shall pay to the Supreme Court Legal Services Authority, costs quantified at Rs. 50,000- within a period of four weeks of this order….
64. The observations of the Apex Court in this behalf as back as in Morgan Stanley Mutual Fund v. Kartick Das are also topical and instructive and were made with the intention of discouraging speculative and vexatious litigation and judicial adventurism. In this behalf, the court observed thus:
47 There is an increasing tendency on the part of the litigants to indulge in speculative and vexatious litigation and adventurism which the fora seem readily to oblige. We think such a tendency should be curbed. Having regard to the frivolous nature of the complaint, we think it is a fit case for award of costs, more so, when the appellant has suffered heavily. Therefore, we award costs of Rs. 25,000/- in favor of the appellant. It shall be recovered from the first respondent C.A. No. 4584 of 1994 arising out of SLP (c) No. 272 of 1994 is allowed accordingly.
65. The Division Bench of this Court in 2004 (110) DLT 186 entitled Indian Steel & Wire Products v. B.I.F.R. (DB), held that the sole purpose of filing the petition was to sabotage the proposal/scheme of TISCO which was accepted by the BIFR. The court held that the petitioner-company’s false offer and undertaking has delayed the implementation of the scheme and the interest of workers and other creditors have suffered. The court held that the petitioner had not approached the court with clean hands and that such practice and tendency needed to be strongly discouraged and effectively curbed so that “in future, the petitioner and such like litigants should not gather the courage of abusing the process of law for ulterior motives and extraneous considerations. Such motivated petitions pollute the entire legal and judicial process which seriously affects the credibility of this system”.
66. In these circumstances, the court held that the respondent who had to appear before the court in pursuance of the notice issued had to “unnecessarily incur the costs to contest such a frivolous petition. In our considered opinion, at least those respondents who have appeared and contested this litigation and incurred costs must be compensated to some extent”. The court consequently awarded costs to each of the respondents who appeared in the matter on consideration of the totality of the facts and circumstances and in the interest of justice and fair play.
67. Imposition of costs normally follows the indemnity principle which is simply described as “If you lose, you will be responsible not merely for your own legal costs but you must pay the other side’s too”.
68. In this background, there is yet another more imperative reason which necessitates imposition of costs. The resources of the court which includes precious judicial time are scarce and already badly stretched. Valuable court time which is required to be engaged in adjudication of serious judicial action, is expended on frivolous and vexatious litigation which is misconceived and is an abuse of the process of law. A judicial system has barely sufficient resources to afford justice without unreasonable delay to those having genuine grievances. Therefore, increasingly, the courts have held that such totally unjustified use of judicial time has to be curbed and the party so wasting precious judicial resources, must be required to compensate not only the adversary but also the judicial system. For this reason, in the State of Karnataka v. All India Manufactures Organisation (Supra), the appellants were required to pay costs to the Supreme Court Legal Services Authority in addition to paying the costs to the adversarial party. Such vexatious litigation has to be deprecated. Lord Phillips MR in a judgment rendered in the court of appeal in (2004) 1 WLR 88 (CA) entitled Bhamjee v. Forsdick and Ors. said:
(8) In recent years the courts have become more conscious of the extent to which vexatious litigation represents a drain on the resources of the court itself, which of necessity are not infinite. There is a trace of this in the judgment of Staughton LJ in Attorney-General v. Jones (1990) 1 WLR 859, 865C, when he explained why there must come a time when it is right for a court to exercise its power to make a civil proceedings order against a vexatious litigant. He said that there were at least two reasons:
First, the opponents who are harassed by the worry and expense of vexatious litigation are entitled to protection; secondly the resources of the judicial system are barely sufficient to afford justice without unreasonable delay in those who do have genuine grievances and should not be squandered on those who do not.
69. The same concerns were articulated in Attorney-General v. Ebert (2004) EWHC 1838 (Admn.) thus:
Mr. Ebert’s vexatious proceedings have…been very damaging to the public interest; quite aside from the oppression they have inflicted on his adversaries…. The real vice here, apart from the vexing of Mr. Ebert’s opponents, is that scarce and valuable judicial resources have been extravagantly wasted on barren and misconceived litigation, to the detriment of other litigants with real cases to try.” Silber J, concurring, referred (at para 61) to “a totally unjustified use of judicial time.
70. The Division Bench of this Court has further considered yet another impact of frivolous and vexatious litigation. In 1995 (59) DLT 604 Jagmal Singh v. Delhi Transport Corporation, the court was called upon to consider a challenge to the disciplinary proceedings at the hands of an employee of the Delhi Transport Corporation. While noticing the various reasons as to the self-imposed limitations on the courts in interfering with interlocutory stages of departmental proceedings, the court arrived at a finding that the writ petition by the petitioner was not only misconceived but an abuse of the process of the court. After so holding, the court observed thus:
We are firmly of the view that petitioner has resorted to the dilatory tactics hereby crippling the progress of the departmental enquiry pending against him for the last about eight long years. It is not only unfortunate but matter of concern to all of us being the members of the society, that the petitioner by indulging in this type of frivolous litigation has not only wasted his time and money but has also wasted the time of the court and other public functionaries thereby causing unnecessary drain on the resources of public exchequer whose coffers are filled in by poor people’s money. In such a case with a view to discourage frivolous litigation, it becomes our duty not only to see that the petitioner is saddled with exemplary costs but also to ensure that he gets no benefit on account of the delay caused by him in the departmental enquiry pending against him.
71. There have been several other instances when the courts have been called upon to consider such frivolous and sham claims. In the judgment dated 17th July, 2006 passed by this Court in Arb.Petition No. 22/2006 entitled M/s Ge Countrywide Consumer Financial Services Ltd. v. Shri Prabhakar Kishan Khandare and Anr., it was observed thus:
30. The matter however cannot rest here. It is apparent that the petitioner has caused the respondents to incur heavy expenses and to contest litigation in a city where they do not reside or work for gain. The petition was filed in the district courts wherein it was contested by the respondents and thereafter in the jurisdiction of this Court. Having regard to the entire conspectus and facts noticed above, in my view, punitive and exemplary costs deserve to be imposed on the petitioner for its conduct in effecting the interpolations in the agreement and placing reliance on the same before this Court as well as in compelling the respondents to contest litigation which it knew was not maintainable within the jurisdiction of this Court. The petitioner also deliberately and mala fide concealed a material facts while filing the present petition. The petitioner has deliberately wasted precious court time with impunity and without remorse. Therefore, whether dismissal or withdrawl, the petitioner cannot be permitted to get away without compensation to the respondents and the justice system. The matter has been listed before this Court on several dates and before the District Courts before that. Such conduct has not only to be condemned but it is necessary to impose such costs as would deter the petitioner and others like it from resorting to such tactics.
Therefore, while dismissing the petition I hereby impose punitive and exemplary costs on the petitioner of Rs. 1,20,000/- The petitioner shall apportion the costs which have been awarded equally between the respondents, the Delhi High Court Lawyers’ Social Security & Welfare Fund and the National Legal Aid Fund (NALSA). The costs shall be deposited by the petitioner within four weeks. Proof of deposit of the costs shall be placed before this Court.
72. It has been held that the present petition is wholly misconceived and without merit. In my view, the petitioner has wasted valuable judicial time unjustifiably with the intent to oppress its adversaries for commercial gains. The petitioner has persisted with this petition despite having been unsuccessful in obtaining prohibitory order which it has sought in the earlier litigation. Undoubtedly, the petitioner must be required to compensate the other side by the costs which they would have incurred in the litigation and also to afford some measure of compensation to the judicial system.
73. In 2006 (32) PTC 133 (Del.) entitled Austin Nichols and Anr. v. Arvind Behl and Anr., a learned Single Judge of this Court has expressed the view that mere injunction does not subserve the interest of unsuccessful party and that the actual legal costs incurred by them for contesting the application would be awarded to the party that succeeds. The plaintiff had indicated that it had incurred costs of Rs. 18,85,000/-. In these circumstances, as the plaintiff succeeded in the application, it was held that it was entitled to costs which were quantified at Rs. 18,85,000/- even at the interlocutory stage.
74. Having regard to the facts and circumstances of the present case and the quantification of costs by the Apex Court and this Court in the cases which have been noticed hereinabove. In my view, the present case is also a fit case where the respondents deserve to be compensated with costs. It is apparent from the aforegoing discussion that the this petition was filed by the petitioner to extract commercial gain against persons who are far beyond the territorial jurisdiction of this Court. Not a whit of allegation is contained in the petition that any order was passed against them or they were having knowledge of the same, to enable this Court to hold the respondent guilty of willful violation of the order passed by this Court. Protracted proceedings have taken place in the present case and arguments spread over several years. The petition has been found to be wholly without merit, vexatious and frivolous. Undoubtedly, the petitioner must be burdened with heavy costs for filing such a petition.
75. It is accordingly directed that the petitioner shall pay the respondent No. 2 costs which are quantified at Rs. 1,00,000/- within a period of two weeks of this order. In addition thereto, the petitioner shall pay to each of the Delhi High Court Legal Services Committee and the National Legal Aid Fund, an amount of Rs. 50,000/- within the period of two weeks of this order.
Proof of payment of costs shall be placed before the Deputy Registrar (Original).
