Supreme Court of India
RELIANCE COMMUNICATION LIMITED & ORS.versusSTATE BANK OF INDIA & ORS.
- Citation
- 2019 INSC 242
- Decided
- 20 February 2019
- Bench
- R F NARIMAN
Holding
The three Reliance Companies are guilty of civil contempt for wilfully breaching the Supreme Court’s unconditional payment undertaking, and must purge the contempt by paying the outstanding amount, fines, and face imprisonment on default; the contempt petition against SBI is dismissed.
Summary
The Supreme Court heard three contempt petitions filed by Ericsson India Pvt. Ltd. against Reliance Communications Ltd., Reliance Telecom Ltd. and Reliance Infratel Ltd. (collectively the Reliance Companies) for failing to honour a settlement of INR 550 crore that was ordered to be paid by 30 September 2018, with a later deadline of 15 December 2018 as a matter of indulgence. The Companies submitted undertakings linking payment to the sale of assets, contrary to the Court’s explicit order that the amount was payable irrespective of any asset‑sale timeline. The Court held that the Companies wilfully misrepresented their undertakings, thereby committing civil contempt. The petition against the Chairman of State Bank of India was dismissed as unrelated. Under Section 12(4) of the Contempt of Courts Act, the Court ordered the Companies to pay INR 453 crore (net of the INR 118 crore already deposited) with interest, a fine of INR 1 crore per company, and directed imprisonment of the chairmen for three months (or one month for the fine) on default.
Issues considered
- The validity of the Reliance Companies' undertakings linking payment to the sale of assets in view of the Supreme Court's order.
- Whether the Reliance Companies' conduct amounts to wilful disobedience constituting civil contempt under the Contempt of Courts Act, 1971.
- Whether the contempt petition against the Chairman of State Bank of India is maintainable.
- The appropriate quantum of punishment under Section 12(4) of the Contempt of Courts Act.
Legislation cited
- Contempt of Courts Act, 1971s. 12(4), s. 2(b)
- Insolvency and Bankruptcy Code, 2016s. 9
Subjects
civil contemptundertakingwilful disobedienceSupreme Court orderpayment settlementInsolvency and Bankruptcy CodeSection 12(4) Contempt Actimprisonment for contemptfine for contemptasset sale linkage
Judgment
64 [2019]
SUPREME COURT 4 S.C.R. 64
REPORTS [2019] 4 S.C.R.
A RELIANCE COMMUNICATION LIMITED & ORS.
v.
STATE BANK OF INDIA & ORS.
(Writ Petition (Civil) No. 845 of 2018)
With
B
(Contempt Petition (C) No. 1838 of 2018, 55 of 2019 and 185 of 2019
in W.P.(C) No. 845 of 2018)
FEBRUARY 20, 2019
[R. F. NARIMAN AND VINEET SARAN, JJ.]
C Contempt of Courts Act, 1971 – s.12(4) – Agreement between
Ericsson and Reliance Communications (RCom) – Ericsson agreed
to provide managed services, i.e., operation, maintenance, and
management of RCom’s network – It raised invoices, however on
receiving no payment, ultimately issued notices – Notices replied by
three Reliance Companies (RCom and its group companies, Reliance
D Telecom Ltd. & Reliance Infratel Ltd. – Understanding reached for
making payment of the outstanding invoices – However, even this
understanding fell through – Ericsson terminated the agreement
calling upon the three Reliance Companies to pay the outstanding
amount in full – Ericsson filed three applications u/s.9, Insolvency
E Code – National Company Law Tribunal (NCLT) appointed three
Interim Resolution Professionals to carry out the corporate
insolvency resolution process – In appeal, NCLAT by order dtd.
30.05.2018, stayed the orders – Statement of counsel appearing on
behalf of the Reliance Companies that the matter was agreed to be
settled for a sum of INR 550 crore, which would be paid within 120
F days’ time – Undertakings filed – Writ petition filed by the three
Reliance Companies before Supreme Court seeking quashing/closure
of the corporate insolvency resolution process in view of settlement
of disputes – By order dt. 03.08.2018, Supreme Court recorded that
the timeline of 120 days shall be strictly adhered to and payment of
G INR 550 crore is to be made on or before 30.09.2018 – Pursuant to
the order, undertakings dt.09.08.2018 given by the Chairmen of
these Companies in Supreme Court, however, stating that the sum
of INR 550 crore will be paid “upon sale of assets of the company”–
First contempt petition filed by Ericsson– Reliance Companies
applied for extension of time for payment by 60 days – Supreme
H
64
RELIANCE COMMUNICATION LIMITED v. STATE BANK OF 65
INDIA
Court inter alia ordered that as a last opportunity, the amount must A
be paid on or before 15.12.2018 – Second application to extend
time – Dismissed, as withdrawn – Second contempt petition filed by
Ericsson for non-payment of INR 550 Crore on or before
15.12.2018– Third contempt petition filed by Ericsson – Held: Order
dt. 03.08.2018 clearly recorded that the payment of INR 550 crore
B
will be made on or before 30.09.2018, and an undertaking was to
be given by the Chairmen of the Reliance Companies to that effect
– Order separately noted that the sale of assets will continue, as
stated in the orders of the NCLT and the NCLAT– Undertakings
that were to be given by the Chairmen of the Reliance Companies
concerned were only that the payment of INR 550 crore was to be C
made on or before 30.09.2018 – There was no linkage with any
sale of assets of these Companies – However, a perusal of these
undertakings would show that they are contrary to the undertakings
given by the authorized persons of these very Companies pursuant
to the NCLAT order dt.30.05.2018– Those undertakings were
D
unconditional, however, these undertakings are now conditional
upon sale of assets of the Companies – Statements made by RCom
and its group companies that they were “disabled” from paying the
amount of INR 550 crore plus interest; that they “were and are unable
to pay”; is belied by the letter dt. 21.01.2019 written by the
advocates of the Reliance Companies inter alia stating that the full E
payment would be made by 31.01.19 if two conditions were met
namely, withdrawal of contempt petitions and withdrawal of
arbitration proceedings – The three Reliance Companies had no
intention, at the very least, of adhering to the time limit of 120 days
or to the extended time limit of 60 days plus, as given by way of
F
indulgence – Undertakings given on the footing that the amount of
INR 550 crore would be paid only out of the sale of assets was false
to the knowledge of the three Reliance Companies and was a
deliberate misstatement made with the purpose of circumventing the
orders of Supreme Court – This itself affects the administration of
justice, and is therefore, contempt of court – In the facts of the G
present case, wilful default is made out – However, contempt petition
against the Chairman of SBI would not lie inasmuch as the Ericsson
transaction and the sale of assets by the Joint Lenders’ Forum are
completely independent of each other – The three Reliance
Companies are guilty of contempt of this Court – Contempt of this
H
66 SUPREME COURT REPORTS [2019] 4 S.C.R.
A Court needs to be purged by payment of the sum of INR 550 crore
together with interest till date – As stated in the letter dt. 21.01.2019,
subject to any calculation error, INR 453 crore must be paid to
Ericsson in addition to the deposit of INR 118 crore made in the
Registry of Supreme Court – Registry to pay over the sum of INR
118 crore to Ericsson within one week from today – RCom group is
B
directed to purge the contempt of this Court by payment to Ericsson
of the sum of INR 453 crore within four weeks from today – In
default, the Chairmen who have given undertakings to Supreme
Court will suffer three months’ imprisonment – In addition to the
aforesaid sum being paid, a fine amounting to INR 1 crore for each
C Company must also be paid to the Registry within four weeks from
today, which sum will be paid to the Supreme Court Legal Services
Committee – In default, the Chairmen of these Companies will suffer
one month’s imprisonment – Insolvency & Bankruptcy Code, 2016.
Disposing of the Contempt Petitions, the Court
D HELD: 1.1 The undertaking makes it clear that the
understanding of the three Reliance Companies with regard to
the NCLAT order dated 30.05.2018 was that a sum of INR 550
crore will be paid by 30.09.2018 without there being any linkage
to sale of assets, as separately stated in the order. Even otherwise,
reading the order as a whole, it is clear that whereas INR 550
E crore had to be paid within 120 days, sale of assets could take
place at any time in the future without any time limit being
mentioned. This being the case, it is futile to contend that this
order itself made it clear that the sum of INR 550 crore was to be
obtained only from sale of assets. Both the undertakings as well
F as a plain reading of the NCLAT order, militate against any such
linkage. [Para 8][82-G-H; 83-A-B]
1.2 The order dated 03.08.2018 clearly recorded that the
payment of INR 550 crore will be made on or before 30.09.2018,
and an undertaking was to be given by the Chairmen of the
Reliance Companies to that effect. The order separately noted
G
that the sale of assets will continue, as has been stated in the
orders of the NCLT and the NCLAT. A reading of this order also
leaves no manner of doubt that the undertakings that were to be
given by the Chairmen of the Companies concerned were only
that the payment of INR 550 crore was to be made on or before
H
RELIANCE COMMUNICATION LTD. v. SBI 67
30.09.2018. There is no doubt whatsoever that there was no A
linkage with any sale of assets of these Companies. Despite the
aforesaid position being clear, on 09.08.2018, the affidavits of
undertaking, in pursuance of Supreme Court’s order dated
03.08.2018, were given by the Chairmen of the Reliance
Companies. Similar undertakings were filed on behalf of the
B
Chairmen of the other two Reliance Companies. A perusal of these
undertakings would show that they are contrary to the
undertakings given by the authorized persons of these very
Companies pursuant to the NCLAT order dated 30.05.2018.
Whereas those undertakings were unconditional, these
undertakings are now conditional upon sale of assets of the C
Companies. These undertakings have obviously not been given
in accordance with Supreme Court’s order dated 03.08.2018. To
further compound this misdemeanor, an application to extend
time by 60 days was moved on 27.09.2018, in which the same
linkage was made to sale of assets before the sum of INR 550
D
crore could be paid. Ericsson immediately protested in the form
of a contempt petition, being the first contempt petition that was
filed on 01.10.2018, in which it was clearly pointed out that the
said undertaking would show contumacious behavior coupled with
the fact that the Reliance Companies were wriggling out of the
commitment made to Supreme Court. When the first contempt E
petition and the first application for extension of time came up
for hearing before Supreme Court, vide order dated 23.10.2018,
it was made clear that as a matter of indulgence, a last opportunity
would be granted to pay the aforesaid sum on or before
15.12.2018, making it clear that this is conditional upon payment
F
of interest of 12% per annum for delayed payment beyond
30.09.2018. It was also made clear that no further extension would
be granted and that Ericsson may revive the petition for contempt
if payment is not so made. This order again leads to only one
conclusion – that the averment made in the application for
extension of time that the sum of INR 550 crore will be paid out G
of sale of assets was not accepted by this Court, as sale of assets
could have taken place even beyond 15.12.2018. This further
becomes clear from the fact that the contempt petition would be
revived if this payment were not to be made, i.e., it would be
open for Ericsson to contend that the undertaking given to this
H
68 SUPREME COURT REPORTS [2019] 4 S.C.R.
A Court was not as per this Court’s order, and that there had been
wilful and contumacious default on part of the Reliance
Companies. [Paras 9,10][83-B-E; 84-F-H; 85-A-D]
1.3 When a further application for extension of time was
made on the selfsame ground, Supreme Court made it clear by
B its order dated 13.12.2018 that in view of the order passed on
23.10.2018, no further extension of time could be granted, and
revival of the contempt petition would necessarily follow. As a
result of this, this I.A. was dismissed as withdrawn on the said
date. Meanwhile, in parallel proceedings, Supreme Court did its
utmost to lend a helping hand, so that, independently of these
C orders, sale of assets could also be affected. The DoT was called
before this Court and was asked to give its NOC for sale of
spectrum. However, it was pointed out that this NOC could only
be given according to certain guidelines, one of which mandated
that the buyer of the spectrum would have to undertake that it
D would be responsible for payment of the erstwhile debts of the
seller. The sale of spectrum to Reliance Jio, therefore, did not
fructify, not because the DoT wrongfully refused to give its NOC,
as has been alleged by the Reliance Companies in their pleadings
filed in this case. It fell through only because the prospective
buyer, Reliance Jio, refused to give the undertaking that if called
E upon, it would pay the erstwhile debts of the seller of the spectrum.
[Paras 11, 12][85-E-H; 86-A]
1.4 Contempt Petition No.55 of 2019 dated 02.01.2019 was
filed in view of non-payment of the sum of INR 550 crore on or
before 15.12.2018. Contempt Petition No.185 of 2019 dated
F 05.02.2019 was filed pointing out two subsequent facts. First,
that by a letter dated 21.01.2019, the Reliance Companies were
willing to pay the entire sum of INR 550 crore with interest if two
conditions were met, namely, withdrawal of contempt petitions
and withdrawal of arbitration proceedings. Ericsson replied on
23.01.2019, stating that this could only be done by moving an
G application before this Court as contempt proceedings were
pending. Secondly, this petition points out that, maliciously, instead
of moving such appropriate application, from 01.02.2019 onwards,
an about-turn was taken, and Ericsson was left in the lurch as a
decision was taken by the three Reliance Companies that the
H
RELIANCE COMMUNICATION LTD. v. SBI 69
corporate insolvency resolution process could be revived. A
[Para 13][86-B-D]
1.5 The undertakings given on 09.08.2018 by the three
Chairmen of the three Reliance Companies were neither as per
the Court’s understanding of its order dated 03.08.2018, nor the
understanding of the three Companies themselves, as is clear B
from the undertakings given by the three Directors pursuant to
the order dated 30.05.2018. In this view of the matter, it is clear
that the three Reliance Companies had no intention, at the very
least, of adhering to the time limit of 120 days or to the extended
time limit of 60 days plus, as was given by way of indulgence, by
the order dated 23.10.2018. The undertakings given on the C
footing that the amount of INR 550 crore would be paid only out
of the sale of assets was false to the knowledge of the three
Reliance Companies. This itself affects the administration of
justice, and is therefore, contempt of court. Despite the Reliance
Companies’ continuous protestations to the contrary, the letter D
dated 21.01.2019 from the advocate for the three Reliance
Companies made it clear that the entire payment would be made
by 31.01.2019, albeit on fulfilment of two conditions. In their reply
to the Contempt Petition No.55 of 2019, RCom and its group
companies had stated that they were “disabled” from paying the
amount of INR 550 crore plus interest; that they “were and are E
unable to pay”. Obviously, the letter dated 21.01.2019 by the
advocates on behalf of the Reliance Companies would belie each
of the aforesaid statements made in the said reply affidavit. The
three Reliance Companies have wilfully not paid the sum of INR
550 crore plus interest and have thus breached the undertakings F
given to this Court. [Paras 17, 18 and 19][87-G-H; 88-A-C;
89-H; 90-C]
1.6 Another disturbing feature of the reply affidavit filed in
this Court by the Chairman of RCom to Contempt Petition No.
55 of 2019 is the statement that RCom has not taken or received
any advantage on account of the undertaking submitted before G
this Court. This, again, is a wholly incorrect statement, given the
fact that a writ petition was filed in this Court seeking quashing
of the corporate insolvency resolution process on settlement of
the matter with Ericsson, which could not be achieved without
such undertaking being given to this Court. Any unconditional H
70 SUPREME COURT REPORTS [2019] 4 S.C.R.
A apology given that there was no intention to make any wrongful
undertaking or that the undertaking was submitted bona fide must
be rejected. It is clear that this reply affidavit clearly demonstrates
the cavalier attitude of the deponent of this affidavit to the highest
court of the land. To say that the sum of INR 550 crore would be
paid only out of sale of assets of the three Reliance Companies is
B
a deliberate misstatement made in the undertakings as well as
the applications for extension of time filed before this Court, which
was done with the purpose of circumventing the orders of this
Court. In the facts of the present case, wilful default is made out.
INR 550 crore plus interest was to be paid without any linkage to
C sale of assets within a fixed time limit. As is clear from the letter
dated 21.01.2019, the Reliance Companies are able to pay this
amount, but are wilfully refusing to do so. [Paras 20, 21][90-D-F;
91-D-E; 92-E-F]
1.7 The contempt petition against the Chairman of SBI
D would not lie inasmuch as the Ericsson transaction and the sale
of assets by the Joint Lenders’ Forum are completely
independent of each other. Also, the statement made in paragraph
18 of the Contempt Petition No. 185 of 2019 that, “all the
respondents in the contempt petition were bound to have handed
over the amount of INR 550 crore to the petitioner on or before
E 15.12.2018 ……” is patently incorrect inasmuch as respondent
no. 4 (SBI) has nothing to do with this amount of INR 550 crore
which had to be paid over to Ericsson only by the three Reliance
Companies. The contempt petition against the Chairman of SBI
is, therefore, dismissed. [Para 22][92-G-H; 93-A-B]
F 1.8 The contempt of this Court needs to be purged by
payment of the sum of INR 550 crore together with interest till
date. As stated by the letter dated 21.01.2019, subject to any
calculation error, an amount of INR 453 crore must be paid to
Ericsson in addition to the deposit of INR 118 crore made in the
Registry of Supreme Court. The Registry of this Court is directed
G to pay over the sum of INR 118 crore to Ericsson within a period
of one week from today. The RCom group is directed to purge
the contempt of this Court by payment to Ericsson of the sum of
INR 453 crore within a period of four weeks from today. In default
of such payment, the Chairmen who have given undertakings to
H this Court will suffer three months’ imprisonment. In addition to
RELIANCE COMMUNICATION LTD. v. SBI 71
the aforesaid sum being paid, a fine amounting to INR 1 crore for A
each Company must also be paid to the Registry of this Court
within four weeks from today. This sum will be paid over to the
Supreme Court Legal Services Committee. In default of payment
of such fine, the Chairmen of these Companies will suffer one
month’s imprisonment. [Para 24][95-C-F]
B
Lakshman Prasad Agarwal v. Syed Mohammad Kareem
2009 (6) SCALE 413; Rosnan Sam Boyce v. B.R. Cotton
Mills Ltd. (1990) 2 SCC 636 : [1990] 2 SCR 381 –
relied on.
Babu Ram Gupta v. Sudhir Bhasin (1980) 3 SCC 47 :
[1979] 3 SCR 685; Ashok Paper Kamgar Union v. C
Dharam Godha (2003) 11 SCC 1; Dinesh Kumar Gupta
v. United India Insurance Co. Ltd. (2010) 12 SCC
770 : [2010] 13 SCR 599; Mohd. Iqbal Khanday v.
Abdul Majid Rather (1994) 4 SCC 34; Gyanichand v.
State of A.P. (2016) 15 SCC 164 – held inapplicable. D
Attorney-General v. British Broadcasting Corporation
[1980] 3 All ER 161; Attorney-General v. Leveller
Magazine Ltd. and Ors. [1979] 1 All ER 745; Patel
Rajnikant Dhulabhai v. Patel Chandrakant Dhulabhai
(2008) 14 SCC 561 : [2008] 10 SCR 1169; Noorali E
Babul Thanewala v. K.M.M. Shetty (1990) 1 SCC 259 :
[1989] 2 Suppl. SCR 561; Supreme Court Bar Assn.
v. Union of India (1998) 4 SCC 409 : [1998] 2 SCR
795 ; Chhaganbhai Norsinbhai v. Soni Chandubhai
Gordhanbhai (1976) 2 SCC 951 : [1976] 2 SCR 786 –
referred to. F
Case Law Reference
2009 (6) SCALE 413 relied on Para 15
[1990] 2 SCR 381 relied on Para 16
[1979] 3 SCR 685 held inapplicable Para 21
G
(2003) 11 SCC 1 held inapplicable Para 21
[2010] 13 SCR 599 held inapplicable Para 21
(1994) 4 SCC 34 held inapplicable Para 21
(2016) 15 SCC 164 held inapplicable Para 21
H
72 SUPREME COURT REPORTS [2019] 4 S.C.R.
A [1998] 2 SCR 795 referred to Para 23
[1976] 2 SCR 786 referred to Para 23
[2008] 10 SCR 1169 referred to Para 23
[1989] 2 Suppl SCR 561 referred to Para 23
CIVIL ORIGINAL JURISDICTION: Writ Petition (Civil) No.
B 845 of 2018.
Under Article 32 of the Constitution of India.
WITH
Contempt Petition (C) Nos. 1838 of 2018, 55 of 2019 and 185 of
2019 in W.P. (C) No. 845 of 2018.
C
Dushyant A. Dave, Anil K. Kher, Kapil Sibal, Mukul Rohatgi,
Neeraj Kishan Kaul, Sr. Advs., Bhargava V. Desai, Akshat Malpani,
Kunal Kher, Mahesh Agarwal, Ms. Shally Bhasin, Chaitanya Safaya,
Prateek Gupta, Ms. Madhavi Agrawal, E. C. Agrawala, Vaibhav Niti,
Sanjay Kapur, Sanyat Lodha, Chanan Parwani, Ramchandra Madan,
D Ms. Divyya Kapur, Ms. Megha Karnwal, Bharath Gangadharan, Kauser
Husain, Ms. Pallavi Kumar, Divyam Agarwal, Sumit R. Sharma, Advs.
for the appearing parties.
The Judgment of the Court was delivered by
R. F. NARIMAN, J. 1. Three contempt petitions are before us,
E having been filed by Ericsson India Pvt. Ltd. [“Ericsson”] against
Reliance Communications Ltd. [“RCom”], Reliance Telecom Ltd.
[“RTL”], and Reliance Infratel Ltd. [“RITL”] [hereinafter, collectively
referred to as the “Reliance Companies” or “Companies”].
2. The brief facts necessary to appreciate these matters are as
F follows:
On 25.01.2013, Ericsson and RCom entered into a Managed
Service Agreement whereby Ericsson agreed to provide RCom managed
services, i.e., operation, maintenance, and management of RCom’s
network. Ericsson raised invoices from time to time in consideration of
services provided, and on receiving no payment, ultimately issued three
G
notices, each dated 07.05.2017, under the Insolvency and Bankruptcy
Code, 2016 [“Insolvency Code”] to the three Reliance Companies,
calling upon them to pay an amount of INR 9.78 crore. These notices
were replied to on 19.05.2017, whereby the three Reliance Companies
stated that the performance of Ericsson had been inconsistent. After
H
RELIANCE COMMUNICATION LTD. v. SBI 73
[R. F. NARIMAN, J.]
this date, discussions took place between the parties, and an understanding A
was reached for making payment of the outstanding invoices. However,
even this understanding fell through, and on 07.09.2017, Ericsson issued
a letter to the three Reliance Companies, terminating the agreement
between them, and calling upon them to pay the outstanding amount in
full. At this stage, on 08.09.2017, Ericsson filed three applications under
B
Section 9 of the Code as operational creditors. On 15.05.2018, the
National Company Law Tribunal [“NCLT”] admitted the aforesaid
petitions and appointed three Interim Resolution Professionals on
18.05.2018 to carry out the corporate insolvency resolution process. At
this stage, appeals were filed against the NCLT order. The National
Company Law Appellate Tribunal [“NCLAT”], by order dated C
30.05.2018, stayed the orders dated 15.05.2018 and 18.05.2018 passed
by the NCLT, and recorded the statement of counsel appearing on behalf
of the Reliance Companies that the matter had been agreed to be settled
for a sum of INR 550 crore, which would be paid within 120 days’ time.
The order recorded that both the Reliance Companies as well as Ericsson
D
were to file respective affidavits of undertaking in terms of the statements
made before the NCLT. These undertakings were so filed in June, 2018.
At this stage, the three Reliance Companies filed a writ petition in this
Court on 17.07.2018 in which they asked for quashing/closure of the
corporate insolvency resolution process in view of settlement of disputes
between them and Ericsson. In this writ petition, by an order dated E
03.08.2018, this Court heard learned counsel who appeared on behalf of
RCom and its group companies, and recorded that the timeline of 120
days shall be strictly adhered to and payment of INR 550 crore is to be
made on or before 30.09.2018. Undertakings to this effect were to be
filed before this Court by Chairmen of the Companies concerned. The
F
undertakings that were given by the Chairmen of these Companies,
pursuant to this order, were dated 09.08.2018 and are a serious bone of
contention between the parties in that these undertakings stated that the
sum of INR 550 crore will be paid “upon sale of assets of the company”.
This being the case, a contempt petition, being Contempt Petition No.
1838 of 2018 [“first contempt petition”], dated 01.10.2018, was moved G
by Ericsson, in which it was expressly stated that the undertakings were
not in terms of this Court’s order and that the Companies aforestated
have no intention of abiding by their commitment to pay the necessary
sum of money within the time stated. Meanwhile, on 27.09.2018, the
Reliance Companies applied for extension of time for payment by 60
H
74 SUPREME COURT REPORTS [2019] 4 S.C.R.
A days, expressly stating that since sale of other spectrum had not reached
a stage of completion, in order to enable the Companies to make payments,
they would require this extension. Both the application for extension and
the contempt petition came up for hearing before this Court on 23.10.2018,
and it was made clear, as a last opportunity, that the aforesaid amount
must be paid on or before 15.12.2018, and that interest at the rate of
B
12% per annum would also have to be paid for delayed payment beyond
30.09.2018. It was also made clear that the petition for contempt may
be revived if payment is not so made by this date. A second application
to extend time was moved on 12.12.2018, citing the same excuse of
other spectrum not yet being saleable. This time, extension of time was
C asked for making the payment within two weeks from the date on which
a No-Objection Certificate [“NOC”] is given by the Department of
Telecommunications [“DoT”] for sale of other spectrum. On 13.12.2018,
this Court made it clear that it was not inclined to grant any such extension,
as a result of which, the second application for extension of time was
dismissed as withdrawn. While matters stood thus, a letter dated
D
21.01.2019 was written by the advocates of the three Reliance
Companies, who stated that on 09.01.2019, INR 118 crore had already
been deposited with the Registry of this Court, and that the total
outstanding, as on date, together with interest, would be roughly INR
570 crore. This letter specifically states that the net figure of INR 453
E crore would be paid by 31.01.2019, conditional upon withdrawal of the
two contempt petitions (a second contempt petition, being Contempt
Petition No. 55 of 2019, was also filed on 02.01.2019) and upon withdrawal
of pending arbitration proceedings. This was replied to by the advocates
of Ericsson, stating that an appropriate application may be moved in the
Supreme Court, as once notice of contempt is issued, the Court alone
F
can pass necessary orders to effectuate the settlement. However, on
01.02.2019, the RCom group wrote to various stock exchanges, making
it clear that they will now not resist the corporate insolvency resolution
process that had hitherto been stayed. This led to the filing of a third
contempt petition, namely, Contempt Petition No. 185 of 2019, in which,
G various prayers were asked for, including issuance of a notice of contempt
against the Chairman of the State Bank of India [“SBI”], who headed
the Joint Lenders’ Forum comprising of 46 financial creditors of the
RCom group.
3. Shri Dushyant Dave, learned Senior Advocate appearing on
behalf of Ericsson, painstakingly took us through the NCLAT order dated
H
RELIANCE COMMUNICATION LTD. v. SBI 75
[R. F. NARIMAN, J.]
30.05.2018 as well as our orders. According to the learned Senior A
Advocate, the administration of justice has been sought to be interfered
with by the Reliance Companies in two ways. First and foremost, the
payment of INR 550 crore to his client was not conditional upon sale of
spectrum as is clear from all the orders passed. In fact, this was the
understanding of the NCLAT order dated 30.05.2018 by the Reliance
B
Companies, as was clear from the undertakings that were filed by their
Directors pursuant to this order. However, mischievously, the undertakings
filed pursuant to this Court’s order dated 03.08.2018 brought in this
condition for the first time, and was directly contrary to this Court’s
order dated 03.08.2018. He argued that this was the occasion for moving
the first contempt petition on 01.10.2018 in which this was pointed out. C
He also argued that the reply made to the contempt petition, together
with the correspondence between the parties, would show that no bona
fide efforts were made to pay this sum of INR 550 crore at any stage,
and that the plea that the Companies were unable to pay is clearly belied
by their own advocates’ letter dated 21.01.2019, in which it was stated
D
that full payment would be made within a period of 10 days. He, therefore,
argued that both on account of furnishing false undertakings to this Court
as well as wilfully breaching the said undertakings and this Court’s orders,
the administration of justice has been sought to be interfered with. He
cited judgments in order to buttress these contentions.
4. On the other hand, Shri Mukul Rohatgi and Shri Kapil Sibal, E
learned Senior Advocates appearing on behalf of RCom, and RITL and
RTL, respectively, have argued that at best, if the settled amount of INR
550 crore, in the place of INR 1500 crore, was not paid to Ericsson, the
corporate insolvency resolution process, which was stalled, would begin
afresh, and Ericsson would then stand in line as an operational creditor F
to claim the entire sum of INR 1500 crore. In any case, it is also obvious
from the NCLAT order dated 30.05.2018, which was referred to by the
orders of this Court, that the sum of INR 550 crore was to be paid from
the sale of assets of the corporate debtor, which is part and parcel of the
order dated 30.05.2018. The undertakings given by the Chairmen of the
three Reliance Companies, dated 09.08.2018, are therefore, in accordance G
with the NCLAT order as well as the order of this Court dated 03.08.2018.
They further argued that, in any case, even if such undertakings were
not in accordance with these orders, no complaint was ever made by
Ericsson, which went along with the undertakings. They also argued
that, throughout, the three Reliance Companies did their best to pay INR
H
76 SUPREME COURT REPORTS [2019] 4 S.C.R.
A 550 crore, as is clear from the correspondence between the parties and
their conduct. Also, as recently as 07.01.2019, the moment they got
income tax refunds amounting to INR 118 crore, this sum was deposited
in the Registry of this Court, in compliance of this Court’s orders.
Therefore, according to them, there was no breach of undertakings, nor
has there been any wilful default. Despite their best efforts, the DoT
B
insisted on adhering to certain guidelines, as a result of which, it did not
give its NOC for sale of spectrum, and therefore, it had now become
impossible for the three Reliance Companies to pay the aforesaid amount.
The very fact that they have now succumbed to the corporate insolvency
resolution process going forward would show their bona fides. In any
C case, they stated that they are still ready and willing to pay whatever
they can, by way of income tax refunds. Another sum of INR 129 crore
has now come by way of income tax refunds, which can be further
adjusted. Also, an extremely recent refund order of INR 134 crore can
also be used in part payment of the sum of INR 550 crore. Thus, a total
sum of INR 391 crore, out of INR 550 crore, can, in fact, be paid as of
D
today. All this would show that they are doing their best to make this
payment, and therefore, cannot be characterized as wilful defaulters.
They also made a fervent prayer that the special leave petition and the
writ petition should be dismissed as withdrawn, as the inevitable has
now occurred, and the corporate insolvency resolution process has to
E now go forward. They also cited various judgments to buttress their
submissions.
5. Shri Neeraj Kishan Kaul, learned Senior Advocate appearing
on behalf of the Chairman, SBI, has argued that the Joint Lenders’ Forum,
being allowed to sell assets outside of the corporate insolvency resolution
F process has nothing to do with the Ericsson transaction. According to
him, prayers (c) and (j) of the Contempt Petition No. 185 of 2019 are not
reliefs that can be given in a contempt petition. Also, it is wholly
unnecessary to file an affidavit stating the total amount received from
sale of assets of the corporate debtors post the settlement dated
30.05.2018. Equally, prayer (j), asking for a direction for SBI to bring in
G amounts due and payable so as to purge itself of contempt does not lie
against the Joint Lenders’ Forum in view of the fact that the Ericsson
transaction is wholly independent of sale of assets.
6. Since everything turns on the order of NCLAT dated 30.05.2018,
and the three orders of this Court, these orders are set out hereunder:
H
RELIANCE COMMUNICATION LTD. v. SBI 77
[R. F. NARIMAN, J.]
The order of the NCLAT, dated 30.05.2018, states: A
“These appeals have been preferred by the Appellants-Directors
and Shareholders of ‘Reliance Infratel Ltd.’; ‘Reliance Telecom
Ltd.’ and ‘Reliance Communications Ltd.’ against the common
orders dated 15th May, 2018 and 18th May, 2018, passed by the
Adjudicating Authority (National Company Law Tribunal), B
Mumbai Bench, Mumbai, whereby and whereunder, the
application(s) under Section 9 of the Insolvency and Bankruptcy
Code, 2016 (hereinafter referred to as “I&B Code”) preferred
by the Respondent- ‘Ericsson India Pvt. Ltd.’- (‘Operational
Creditor’) have been admitted, order of ‘Moratorium’ has been
passed and ‘Insolvency Resolution Professional’ has been C
appointed.
Apart from the ground that an arbitration proceeding is pending
and the Hon’ble Supreme Court has passed an order, some other
grounds have also been taken to assail the impugned orders.
2. The ‘Financial Creditors’- ‘Joint Lenders Forum’, some D
other Banks and ‘Ericsson India Pvt. Ltd.’- (‘Operational
Creditor’) have appeared. It is informed that interests of a number
of Banks are involved who are awaiting the decision of this
Appellate Tribunal as they intend to recover the amount.
3. Mr. Tushar Mehta, learned Senior Counsel for the ‘Joint E
Lenders Forum’- (‘Financial Creditors’) submitted that they have
reached an agreement with the ‘Corporate Debtors’ for sale of
assets of the ‘Corporate Debtors’, pursuant to which, the ‘Financial
Creditors’ can recover a sum of Rs. 18,100 crores approximately.
He further submits that on re-structuring and sale of assets, the
‘Financial Creditors’ can recover Rs. 37,000 Crores approximately. F
4. According to them, in view of the impugned order, the
Bank is not in a position to recover the amount and there is
recurring loss of more than crores per day.
5. Mr. Rajeeve Mehra, learned Senior Counsel appearing
on behalf of the ‘Standard Chartered Bank’ has also taken similar G
plea and supported the stand taken by the learned Senior Counsel
for the ‘Joint Lenders Forum’.
6. Mr. Kapil Sibal, learned Senior Counsel appearing on
behalf of the Appellants submitted that if the impugned order is
stayed and/or set aside, the parties may settle the matter. H
78 SUPREME COURT REPORTS [2019] 4 S.C.R.
A 7. The case was taken up yesterday (29th May, 2018) and
on the request of the parties, the case was adjourned to find out
whether the Appellants and the ‘Operational Creditors’ can settle
the matter.
8. Mr. Salman Khursid, Mr. Arun Kathpalia and Mr. Anil
B Kher, learned Senior Counsel appear on behalf of the ‘Operational
Creditors’ in the respective cases. They submitted that the
Respondent- ‘Ericsson India Pvt. Ltd.’- (‘Operational Creditor’)
has agreed to settle the matter if affront payment of Rs. 600
Crores (Rupees Six hundred Crores Only) is made by the
Appellants/’Corporate Debtors’.
C 9. Mr. Kapil Sibal, learned Senior Counsel for the Appellants
informed that the Appellants have agreed to pay a sum of Rs. 550
Crores (Rupees five hundred fifty Crores only) (jointly) in favor
of ‘Ericsson India Pvt. Ltd.’- (‘Operational Creditor’) and sought
for 120 days’ time to pay the total amount.
D 10. Learned Senior Counsel appearing on behalf of ‘Ericsson
India Private Limited’- (‘Operational Creditor’), on instructions
from the Respondent, informed that the 1st Respondent has agreed
to receive a sum of Rs. 550 Crores (Rupees Five hundred fifty
Crores only), if the total amount is paid within 120 days as proposed
E by the learned Senior Counsel for the Appellants.
11. Taking into consideration the stand taken by the parties
and the fact that if the ‘Corporate Insolvency Resolution Process’
is allowed to continue, all the ‘Financial Creditors’ as also the
‘Operational Creditors’ may suffer more loss and the Appellants
have made out a prima facie case, as agreed and suggested by
F learned Senior Counsel for the Appellants and learned Senior
Counsel for the ‘Joint Lenders Forum’ and the learned Senior
Counsel for the ‘Operational Creditor’- ‘Ericsson India Pvt. Ltd.’,
we pass the following orders:
i. Until further orders, the impugned orders dated 15th May,
G 2018 and 18th May, 2018, passed by the Adjudicating Authority,
Mumbai Bench in C.P. (IB) 1385, 1386 & 1387 (MB)/2017,
shall remain stayed. The ‘Resolution Professional’ will allow
the managements of the ‘Corporate Debtors’ to function. He
may attend the office of the ‘Corporate Debtors’ till further
order is passed by this Appellate Tribunal. Thereby, the
H ‘Corporate Insolvency Resolution Process’ initiated against the
RELIANCE COMMUNICATION LTD. v. SBI 79
[R. F. NARIMAN, J.]
‘Corporate Debtors’ namely— ‘Reliance Infratel Ltd.’; A
‘Reliance Telecom Ltd.’ and ‘Reliance Communications Ltd.’
shall remain stayed, until further orders.
ii. The ‘Financial Creditors’/’Joint Lenders Forum’ with whom
the assets of the ‘Corporate Debtors’ have been mortgaged
as also the ‘Corporate Debtors’ are given liberty to sell the B
assets of the ‘Corporate Debtors’ and to deposit the total amount
in the account of the lead Bank of Joint Lenders Forum which
shall be subject to the decision of these appeals. If the appeals
are rejected, in such case, the ‘Financial Creditors’/’Joint
Lenders Forum’ and other Banks with whom the amount is
deposited, will have to return the total amount in the respective C
accounts of the ‘Corporate Debtors’.
iii. The Chairman, Managing Directors, Directors and other
members of the ‘Corporate Debtors’ namely— ‘Reliance
Infratel Ltd.’; ‘Reliance Telecom Ltd.’ and ‘Reliance
Communications Ltd.’ are directed to pay a sum of Rs. 550 D
Crores (Rupees Five Hundred Fifty Crores Only) (jointly) in
favour of ‘Ericsson India Pvt. Ltd.’ within 120 days i.e. by
30th September, 2018. In case of non-payment of the amount
and part of the same, the concerned appeal(s) may be dismissed
and this Appellate Tribunal may direct to complete the
‘Corporate Insolvency Resolution Process’ and may pass E
appropriate order. The payment of Rs. 550 Crores (Rupees
Five Hundred Fifty Crores Only) in favour of the ‘Operational
Creditor’ shall be subject to the decision of these appeals. If
the appeals are dismissed, the ‘Operational Creditor’ will pay
back the amount to the ‘Corporate Debtors’. F
12. The Appellants and the ‘Operational Creditors’ are directed
to file their respective affidavits of undertaking in terms of their
statement as made and recorded above within 10 days.
Let the appeals be listed ‘for admission’ on 3rd October, 2018.
13. In the meantime, it will be open to the parties to file G
Interlocutory Application if orders and directions given above are
not complied. Interlocutory Application Nos. 701-702, 709-710
and 712-713 of 2018 stand disposed of with aforesaid observations
and directions.
xxx xxx xxx” H
80 SUPREME COURT REPORTS [2019] 4 S.C.R.
A The order of the Supreme Court, dated 03.08.2018, states:
“Applications seeking exemption from filing certified copy of the
impugned orders are allowed.
Permission to file Appeals is granted.
Applications for impleadment are allowed.
B Reading the interim Order dated 30.05.2018 of the National
Company Law Appellate Tribunal, it is clear that Ericsson India
Pvt. Ltd., who is an Operational Creditor, is willing to settle its
debt of over Rs. 1500 Crores for a sum of Rs. 550 Crores (Rupees
Five Hundred Fifty Crores only) which is to be paid within 120
C days from the date of that order i.e. by 30th September, 2018.
Having heard Mr. P. Chidambaram, learned Senior Counsel for
Neptune Steel Strips Ltd. and Mahima Mercantile Credits Ltd.,
Mr. Kapil Sibal, learned Senior Counsel for Reliance
Communications Limited & Ors. and Mr. Tushar Mehta, learned
ASG for Joint Lenders Forum/SBI, we are of the view that this
D
time-line shall be strictly adhered to and payment of Rs. 550 Crores
(Rupees Five Hundred Fifty Crores only) be made on or before
30th September, 2018.
In the meanwhile, the undertaking that is to be given by the
Chairman of the Company concerned shall be given within a period
E of one week from today.
Mr. Tushar Mehta, learned ASG appearing for the Joint Lenders
Forum agrees to this. Mr. Dushyant Dave, learned Senior Counsel
for Ericsson India Pvt. Ltd. also agrees to it.
In this view of the matter, list on Monday, the 1st October, 2018.
F Needless to say, the sale of the assets concerned will go through
as has been stated in the orders of the Tribunal and Appellate
Tribunal.
xxx xxx xxx”
The order of the Supreme Court, dated 23.10.2018, states:
G
“I.A. No. 141871/2018:
The applicants in this I.A. state that - thanks to a situation which
is beyond their control - they have not been able to make the
requisite payment on or before 30.09.2018 in accordance with
the undertaking given to this Court.
H
RELIANCE COMMUNICATION LTD. v. SBI 81
[R. F. NARIMAN, J.]
At the request of Mr. Kapil Sibal, as a last opportunity, we make A
it clear that the amount that is to be paid to Mr. Dave’s client shall
be paid on or before 15.12.2018. We also make it clear that interest
shall begin ticking on this amount at the rate of 12% p.a. for delayed
payment beyond 30.09.2018.
We make it clear that no time beyond 15.12.2018, in any case, B
will be given. We also make it clear that Mr. Dave may revive his
I.A. for contempt, if payment is not made.
I.A. stands disposed of accordingly.
C.A. Nos. 9337-9338/2018:
The Civil Appeals are dismissed in terms of the signed order. C
Pending applications, if any, stand disposed of.
xxx xxx xxx”
The order of the Supreme Court, dated 13.12.2018, states:
“IA No. 180453/2018 in W.P. (C.) No. 845/2018 is dismissed as
withdrawn. D
List the matters on Friday, the 14th December, 2018.
xxx xxx xxx”
7. A perusal of the NCLAT order dated 30.05.2018 would show
that the financial creditors’/Joint Lenders’ Forum stated that they have
reached an agreement with the corporate debtors for the sale of assets E
of the corporate debtors, pursuant to which they can recover a sum of
INR 18,100 crore. Also, from restructuring and sale of further assets, a
further sum of INR 37,000 crore could be recovered, which would then
suffice to pay off the entire debt of the secured creditors. This order
also recorded that Ericsson had agreed to settle the debt in its favour F
(which amounted to roughly INR 1500 crore) for the sum of INR 550
crore within a period of 120 days. As a result of this, the erstwhile
management continued in the saddle; the corporate insolvency resolution
process was stayed until further orders; the financial creditors’/Joint
Lenders’ Forum was given liberty to sell assets of the corporate debtors
and to deposit the amount so received in an account of the lead bank, G
i.e., SBI; and the sum of INR 550 crore was directed to be paid by
30.09.2018. It was made clear that in case of non-payment, the concerned
appeals may be dismissed, and the NCLAT may direct the completion
of the corporate insolvency resolution process. In any case, the amount
so deposited with the financial creditors’/Joint Lenders’ Forum would H
82 SUPREME COURT REPORTS [2019] 4 S.C.R.
A be subject to the decision of these appeals, and that if the appeals are
dismissed, the financial creditors’/Joint Lenders’ Forum will pay back
this amount to the corporate debtors. Most importantly, the corporate
debtors and creditors were directed to file their respective affidavits of
undertaking in terms of the statements recorded.
B 8. At this stage, it is important to set out one sample undertaking
that has been filed on behalf of one of the Reliance Companies, i.e., by
the Director of RITL. This affidavit of undertaking reads as follows:
“BEFORE THE NATIONAL COMPANY LAW APPELLATE
TRIBUNAL, NEW DELHI
C xxx xxx xxx
AFFIDAVIT OF UNDERTAKING OF THE APPELLANTS
I, Suresh Madihally Rangchar, S/o Sh. Rangachar M.
Raghavachar, aged about 54 years, R/o Imperial Tower, Flat No.
3604, 36th Floor, South Wing, BB Nakashe Marg, Tardeo, Mumbai
– 400 036, do hereby solemnly affirm and state as under:
D
1) That I am the Appellant and the Director of the Reliance
Infratel Ltd. in the above said matter and as such I am well
acquainted with all the facts and circumstances of the case
and am fully competent to swear this affidavit for the Reliance
Infratel Ltd.
E
2) That I am giving this affidavit cum undertaking on behalf of
the Reliance Infratel Ltd. pursuant to the order of this Hon’ble
Tribunal dated 30.05.2018.
3) That the Reliance Infratel Ltd. alongwith Reliance
Communications Ltd. and Reliance Telecom Ltd. and their
F respective directors shall jointly pay a sum of Rs.550 Crores
(Rupees Five Hundred Fifty Crores Only) to Ericsson India
Pvt. Ltd. (Operational Creditors) within a period of 120 days
i.e. by 30th September, 2018.
xxx xxx xxx”
G This undertaking makes it clear that the understanding of the three
Reliance Companies with regard to the NCLAT order dated 30.05.2018
was that a sum of INR 550 crore will be paid by 30.09.2018 without
there being any linkage to sale of assets, as separately stated in the
order. Even otherwise, reading the order as a whole, it is clear that
whereas INR 550 crore had to be paid within 120 days, sale of assets
H
RELIANCE COMMUNICATION LTD. v. SBI 83
[R. F. NARIMAN, J.]
could take place at any time in the future without any time limit being A
mentioned. This being the case, it is futile to contend that this order itself
made it clear that the sum of INR 550 crore was to be obtained only
from sale of assets. Both the undertakings as well as a plain reading of
the NCLAT order, militate against any such linkage.
9. On 03.08.2018, the writ petition that was filed before this Court B
was taken up. It is important to note that this writ petition expressly
states that this Court was approached so that it could pass orders under
Article 142 of the Constitution of India to quash/close the corporate
insolvency resolution process, which no other court or tribunal could do.
This was done on the footing that the parties have “fully, mutually, and
finally settled all the disputes between them” as has been noted in the C
NCLAT order dated 30.05.2018. When this writ petition came up for
hearing, the order dated 03.08.2018 clearly records that the payment of
INR 550 crore will be made on or before 30.09.2018, and an undertaking
was to be given by the Chairmen of the Reliance Companies to that
effect. The order separately noted that the sale of assets will continue, D
as has been stated in the orders of the NCLT and the NCLAT. A reading
of this order also leaves no manner of doubt that the undertakings that
were to be given by the Chairmen of the Companies concerned were
only that the payment of INR 550 crore was to be made on or before
30.09.2018. There is no doubt whatsoever that there was no linkage
with any sale of assets of these Companies. E
10. Despite the aforesaid position being clear, on 09.08.2018, the
affidavits of undertaking, in pursuance of this Court’s order dated
03.08.2018, were given by the Chairmen of the Reliance Companies. A
sample undertaking, filed by the Chairman of RCom, reads as follows:
“IN THE SUPREME COURT OF INDIA F
xxx xxx xxx
AFFIDAVIT OF UNDERTAKING/COMPLIANCE
I, Anil Dhirubhai Ambani, S/o Late Shri Dhirajlal Dhirubhai
Hirachand Ambani, aged about 60 years, residing at 39, ‘Sea Wind’,
Cuffe Parade Colaba, Mumbai – 400005, do hereby solemnly G
affirm and state on oath as under:
1. That I am the Chairman of the Reliance Communications
Limited (“Company”), the holding company of Reliance Telecom
Limited and Reliance Infratel Limited, the Petitioners in the above
H
84 SUPREME COURT REPORTS [2019] 4 S.C.R.
A Writ Petition, I am well acquainted with the facts of the case
and as such I am competent to swear this affidavit.
2. By order dated 30 May, 2018, the Hon’ble National Company
Law Appellate Tribunal (“NCLAT”) by way of an interim order
recorded settlement between the parties and permitted sale of
B the assets for repayment to the banks. Pursuant to the said
order, the Petitioner gave an Undertaking dated 1st June 2018
before the NCLAT inter alia stating as under:
“that the Reliance Infratel Ltd. alongwith Reliance
Communications Ltd. and Reliance Telecom Ltd. and their
respective Director shall jointly pay a sum of Rs.550 Crores
C (Rupees Five Hundred Fifty Crores only) to Ericson India
Pvt. Ltd. (Operational Creditors) within a period of 120
days i.e. 30th September, 2018.”
3. In the Petitions filed before this Hon’ble Court for orders
under Article 142 of the Constitution of India to be able to proceed
D with the sale and to effectuate the settlement, this Hon’ble Court
passed the following order:
“......In the meanwhile, the undertaking that is to be given
by the Chairman of the Company concerned shall be given
within a period of one week from today.”
E 4. Accordingly, in light of the order of this Hon’ble Court dated
3rd August, 2018, read with the order of the Hon’ble NCLAT
dated 30th May, 2018, I hereby undertake that upon the sale of
the assets of the Company, the Company and its directors will
honour their undertaking extracted above.”
F Similar undertakings were filed on behalf of the Chairmen of the
other two Reliance Companies. A perusal of these undertakings would
show that they are contrary to the undertakings given by the authorized
persons of these very Companies pursuant to the NCLAT order dated
30.05.2018. We have seen that whereas those undertakings were
unconditional, these undertakings are now conditional upon sale of assets
G of the Companies. These undertakings have obviously not been given in
accordance with this Court’s order dated 03.08.2018. To further
compound this misdemeanor, an application to extend time by 60 days
was moved on 27.09.2018, in which the same linkage was made to sale
of assets before the sum of INR 550 crore could be paid. Contrary to
H Shri Rohatgi’s argument, Ericsson immediately protested in the form of
RELIANCE COMMUNICATION LTD. v. SBI 85
[R. F. NARIMAN, J.]
a contempt petition, being the first contempt petition that was filed on A
01.10.2018, in which it was clearly pointed out that the said undertaking
would show contumacious behavior coupled with the fact that the
Reliance Companies were wriggling out of the commitment made to this
Court. When the first contempt petition and the first application for
extension of time came up for hearing before this Court, this Court, vide
B
order dated 23.10.2018, made it clear that as a matter of indulgence, a
last opportunity would be granted to pay the aforesaid sum on or before
15.12.2018, making it clear that this is conditional upon payment of interest
of 12% per annum for delayed payment beyond 30.09.2018. It was also
made clear that no further extension would be granted and that Ericsson
may revive the petition for contempt if payment is not so made. This C
order again leads to only one conclusion – that the averment made in the
application for extension of time that the sum of INR 550 crore will be
paid out of sale of assets was not accepted by this Court, as sale of
assets could have taken place even beyond 15.12.2018. This further
becomes clear from the fact that the contempt petition would be revived
D
if this payment were not to be made, i.e., it would be open for Ericsson
to contend that the undertaking given to this Court was not as per this
Court’s order, and that there had been wilful and contumacious default
on part of the Reliance Companies.
11. When a further application for extension of time was made on
the selfsame ground, this Court made it clear by its order dated 13.12.2018 E
that in view of the order passed on 23.10.2018, no further extension of
time could be granted, and revival of the contempt petition would
necessarily follow. As a result of this, this I.A. was dismissed as
withdrawn on the said date.
12. Meanwhile, in parallel proceedings, this Court did its utmost to F
lend a helping hand, so that, independently of these orders, sale of assets
could also be affected. The DoT was called before this Court and was
asked to give its NOC for sale of spectrum. However, it was pointed out
that this NOC could only be given according to certain guidelines, one of
which mandated that the buyer of the spectrum would have to undertake
that it would be responsible for payment of the erstwhile debts of the G
seller. The sale of spectrum to Reliance Jio, therefore, did not fructify,
not because the DoT wrongfully refused to give its NOC, as has been
alleged by the Reliance Companies in their pleadings filed in this case. It
fell through only because the prospective buyer, Reliance Jio, refused to
H
86 SUPREME COURT REPORTS [2019] 4 S.C.R.
A give the undertaking that if called upon, it would pay the erstwhile debts
of the seller of the spectrum.
13. We now come to two other contempt petitions that were filed.
Contempt Petition No.55 of 2019 dated 02.01.2019 was filed in view of
non-payment of the sum of INR 550 crore on or before 15.12.2018.
B Contempt Petition No.185 of 2019 dated 05.02.2019 was filed pointing
out two subsequent facts. First, that by a letter dated 21.01.2019, the
Reliance Companies were willing to pay the entire sum of INR 550
crore with interest if two conditions were met, namely, withdrawal of
contempt petitions and withdrawal of arbitration proceedings. Ericsson
replied on 23.01.2019, stating that this could only be done by moving an
C application before this Court as contempt proceedings were pending.
Secondly, this petition points out that, maliciously, instead of moving such
appropriate application, from 01.02.2019 onwards, an about-turn was
taken, and Ericsson was left in the lurch as a decision was taken by the
three Reliance Companies that the corporate insolvency resolution process
D could be revived.
14. The law of contempt has been recognized in English law at
least from the 12th Century A.D. to the present time [see The History of
Contempt of Court: The Form of Trial and the Mode of Punishment by
Sir John C. Fox, at page 1]. It is always important to bear in mind, as
was stated in Attorney-General v. British Broadcasting
E Corporation, [1980] 3 All ER 161 [House of Lords], per Lord Salmond,
that:
“The description “contempt of court” no doubt has an [sic]
historical basis but it is nevertheless most misleading. Its object is
not to protect the dignity of the courts or the judges but to protect
F the administration of justice…....”
(at page 170)
In the same judgment, Lord Scarman added:
“It is high time, I would think, that we re-arranged our law so that
the ancient but misleading term “contempt of court” disappeared
G from the law’s vocabulary.”
(at page 184)
Another edifying statement, by Lord Diplock in Attorney-
General v. Leveller Magazine Ltd. and Ors., [1979] 1 All ER 745
[House of Lords], reads as follows:
H
RELIANCE COMMUNICATION LTD. v. SBI 87
[R. F. NARIMAN, J.]
“…… It is justice itself that is flouted by contempt of court, not A
the individual court or judge who is attempting to administer it.
(at page 749)
15. It is also important to remember that while considering the
question of disobedience of an order, what must be regarded is the letter
and the spirit of the order, together with the bona fide or genuine belief B
of the alleged contemnor as to such order [see Lakshman Prasad
Agarwal v. Syed Mohammad Kareem, 2009 (6) SCALE 413 at
paragraph 5].
16. In Rosnan Sam Boyce v. B.R. Cotton Mills Ltd., (1990) 2
SCC 636, this Court referred to a party who gave an undertaking based C
on an implication or assumption which was false to its knowledge. This
Court held:
“9. …… We are, of course, quite conscious of the fact that the
proceedings in the contempt are quasi-criminal in nature, that the
law of contempt has to be strictly interpreted and that the
requirements of that law must be strictly complied with before D
any person can be committed for contempt. However, as we have
pointed out, respondent 1 gave an undertaking based on an
implication or assumption which was false to its knowledge and
to the knowledge of respondent 2. Respondent 2 was equally
instrumental in the giving of this undertaking. This implication or E
assumption was made explicit by the clarification given by the
learned counsel for respondent 1 as set out earlier. Respondent 2
was equally responsible for instructing counsel to give this
clarification which was false to the knowledge of both, respondents
1 and 2. Both respondent 1 and respondent 2 have tried to deceive
the court and the appellant. In view of this, we fail to see how it F
can be said that they are not guilty of contempt.……”
Finally, the Court directed the court receiver to take possession of
the suit premises from the tenant/sub-tenant and hand it over to the
landlord, as agent, so that the contempt committed be purged.
17. We have seen from the above narration of facts that the G
undertakings given on 09.08.2018 by the three Chairmen of the three
Reliance Companies were neither as per the Court’s understanding of
its order dated 03.08.2018, nor the understanding of the three Companies
themselves, as is clear from the undertakings given by the three Directors
pursuant to the order dated 30.05.2018. In this view of the matter, it is H
88 SUPREME COURT REPORTS [2019] 4 S.C.R.
A clear that the three Reliance Companies had no intention, at the very
least, of adhering to the time limit of 120 days or to the extended time
limit of 60 days plus, as was given by way of indulgence, by the order
dated 23.10.2018. The undertakings given on the footing that the amount
of INR 550 crore would be paid only out of the sale of assets was false
to the knowledge of the three Reliance Companies. This itself affects
B
the administration of justice, and is therefore, contempt of court. What is
of greater relevance is the fact that, despite the Reliance Companies’
continuous protestations to the contrary, the letter dated 21.01.2019 from
the advocate for the three Reliance Companies made it clear that the
entire payment would be made by 31.01.2019, albeit on fulfilment of two
C conditions. This letter is of great importance and is set out in entirety
hereinbelow:
“21 January, 2019
To,
xxx xxx xxx
D SUB: COMPLETION OF SETTLEMENT
Dear Sir,
We are concerned for our clients Reliance Communications
Limited (RCom), Reliance Infratel Limited (RITL) and Reliance
Telecom Limited (RTL, and collectively with RCom and RITL,
E the RCom Group), who have instructed us to write to you on
behalf of your client Ericsson India Private Limited (Ericsson) as
under:
1. The Hon’ble Supreme Court has vide its order dated 3 August,
2018 in Writ Petition (C) No. 845 of 2018, recorded the settlement
F arrived at between the RCom Group and Ericsson before the
Hon’ble National Company Law Appellate Tribunal (NCLAT)
on 30 May, 2018, pursuant to which Rs.550 crores was to be
paid to Ericsson by 30 September, 2018 as full and final settlement
of all dues and claims.
G 2. Vide its order dated 23 October, 2018, the Hon’ble Supreme
Court extended the date for the RCom Group to make payment
to Ericsson and directed that interest at 12% p.a. on such amount
to be paid from 1 October, 2018. As on 31 January 2019, such
interest would amount to Rs.20.016 crores being an amount of
Rs.22.24 crores less TDS of Rs. 2.224 crores.
H
RELIANCE COMMUNICATION LTD. v. SBI 89
[R. F. NARIMAN, J.]
3. Thus, the total net amount payable by the RCom Group to A
Ericsson on 31 January, 2019 is Rs.570.016 crores.
4. Out of the total settlement payment set out in para 3 above,
the RCom Group has deposited an amount of Rs.118 crores with
the Registry of the Supreme Court on 9 January, 2019 (Deposited
Payment), pursuant to the Hon’ble Supreme Court’s order dated B
7 January, 2019.
5. The RCom Group will make the balance net settlement
payment of Rs.452.016 crores (Balance Settlement Payment)
in favour of Ericsson on 31 January, 2019 to complete all their
payment obligations to Ericsson.
C
6. Ericsson is therefore required to:
a. Withdraw Contempt Petition (Civil) Diary No.122/2019 and
Contempt Petition (C) No.1838/2018 in W.P.(C) No.845/2018
filed on its behalf, immediately upon receipt of the Balance
Settlement Payment and towards the same, prepare and send
for our consideration and for us to mutually agree by 29 D
January, 2019, the draft application to be made to the Hon’ble
Supreme Court for withdrawal of the said Contempt Petitions;
b. Withdraw all its claims and contentions as per the Arbitration
between RCom and its affiliates, and Ericsson, pending before
the Hon’ble Arbitral Tribunal comprising Justice Mr. S.B. Sinha, E
Justice Mr. Swatanter Kumar, and Justice V.S. Sirpurkar, and
towards the same, prepare and sent for our consideration and
for us to mutually agree by 29 January 2019, the draft application
to be made to the Hon’ble Arbitral Tribunal for withdrawal of
all claims and contentions, and the consequent termination of
F
proceedings.
c. Sign and return the attached No Dues Confirmation
simultaneous with the Demand Draft for an amount of Rs.
452.016 crores, being handed over to Ericsson on 31 January
2019.
G
Yours sincerely,
xxx xxx xxx”
18. It may be pointed out that in their reply to the Contempt Petition
No.55 of 2019, RCom and its group companies had stated that they
were “disabled” from paying the amount of INR 550 crore plus interest;
that they “were and are unable to pay”; and finally, that: H
90 SUPREME COURT REPORTS [2019] 4 S.C.R.
A “xxx xxx xxx
39. The Respondents had submitted the Undertaking on behalf of
RCom Group Companies based on the lenders’ consent for
monetization of the Other Spectrum for Rs.975 crores and in the
genuine hope and bonafide belief that Asset Monetization Scheme
B would be implemented and Ericsson shall be paid an amount of
Rs.550 crores along with interest, however, the same has become
impossible to be achieved.
xxx xxx xxx”
19. Obviously, the letter dated 21.01.2019 by the advocates on
C behalf of the Reliance Companies would belie each of the aforesaid
statements made in the said reply affidavit. There is, therefore, no doubt
whatsoever that the three Reliance Companies have wilfully not paid
the sum of INR 550 crore plus interest and have thus breached the
undertakings given to this Court.
20. Another disturbing feature of the reply affidavit filed in this
D Court by the Chairman of RCom to Contempt Petition No. 55 of 2019 is
the statement that RCom has not taken or received any advantage on
account of the undertaking submitted before this Court. This, again, is a
wholly incorrect statement, given the fact that a writ petition was filed in
this Court seeking quashing of the corporate insolvency resolution process
E on settlement of the matter with Ericsson, which could not be achieved
without such undertaking being given to this Court. We are of the view
that any unconditional apology given that there was no intention to make
any wrongful undertaking or that the undertaking was submitted bona
fide must be rejected. It is clear that this reply affidavit clearly
demonstrates the cavalier attitude of the deponent of this affidavit to the
F highest court of the land.
21. However, Shri Rohatgi and Shri Sibal relied upon the following
judgments:
(i) Babu Ram Gupta v. Sudhir Bhasin, (1980) 3 SCC 47 was a
case where an express undertaking to hand over possession to a receiver
G was not given. In this view of the matter, it was held that it would not be
possible to state that the appellant had wilfully disobeyed or committed
breach of such undertaking. This case has no application on facts to the
present case.
(ii) In Ashok Paper Kamgar Union v. Dharam Godha, (2003)
H 11 SCC 1, this Court held:
RELIANCE COMMUNICATION LTD. v. SBI 91
[R. F. NARIMAN, J.]
“17. Section 2(b) of the Contempt of Courts Act defines “civil A
contempt” and it means wilful disobedience to any judgment,
decree, direction, order, writ or other process of a court or wilful
breach of undertaking given to a court. “Wilful” means an act or
omission which is done voluntarily and intentionally and with the
specific intent to do something the law forbids or with the specific
B
intent to fail to do something the law requires to be done, that is to
say, with bad purpose either to disobey or to disregard the law. It
signifies a deliberate action done with evil intent or with a bad
motive or purpose. Therefore, in order to constitute contempt the
order of the court must be of such a nature which is capable of
execution by the person charged in normal circumstances. It should C
not require any extraordinary effort nor should be dependent, either
wholly or in part, upon any act or omission of a third party for its
compliance…….”
This case again has no application to the facts of this case. We
have seen that right from the beginning, the sum of INR 550 crore was D
undertaken to be paid, without having to depend upon any act or omission
of a third party. To say that the sum of INR 550 crore would be paid only
out of sale of assets of the three Reliance Companies is a deliberate
misstatement made in the undertakings as well as the applications for
extension of time filed before this Court, which was done with the purpose
of circumventing the orders of this Court. We are also of the view that in E
the facts of the present case, wilful default is made out, as has been
pointed out in this judgment.
(iii) In Dinesh Kumar Gupta v. United India Insurance Co.
Ltd., (2010) 12 SCC 770, this Court held:
“23. Besides this, it would also not be correct to overlook or ignore F
an important statutory ingredient of contempt of a civil nature
given out under Section 2(b) of the Contempt of Courts Act, 1971
that the disobedience to the order alleging contempt has to satisfy
the test that it is a wilful disobedience to the order. Bearing this
important factor in mind, it is relevant to note that a proceeding
G
for civil contempt would not lie if the order alleged to have been
disobeyed itself provides scope for reasonable or rational
interpretation of an order or circumstance which is the factual
position in the instant matter. It would equally not be correct to
infer that a party although acting due to misapprehension of the
H
92 SUPREME COURT REPORTS [2019] 4 S.C.R.
A correct legal position and in good faith without any motive to defeat
or defy the order of the Court, should be viewed as a serious
ground so as to give rise to a contempt proceeding.
24. To reinforce the aforesaid legal position further, it would be
relevant and appropriate to take into consideration the settled legal
B position as reflected in the judgment and order delivered in Ahmed
Ali v. Supdt., District Jail [1987 Cri LJ 1845 (Gau)] as also in
B.K. Kar v. High Court of Orissa [AIR 1961 SC 1367 : (1961)
2 Cri LJ 438] that mere unintentional disobedience is not enough
to hold anyone guilty of contempt and although disobedience might
have been established, absence of wilful disobedience on the part
C of the contemnor, will not hold him guilty unless the contempt
involves a degree of fault or misconduct. Thus, accidental or
unintentional disobedience is not sufficient to justify for holding
one guilty of contempt. It is further relevant to bear in mind the
settled law on the law of contempt that casual or accidental or
D unintentional acts of disobedience under the circumstances which
negate any suggestion of contumacy, would amount to a contempt
in theory only and does not render the contemnor liable to
punishment and this was the view expressed also in State of Bihar
v. Rani Sonabati Kumari [AIR 1954 Pat 513] and N. Baksi v.
O.K. Ghosh [AIR 1957 Pat 528].”
E This judgment also has no application to the facts of this case as
the only reasonable or rational interpretation of the orders involved in
this case leads to the result that INR 550 crore plus interest was to be
paid without any linkage to sale of assets within a fixed time limit. This is
also not a case of accidental or unintentional disobedience. As is clear
F from the letter dated 21.01.2019, the Reliance Companies are able to
pay this amount, but are wilfully refusing to do so. Similarly, the judgments
in Mohd. Iqbal Khanday v. Abdul Majid Rather, (1994) 4 SCC 34,
at paragraph 34, and Gyanichand v. State of A.P., (2016) 15 SCC 164,
at paragraph 11 also do not apply on the facts of this case. The facts of
this case are far from cases where directions or orders are impossible
G of compliance.
22. At this stage, we may point out that the contempt petition
against the Chairman of SBI would not lie inasmuch as the Ericsson
transaction and the sale of assets by the Joint Lenders’ Forum are
completely independent of each other, as argued by Shri Dave himself,
H and as has been held by us hereinabove. Also, the statement made in
RELIANCE COMMUNICATION LTD. v. SBI 93
[R. F. NARIMAN, J.]
paragraph 18 of the Contempt Petition No. 185 of 2019 that, “all the A
respondents in the contempt petition were bound to have handed over
the amount of INR 550 crore to the petitioner on or before 15.12.2018
……” is patently incorrect inasmuch as respondent no. 4 (SBI) has
nothing to do with this amount of INR 550 crore which had to be paid
over to Ericsson only by the three Reliance Companies. The contempt
B
petition against the Chairman of SBI is, therefore, dismissed.
23. Having held the three Reliance Companies guilty of contempt
of this Court, it is now necessary to point out Section 12(4) of the
Contempt of Courts Act, 1971, which reads as follows:
“12. Punishment for contempt of court.—
C
xxx xxx xxx
(4) Where the person found guilty of contempt of court in respect
of any undertaking given to a court is a company, every person
who, at the time the contempt was committed, was in charge of,
and was responsible to, the company for the conduct of the business
of the company, as well as the company, shall be deemed to be D
guilty of the contempt and the punishment may be enforced with
the leave of the court, by the detention in civil prison of each such
person :
Provided that nothing contained in this sub-section shall render
any such person liable to such punishment if he proves that the E
contempt was committed without his knowledge or that he
exercised all due diligence to prevent its commission.
xxx xxx xxx”
The question now is as to the punishment to be awarded. Shri
Rohatgi pointed out that in Supreme Court Bar Assn. v. Union of F
India, (1998) 4 SCC 409, this Court had held:
“34. The object of punishment being both curative and corrective,
these coercions are meant to assist an individual complainant to
enforce his remedy and there is also an element of public policy
for punishing civil contempt, since the administration of justice G
would be undermined if the order of any court of law is to be
disregarded with impunity. Under some circumstances, compliance
of the order may be secured without resort to coercion, through
the contempt power. For example, disobedience of an order to
pay a sum of money may be effectively countered by attaching
H
94 SUPREME COURT REPORTS [2019] 4 S.C.R.
A the earnings of the contemner. In the same manner, committing
the person of the defaulter to prison for failure to comply with an
order of specific performance of conveyance of property, may be
met also by the court directing that the conveyance be completed
by an appointed person. Disobedience of an undertaking may in
the like manner be enforced through process other than committal
B
to prison as for example where the breach of undertaking is to
deliver possession of property in a landlord-tenant dispute. Apart
from punishing the contemner, the court to maintain the majesty
of law may direct the police force to be utilised for recovery of
possession and burden the contemner with costs, exemplary or
C otherwise.”
Thus, disobedience of an order to pay a sum of money may be
countered by orders of attachment instead of committal to prison. On
the other hand, Shri Dave pointed out that this Court had, in Chhaganbhai
Norsinbhai v. Soni Chandubhai Gordhanbhai, (1976) 2 SCC 951,
D held that in cases of perverse and deliberate flouting of undertakings,
the High Court rightly observed that it had no option except to convict
the appellant and sentence him to three months’ imprisonment, with which
this Court agreed. He also pointed out that in Patel Rajnikant Dhulabhai
v. Patel Chandrakant Dhulabhai, (2008) 14 SCC 561, so-called
apologies, which are only tactful moves when contemnors are in a tight
E corner, should not be accepted and a jail sentence should be awarded
[see paragraphs 77 and 78]. He also referred to and relied upon Noorali
Babul Thanewala v. K.M.M. Shetty, (1990) 1 SCC 259, where this
Court held:
“11. When a court accepts an undertaking given by one of the
F parties and passes orders based on such undertaking, the order
amounts in substance to an injunction restraining that party from
acting in breach thereof. The breach of an undertaking given to
the court by or on behalf of a party to a civil proceedings is,
therefore, regarded as tantamount to a breach of injunction although
the remedies were not always identical. For the purpose of
G enforcing an undertaking that undertaking is treated as an order
so that an undertaking, if broken, would involve the same
consequences on the persons breaking that undertaking as would
their disobedience to an order for an injunction. It is settled law
that breach of an injunction or breach of an undertaking given to
H a court by a person in a civil proceeding on the faith of which the
RELIANCE COMMUNICATION LTD. v. SBI 95
[R. F. NARIMAN, J.]
court sanctions a particular course of action is misconduct A
amounting to contempt. The remedy in such circumstances may
be in the form of a direction to the contemnor to purge the contempt
or a sentence of imprisonment or fine or all of them. On the facts
and circumstances of this case in the light of our finding that there
was a breach of the undertaking we think that mere imposition of
B
imprisonment or fine will not meet the ends of justice. There will
have to be an order to purge the contempt by directing respondent
1-contemnor to deliver vacant possession immediately and issuing
necessary further and consequential directions for enforcing the
same.”
24. Given the facts as aforesaid, we are of the view that the C
contempt of this Court needs to be purged by payment of the sum of
INR 550 crore together with interest till date. As stated by the letter
dated 21.01.2019, subject to any calculation error, an amount of INR
453 crore must be paid to Ericsson in addition to the deposit of INR 118
crore made in the Registry of this Court. The Registry of this Court is D
directed to pay over the sum of INR 118 crore to Ericsson within a
period of one week from today. The RCom group is directed to purge
the contempt of this Court by payment to Ericsson of the sum of INR
453 crore within a period of four weeks from today. In default of such
payment, the Chairmen who have given undertakings to this Court will
suffer three months’ imprisonment. In addition to the aforesaid sum being E
paid, a fine amounting to INR 1 crore for each Company must also be
paid to the Registry of this Court within four weeks from today. This
sum will be paid over to the Supreme Court Legal Services Committee.
In default of payment of such fine, the Chairmen of these Companies
will suffer one month’s imprisonment. F
Contempt Petitions are disposed of, as aforesaid.
Divya Pandey Contempt Petitions disposed of.
G
H
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