Delhi High Court
Dalmia Family Office Trust & Anr. vs Getamber Anand & Ors. on 8 October, 2024
Bench: Prathiba M. Singh, Amit Sharma
$~1
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 8th October, 2024
CONT.CAS.(CRL) 5/2021
DALMIA FAMILY OFFICE TRUST & ANR. .....Petitioners
Through: Mr. Ajay Bhargava, Mr. Siddhant
Kumar, Ms. Wamika Trehan, Ms.
Radhika Khanna and Mr. Varun
Chopra Advocates (M-8551965439).
versus
GETAMBER ANAND & ORS. .....Respondents
Through: Mr. Sandeep Sethi, Sr. Advocate with
Mr. Krish Kalra, Mr. Kashish Bansal
and Ms. Riya Kumar, Advocates and
Mr. Getamber Anand, Respondent
No.1 in person.
CORAM:
JUSTICE PRATHIBA M. SINGH
JUSTICE AMIT SHARMA
Prathiba M. Singh, J. (Oral)
1. This hearing has been done through hybrid mode.
Factual Background:
2. The present contempt petition arises out of a common order dated 5th
October, 2021 passed by the ld. Sole Arbitrator Hon’ble Mr. Justice Swatanter
Kumar (Retd.), Supreme Court of India (hereinafter ‘ld. Arbitrator’), wherein
the ld. Arbitrator took severe umbrage to the conduct of the Respondents
herein during arbitral proceedings which were pending before the ld.
Arbitrator. Vide the said order the ld. Arbitrator made a reference to this Court
under Section 27(5) of the Arbitration and Conciliation Act, 1996 (hereinafter
“the Act”) for issuance of appropriate orders and directions, in accordance
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with law, for initiating proceedings for perjury as also criminal contempt
against Respondent No.1 – Mr. Getamber Anand, as also Respondent No.3 –
Ms. Saloni Adarsh. The ld. Arbitrator also directed initiation of proceedings
against one Mr. Vaibhav Luthra, Advocate, before the Bar Council of Delhi.
The operative portion of the ld. Arbitrator’s order read as under:-
“CONCLUSION:
ARBITRAL TRIBUNAL’S ORDER, DIRECTIONS
AND REPRESENTATIONS:
For the reasons and findings afore recorded, the
Arbitral Tribunal would pass the following orders,
directions and make the representations stated herein
below, for the kind consideration of the Hon’ble High
Court of Delhi at New Delhi:
I. All the Applications filed by the Claimants
dated 06.04.2021, 18.06.2021 and 25.06.2021 in
Arbitration Case Nos. 1/2021, 2/2021, 3/2021 and
10/2021 & 11/2021 are hereby dismissed with costs.
Costs of all the dates devoted to the hearings of these
Applications shall form part of the costs in the
proceedings and be the part of the final award that
would be published by the Tribunal.
II. For the malicious acts and deeds of the
Claimants No. 1 & 2 and their accomplice Ms. Saloni
Adarsh, they having brought disrepute to the institution
of arbitration, severally and jointly having interfered
with the administration of justice, having alleged
statements/ averments, which to their personal
knowledge were incorrect, as true, and having tampered
with fabricated documents and produced them as
evidence before the Tribunal, in conspiracy and
collusion with each other, have committed offences
punishable under Section 195 to 197 of the Indian Penal
Code, 1861 read with Section 340 of the Code of
Criminal Procedure, 1973. These parties are also liable
to be proceeded against under the provisions of theSignature Not Verified CONT.CAS.(CRL) 5/2021 Page 2 of 25
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Contempt of Court Act, 1971 for committing criminal
contempt, of and in the proceedings before the Arbitral
Tribunal.
i. It needs to be specifically stated before the
Hon’ble High Court that in the proceedings before the
Arbitral Tribunal, Mr. Vaibhav Luthra, Advocate and
Ms. Saloni Adarsh were neither party nor did they
appear at any stage, before the Tribunal. It is as a result
of the email notice dated 08.06.2021 which is the very
foundation of the Application under Section 12 & 13 of
the Act of 1996 filed by the Claimants, that the conduct
of these two individuals, percompulsion had to be
examined by the Tribunal, they being alleged authors
and source of the said email notice dated 08.06.2021.
Thus, even the observations made by the Tribunal in this
order are subject to the orders of the Hon’ble High
Court of Delhi at New Delhi. During the proceedings,
neither of the parties applied for impleadment of these
two persons nor prayed for issuance of notice to them
for any purpose, whatsoever. No steps were taken by Mr.
Vaibhav Luthra, Advocate and Ms. Saloni Adarsh to be
impleaded as affected party or a party claiming through
or in conflict with the ATS Group.
ii. As such, the Tribunal did not consider it
appropriate/necessary to issue notice to these persons
in light of the notification dated 14.03.2011 and the law
afore-referred.
iii. Thus, the Arbitral Tribunal makes the
following representations in accordance with the
provisions of Section 27(5) read with Section 19 of the
Act of 1996 before the Hon’ble High Court for
issuance of appropriate orders and directions, in
accordance with law:
a. Claimants No. 1 & 2 along with their accomplice
Ms. Saloni Adarsh, Flat No. 1111 ATS Tourmaline,
Gurgaon, be ordered and directed to be prosecuted forSignature Not Verified CONT.CAS.(CRL) 5/2021 Page 3 of 25
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committing the offence of perjury and other relevant
offences under the Indian Penal Code, 1861 read with
Code of Criminal Procedure, 1973 in accordance with
law.
b. Proceedings under the provisions of the Contempt
of Court Act, 1971 be initiated against Claimants No.
1 & 2 and their accomplice Ms. Saloni Adarsh, and
they be punished for the offence of criminal contempt
in the proceedings before the Arbitral Tribunal, in
accordance with law, by the Hon’ble High Court.
III. Direct the Bar Council of Delhi to scrutinize
and examine the professional conduct of Mr. Vaibhav
Luthra, Advocate (Luthra & Associates, Advocates and
Solicitors at E-881, First Floor, C. R. Park, New Delhi
– 110048, Mb. No. 9999871116, 9634586683, Email:
[email protected], Website:
www.luthraandassociates.com, and take appropriate
action in accordance with law, if found guilty of
professional misconduct.
IV. Subject to orders of the Hon’ble High Court, the
Respondents are granted liberty to initiate such criminal
and/ or civil proceedings, as permissible to them in
accordance with law, against the afore-referred
Claimants No. 1 & 2 and their accomplices, Mr.
Vaibhav Luthra, Advocate and Ms. Saloni Adarsh.”
3. The aforesaid reference order dated 5th October, 2021 was passed by
the ld. Arbitrator in arbitration proceedings pending between the Petitioners
i.e., Dalmia Family Office Trust and Dalmia Family Holdings LLP
(hereinafter collectively “Dalmia Group”), and M/s Almond Infrabuild
Private Limited, M/s Domus Greens Private Limited, M/s ATS Infrastructure
Limited, M/s Anand Divine Developers Private Limited and M/s ATS Housing
Private Limited (hereinafter collectively “ATS Group”), as also the
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Respondent No.1 – Mr. Getamber Anand, who is stated to be the
promoter/director of the ATS Group.
4. In brief, the allegation of the Petitioners/Dalmia Group, against
Respondent No. 1 and ATS Group, as also its signatory Respondent No.2 –
Mr. Shailendra Pandey, is that between 2013 and 2015 the Dalmia Group had
entered into nine independent sets of transactions with different companies of
the ATS Group. It is alleged that ATS Group failed to repay the investments
made by Dalmia Group in terms of the respective agreements between the
parties. Accordingly, on 18th October, 2019 it is stated that the parties entered
into a Supplementary Agreement whereby it is alleged that ATS Group
admitted to its liabilities and undertook to repay the same by 31st March, 2020.
5. Thereafter, the ATS Group and Respondent No. 1 filed eleven petitions
under Section 11 of the Act seeking constitution of an arbitral tribunal for
adjudicating the disputes that arose between the parties. Vide order dated 8th
January, 2021 with the consent of the parties, the Ld. Single Judge appointed
the Sole Arbitrator for adjudicating all disputes between the parties arising
out the aforesaid transactions. According to the ATS Group, the dispute
relating to the aforesaid transactions was settled and accordingly ATS Group
sought declaratory relief before the ld. Arbitrator in respect of the said
transactions. As a counter claimant, the Dalmia Group sought recovery of the
said investments not repaid by ATS Group, along with interest.
6. The ld. Arbitrator had entered reference post the aforesaid order dated
8th January, 2021. The respective parties filed applications under Section 17
of the Act in which arguments were heard by the ld. Arbitrator on several
dates between 17th February, 2021 and 5th April, 2021. Further arguments of
the ATS Group and Respondent No. 1 on their respective applications were
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pending, and at that stage in a hearing on 10th June, 2021 the ATS group
relied upon an alleged legal notice 8th June, 2021 addressed by one Mr.
Vaibhav Luthra, Advocate, to one of the ATS Group company, namely ATS
Infrastructure Limited. The allegations in the said legal notice were that the
said advocate was representing Respondent No. 3, a home buyer, whose flat
was, being collusively dealt with by the Dalmia Group and M/s ATS
Infrastructure Limited in the Arbitral proceedings. It was also alleged in the
said legal notice that the proceedings before the said ld. Arbitrator could not
have continued in view of a conflict of interest qua the ld. Arbitrator.
7. It is alleged that when the hearing in the Section 17 applications under
the Act commenced on 10th June, 2021, despite the fact that by then the said
legal notice had already been received by M/s ATS Infrastructure Limited via
email, no mention of it was made in the first session of arbitral proceedings.
However, in the post lunch session, the said legal notice was sought to be
relied upon to seek recusal of the ld. Arbitrator from the proceedings. The
Counsel appearing for the ATS Group Companies then refused to proceed
with arguments in the respective Section 17 applications. It is further stated
that the said legal notice was not placed on record on 10th June, 2021 and was
thereafter placed on record by means of an application for additional
documents.
8. In the meantime, on 14th June, 2021 the ATS Group and Respondent
No. 1 filed applications under Sections 14(2) read with 12(5), 15 and 11(6) of
the Act before the Ld. Single Judge of this Court being OMP (T) (Comm)
Nos. 53/2021, 54/2021 and 55/2021. The said applications were withdrawn
on 18th June, 2021 with liberty to approach the ld. Arbitrator. Thereafter, the
ATS Group and Respondent No. 1 filed applications under Sections 12 and
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13 of the Act before the ld. Arbitrator and sought recusal of the ld. Arbitrator
from the arbitration proceedings. These applications were dealt with by the
ld. Arbitrator on 5th October, 2021 and by a detailed order the conclusions
arrived at by the Arbitral Tribunal qua the various grounds for challenge are
as under :-
a) Allegation of collusion between the parties i.e., Dalima Group and
ATS Group, as also with the ld. Arbitrator:
It was urged by the Respondents that the allegations made in the legal
notice dated 8th June, 2021 were deteriorating the public image and
reputation of the ATS Group. In this regard, the ld. Arbitrator after
examining the said legal notice came to the conclusion that the same
appears to a pre-planned affair between the ATS Group and Luthra &
Associates on whose letter head the notice was issued. It was also
concluded by the ld. Arbitrator that the said notice lacked
genuineness and that the Respondents had filed three different
versions of the said notice. Ld. Arbitrator held that the said notice was
a tactic by the Respondents to unduly delay and frustrate the
arbitration proceedings on baseless and frivolous grounds. It was also
noted by the ld. Arbitrator that vide order dated 21st July, 2021 both
parties had recorded their submissions denying the allegation of
collusion between them. Accordingly, the ld. Arbitrator rejected the
said ground for challenge.
b) Allegation that the “Law Firm” related with the ld. Arbitrator, or
managed by his family members, has represented the Resp. No. 1 in
the past, and continues to advice the ATS Group:
It was alleged by the Respondents that the said allegation falls under
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Entry 23 and 28 of the Fifth Schedule and Schedule 7 & 10 of Seventh
Schedule to the Act. In this regard the ld. Arbitrator has held that said
allegation is factually incorrect and that the Respondents have not
provided any documentary proof to substantiate the said allegation.
Further, it was held by the Arbitrator that despite the objection raised
by Petitioners against the genuineness of the legal notice dated 8 th
June, 2021 the Respondents did not lead any documentary or oral
evidence to support the same. The ld. Arbitrator categorically denied
the said allegation, and as per the affidavit on behalf of the said Law
Firm, the ld. Arbitrator is not involved in any capacity in the
functioning of the said firm. Accordingly, the ld. Arbitrator rejected
the said challenge.
c) Orders passed by ld. Arbitrator are open to challenge by home buyers
and financial institutions in light of the allegations made in legal
notice dated 8th June, 2021 read with letter dated 4th May, 2021 issued
by the Dalmia Group to lenders of ATS Group:
The Respondents alleged that a conjoint reading of the letter dated 4th
May, 2021 and legal notice dated 8th June, 2021 would make the ld.
Arbitrator ineligible. In this regard, the ld. Arbitrator held that the
said challenge is vague, lacks clarity and definiteness, and would not
fall within the scope of conflict of interest as stipulated under the Act.
Further, the ld. Arbitrator has held that the ATS Group and
Respondent No. 1 could have availed the legal recourse available to
them under law, or even, raise the same in the arbitration proceedings
if it was related to the disputes in question. Moreover, the said
allegations do not even remotely affect the validity of the mandate of
the ld. Arbitrator. Accordingly, the said challenge was also rejected.
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d) Allegation of significant doubt about involvement of other
lawyers/parties, not connected with the disputes in question, in the
adjudicating process in the concerned arbitration proceedings:
The ld. Arbitrator, in this regard, has held that it is undisputed fact
that each order in the concerned proceedings was dictated by the ld.
Arbitrator before the parties. Further, with effect from 19th June, 2021
the proceedings were ordered to be recorded and the recordings
would also attest to the aforesaid fact. It was also held by the ld.
Arbitrator that although vide order dated 19th June, 2021 the Tribunal
had granted liberty to the parties to examine the laptop of the Private
Secretary of the ld. Arbitrator, the Respondents did not inspect the
same to substantiate the allegation. Accordingly, the ld. Arbitrator
concluded that the said allegation was false, vexatious, and raised
with the malicious intent of derailing the arbitration proceedings.
e) Proceedings conducted in violation of principles of natural justice
qua ATS Group and Respondent No.1:
In this regard the ld. Arbitrator has pointed out that a total of 16
hearings were conducted in the arbitration proceedings and that both
parties have been heard at length on different dates. Further, it is
pointed out that the Respondents had sought adjournment on nine
different occasions and each time the same was granted by the ld.
Arbitrator, despite the fact that the parties had not completed their
pleadings within time. The ld. Arbitrator has held that all parties were
given equal indulgence by the ld. Arbitrator and the same is evident
from the record as well. Accordingly, the said allegation is entirely
incorrect and thus rejected by the ld. Arbitrator.
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f) Allegation that the ld. Arbitrator did not file declaration and make
disclosures in terms of Section 12 and 13 of the Act:
The ld. Arbitrator has held this allegation to be completely baseless
and factually incorrect. Ld. Arbitrator has referred to his declaration
dated 13th January, 2021 made to the parties to the arbitration
proceedings along with the notice issued on the same date, informing
that all the cases would be taken up for hearing on 16th January, 2021.
The said declaration is also part of the order sheet of the proceedings.
The Dalmia Group has not disputed this fact. Further, the ld.
Arbitrator has held that all the circumstances alleged by the
Respondent No. 1 and the ATS Group in their respective applications
under Section 12 and 13 of the Act were in their knowledge prior to
the date of appointment of the ld. Arbitrator i.e., 8th January, 2021.
However, the ATS Group and Respondent No. 1 did not raise any
objection to the appointment of the ld. Arbitrator prior to 8 th June,
2021. The ld. Arbitrator concluded that the disclosures mandated
under Section 12(1)(a) & (b) of the Act have been duly complied with
by the ld. Arbitrator. Accordingly, the said challenge was also
rejected.
g) Appointment of ld. Arbitrator is non-est and invalid in light of the
aforesaid grounds read with legal notice dated 8th June, 2021:
The ld. Arbitrator, in this regard, concluded that since all the aforesaid
challenges/allegations have been rejected/found to be false, and the
authenticity of the legal notice dated 8th June, 2021 is also not proved,
the appointment of the ld. Arbitrator cannot be question on the present
ground. Accordingly, all the challenges to ld. Arbitrator’s impartialitySignature Not Verified CONT.CAS.(CRL) 5/2021 Page 10 of 25
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and independence were rejected in above terms.
9. After having arrived at the above conclusions, the ld. Arbitrator
dismissed all applications under Sections 12 and 13 under the Act, and
invoked Section 27(5) of the Act for initiating criminal contempt against the
Respondents. The matter was then listed before the predecessor Bench of this
Court on 14th December, 2021, on which date notice was issued to the
Respondents.
10. The Court has from time to time passed various directions including
directions to the Respondents vide order dated 28th August, 2023 to apologize
to the ld. Arbitrator pursuant to the submissions of the Respondents. The
Respondent No. 1 tendered an apology before the ld. Arbitrator on 5th
December, 2023 and has placed the affidavits tendering apology on record.
However, the Ld. Arbitrator, has not accepted the apology of the Respondent
No.1- Mr. Geetamber Anand, but has accepted the apology on behalf of Mr.
Shailendra Pandey and Ms. Saloni Adarash, Respondent No.2 and 3,
respectively. The reasons for not accepting the apology of Respondent No.1
is set out in the opinion of the ld. Arbitrator which is dated 13th April, 2024.
The extract from the said opinion is set out below:-
“26. In light of the above well settled principles of law,
it would clearly emerge that the case under contempt
jurisdiction would normally fall in two categories:
a. Where the unconditional and unqualified apology is
tendered with remorse, regret and at the earliest
opportunity available without justifying its
conduct/offence.
b. Where the apology is tendered as a tool of
opportunism. It is tendered as part of a strategy to
overcome the situation and avoiding punitive
consequences before the Hon’ble Court(s) and more soSignature Not Verified CONT.CAS.(CRL) 5/2021 Page 11 of 25
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when such apology is neither sincere nor a genuine
expression of the party’s remorse.
27. In the present case, the apology tendered by Mr.
Getamber Anand falls in the second category of case.
The Tribunal is of the considered view that the apology
tendered by Mr. Getamber Anand is neither bonafide
nor a sincere remorse of his unscrupulous and unfair
conduct. On the contrary, it is apparent from the record
that it is a part of his consistent strategy to somehow
avoid the consequences of his conduct before the
Hon’ble High Court of Delhi. Amongst others and at the
costs of reputation, the following facts would clearly
show that the opinion of the Tribunal in the present case,
is in consonance with the stated principles of law and a
compelling result for the misdeeds and acts of Mr.
Getamber Anand:
i. After the order of the Tribunal dated 05.10.2021, no
apology or regret was expressed by Mr. Getamber
Anand.
ii. Despite the order of the Hon’ble High Court of Delhi
dated 24.08.2023, for a period of nearly four months, no
affidavit of apology was filed by him.
iii. The first affidavit filed by him persisted with the
allegations thus, it would be no apology, regret or
remorse, both as a matter of fact and in the eye of law.
iv. Again on 26.03.2024, after the lapse of nearly four
months, again the affidavit was filed where the
allegations and submission were withdrawn. Thus, the
apology affidavit was filed most belatedly and not at the
first opportunity available to him.
v. His conduct pre and post the order of the Tribunal
dated 05.10.2021 and Hon’ble High Court of Delhi
dated 24.08.2023, does not even remotely suggest that
he had any remorse, regret or a sincere intent of
apologizing for his unscrupulous conduct, irresponsible
statements and allegations made against the Tribunal,
which even brought the institution of arbitration to
disrepute. As afore-recorded, vide order datedSignature Not Verified CONT.CAS.(CRL) 5/2021 Page 12 of 25
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24.08.2023 of the Tribunal, he was directed to file an
affidavit which had a direct bearing on matters in issue
before the Tribunal. That affidavit was not filed till
10.04.2024, despite seeking various adjournments and
undertakings given by him to the Tribunal.
vi. He even had the audacity to cast doubt and suspicion
on the orders of the Tribunal which were based on the
recorded proceedings of the hearings. The challenge to
the correctness of the proceedings was conveyed to the
Tribunal vide mail dated 20.03.2024, which he admitted
before the Tribunal in his statement on 10.04.2024. It
will be appropriate to bring it to the notice of the
Hon’ble High Court that the proceedings before the
Arbitral Tribunal, are being video-recorded all through.
This direction had to be issued by the Tribunal in view
of the attitude adopted by the Claimant. The mail sent is
completely contrary to the statements of the Claimant/its
Counsel recorded in the proceedings from time to time.
The transcript of the recorded statement has been
provided to the Claimant/its Counsel on 09.04.2024.
vii. On few dates, despite the directions of the Tribunal
for his appearance for recording of evidence etc., he did
not appear and sometime even without a sufficient
cause.
viii. He has left no stone unturned in delaying the
proceedings before the Tribunal. For instance, one
example thereof is that the evidence of Respondent No.l
dated 20.03.2024 in Case No. 7/2021, sent to him on the
same date, was signed and returned on 11.04.2024 to
the Tribunal. Another example of the same is that the
Claimant filed an application for additional evidence
first in one case, and thereafter on the same facts,
grounds and claiming the same relief, filed other
application in other case after months. Thus, causing
intentional delay in the proceedings of the Tribunal.
ix. The allegations made in the applications U/S 1286
l3of the Act of 1996, besides having been found untrue,
false and result of a conspiracy led by him, are to say
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the least, criminally intended and contemptuous, which
now is fairly and completely evidenced by the statement
of Mr. Shailendra Kumar and Ms. Saloni Adarsh, as
informed to the Tribunal on 10.04.2024.
x. His conduct is reprehensive and unscrupulous. Thus,
causing avoidable delay in the completion of the
proceedings.”
11. The matter is now pending adjudication before this Court.
Arguments:
12. Mr. Siddhant Kumar, ld. Counsel appearing for the Petitioners, has
taken the Court through the order dated 5th October, 2021 passed by the ld.
Arbitrator to argue that the Respondents have not been fair in their conduct
before the Arbitral Tribunal. Their entire intention was to ensure that the ld.
Arbitrator either recuses or is removed from the proceedings by making
baseless and untenable allegations. It is submitted that in fact, the proceedings
before the Arbitral Tribunal have been dragged due to this conduct of the
Respondents. He further submits that various issues relating to fee etc., were
also raised by the Respondent No. 1 and ATS Group and finally, the said ld.
Arbitrator’s mandate has been terminated and the petition being O.M.P. (T)
(COMM.) 79/2024 is pending, where a substitute Arbitrator is being
appointed by the Court.
13. Ld. Counsel for the Petitioners relies upon Sections 17(2) and 27(5) of
the Act to argue that the powers of the Arbitrator or a Tribunal are for all
purposes the same as that of a Civil Court. It is submitted that Section 27(5)
of the Act is very clear to the effect that even contempt proceedings can be
initiated by the Arbitral Tribunal. Ld. Counsel also places reliance on the
decision of the Supreme Court in Alka Chandewar v. Shamshul Ishrar
Khan, (2017) 16 SCC 119 to argue that after the amendment in 2015 to
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Section 17 of the Act and the insertion of section 17(2) by the Arbitration and
Conciliation (Amendment) Act, 2015, the Arbitral Tribunal need not even
apply to the High Court for contempt of its orders. The submission of the
Petitioner’s Counsel is that the Arbitrator’s power is equal to that of a Civil
Court and any scandalising of the Arbitral Tribunal is as good as scandalising
the Court. Thus, it is argued that the proceedings for criminal contempt are
completely made out against Respondents.
14. On the other hand, Mr. Sandeep Sethi, ld. Senior Counsel submits on
behalf of the Respondent No.1 that the intention of the Respondents was not
to merely seek recusal of the ld. Arbitrator. It was only in the light of the
allegations made in the legal notice dated 8th June, 2021 where collusion was
alleged between the Petitioners and the ATS Group, to be on the safer side the
ATS Group and Respondent No. 1 sought recusal of the ld. Arbitrator.
15. He further submits that in any event, the ld. Arbitrator has already
accepted the apology of Respondent Nos. 2 and 3. However, insofar as
Respondent No. 1 is concerned, for the reasons stated in the opinion, ld.
Arbitrator has not accepted the apology of Respondent No. 1. Mr. Sethi, ld.
Sr. Counsel, submits that his client has still tendered unqualified apology in
respect of his conduct before the ld. Arbitrator and even before this Court.
Analysis and Findings:
16. Heard ld. Counsels for the parties.
17. The first and foremost thing that strikes the Court is that the legal notice
which was addressed to M/s ATS Infrastructure Limited on 8th June, 2021
ought not to have led to such a long winded proceedings resulting in a criminal
contempt reference. The allegations in the said legal notice ought to have been
dealt by ATS Group on its own. The fact that the said legal notice was relied
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upon to seek recusal/termination of the mandate of the ld. Arbitrator was
conduct which is indeed puzzling! The allegation was that the ld. Arbitrator
was conflicted due to work which he or his family had done for the ATS
Group. If this is accepted as correct, the request for recusal ought to have been
from the opposite side i.e., from the Petitioners, not the Respondents.
However, that was not so. ATS, who was allegedly responsible for the
conflicting position, itself sought recusal – which therefore led the ld.
Arbitrator to clearly doubt their intentions.
18. From the facts that emerge, in this reference, it is clear to the Court that
the intention was to somehow or the other ensure that the ld. Arbitrator is no
longer adjudicating the matter for reasons best known to Respondents
themselves. In fact, the allegations primarily being one of collusion between
ATS Group and the ld. Arbitrator, there was no occasion for ATS Group itself
to seek recusal or termination of the ld. Arbitrator’s mandate. It seems
completely illogical to the Court that the Respondents moved such an
application.
19. Further, a perusal of the order dated 5th October, 2021 and the opinion
dated 13th April, 2024 rendered by the ld. Arbitrator would also show that the
ld. Arbitrator has expressed enormous grievances against the conduct of
Respondent No.1 personally. The Respondent No. 1 clearly appears to have
offended the ld. Arbitrator.
20. In the present system of adjudication of disputes that is currently
prevalent, there can be no doubt that the Tribunals and ld. Arbitrators are
adjudicating disputes in place of Civil Courts. Making baseless and untenable
allegations against the ld. Arbitrators cannot be permitted. Arbitrators, who
are currently being appointed are either retired judges or even practising
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lawyers. That by itself cannot lead to allegations of conflict by mere
speculation, resulting in recusal, without actual conflict being there. Ld.
Arbitrators are put in tenuous positions when such applications are moved and
any reckless or baseless allegations thus require to be dealt with strictly. While
the integrity of the arbitration ecosystem needs to be maintained, the same
cannot also be made fragile by giving room to unsubstantiated or speculative
allegations against arbitrators. Any such allegations would constitute
interference in the arbitral process.
21. The ld. Arbitrator’s exasperation and frustrations are clearly evident
from the two orders dated 5th October, 2021 and the opinion dated 13th April,
2024. The conduct of the Respondents to say the least is reprehensible and the
ld. Arbitral Tribunal, under such circumstances cannot be rendered powerless.
22. The decision of the Supreme Court in Alka Chandewar (supra) clearly
records that the entire purpose for amending Section 17 of the Act was to
make sure that orders passed by the Arbitral Tribunals are not toothless and
can be enforced in accordance with law. The observations of the Supreme
Court in the said judgment are set out below:-
“6. If Section 27(5) is read literally, there is no difficulty
in accepting the plea of the learned Senior Advocate for
the appellant, because persons failing to attend in
accordance with the court process fall under a separate
category from “any other default”. Further, the section
is not confined to a person being guilty of contempt
only when failing to attend in accordance with such
process. The section specifically states that persons
guilty of any contempt to the Arbitral Tribunal during
the conduct of the arbitral proceedings is within its
ken. The aforesaid language is, in fact, in consonance
with the chapter heading of Chapter V, “Conduct of
arbitral proceedings”. Further, it is well settled that aSignature Not Verified CONT.CAS.(CRL) 5/2021 Page 17 of 25
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marginal note can be used as an internal aid to
interpretation of statutes only in order to show what is
the general drift of the section. It may also be resorted
to when the plain meaning of the section is not clear. In
the present case we must go by the plain meaning of sub-
section (5). This being the case, we find it difficult to
appreciate the reasoning of the High Court. Also, in
consonance with the modern rule of interpretation of
statutes, the entire object of providing that a party may
approach the Arbitral Tribunal instead of the Court
for interim reliefs would be stultified if interim orders
passed by such Tribunal are toothless. It is to give teeth
to such orders that an express provision is made in
Section 27(5) of the Act.
7. In fact, the Delhi High Court by the judgment dated
18-8-2009, reported in Sri Krishan v. Anand [Sri
Krishan v. Anand, 2009 SCC OnLine Del 2472 :
(2009) 112 DRJ 657 : (2009) 3 Arb LR 447] , has
correctly construed Section 27(5) of the Act. Further, it
must be remembered that this Court in Ambalal
Sarabhai Enterprises Ltd. v. Amrit Lal &
Co. [Ambalal Sarabhai Enterprises Ltd. v. Amrit Lal
& Co., (2001) 8 SCC 397] has held that parties to
arbitration proceedings are put to an election as to
whether to apply for interim relief before the Tribunal
under Section 17 or before the Court under Section 9.
Such election would be meaningless if interim orders
passed by the Arbitral Tribunal were to be written in
water, as all parties would then go only to the Court,
which would render Section 17 a dead letter.
8. Coming to Shri Rana Mukherjee’s submission that
sub-section (2) of Section 17 introduced by the 2015
Amendment Act now provides for the necessary remedy
against infraction of interim orders by the Tribunal,
suffice it to state that the Law Commission itself, in its
246th Report, found the need to go one step further than
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what was provided in Section 27(5) as construed by the
Delhi High Court [Sri Krishan v. Anand, 2009 SCC
OnLine Del 2472 : (2009) 112 DRJ 657 : (2009) 3 Arb
LR 447] . The Commission, in its Report, had this to say:
“Powers of Tribunal to order interim measures
46. Under Section 17, the Arbitral Tribunal has
the power to order interim measures of
protection, unless the parties have excluded such
power by agreement. Section 17 is an important
provision, which is crucial to the working of the
arbitration system, since it ensures that even for
the purposes of interim measures, the parties can
approach the Arbitral Tribunal rather than await
orders from a court. The efficacy of Section 17 is
however, seriously compromised given the lack
of any suitable statutory mechanism for the
enforcement of such interim orders of the
Arbitral Tribunal.
47. In Sundaram Finance Ltd. v. NEPC India
Ltd. [Sundaram Finance Ltd. v. NEPC India
Ltd., (1999) 2 SCC 479], the Supreme Court
observed that though Section 17 gives the Arbitral
Tribunal the power to pass orders, the same
cannot be enforced as orders of a court and it is
for this reason only that Section 9 gives the court
power to pass interim orders during the
arbitration proceedings. Subsequently, in Army
Welfare Housing Organisation v. Sumangal
Services (P) Ltd. [Army Welfare Housing
Organisation v. Sumangal Services (P) Ltd.,
(2004) 9 SCC 619], the Court had held that under
Section 17 of the Act no power is conferred on the
Arbitral Tribunal to enforce its order nor does it
provide for judicial enforcement thereof.
48. In the face of such categorical judicial
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opinion, the Delhi High Court attempted to find a
suitable legislative basis for enforcing the orders
of the Arbitral Tribunal under Section 17 in Sri
Krishan v. Anand[Sri Krishan v. Anand, 2009
SCC OnLine Del 2472 : (2009) 112 DRJ 657 :
(2009) 3 Arb LR 447] [followed in Indiabulls
Financial Services Ltd. v. Jubilee Plots &
Housing (P) Ltd. [Indiabulls Financial Services
Ltd. v. Jubilee Plots & Housing (P) Ltd.,
2009 SCC OnLine Del 2458] ]. The Delhi High
Court held that any person failing to comply
with the order of the Arbitral Tribunal under
Section 17 would be deemed to be “making any
other default” or “guilty of any contempt to the
Arbitral Tribunal during the conduct of the
proceedings” under Section 27(5) of Act. The
remedy of the aggrieved party would then be to
apply to the Arbitral Tribunal for making a
representation to the court to mete out
appropriate punishment. Once such a
representation is received by the court from the
Arbitral Tribunal, the court would be competent
to deal with such party in default as if it is in
contempt of an order of the court i.e. either
under the provisions of the Contempt of Courts
Act or under the provisions of Order 39 Rule 2-
A of the Code of Civil Procedure, 1908.
49. The Commission believes that while it is
important to provide teeth to the interim orders of
the Arbitral Tribunal as well as to provide for
their enforcement, the judgment of the Delhi High
Court in Sri Krishan v. Anand [Sri
Krishan v. Anand, 2009 SCC OnLine Del 2472 :
(2009) 112 DRJ 657 : (2009) 3 Arb LR 447] is not
a complete solution. The Commission has,
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of the Arbitral Tribunal and the same would be
statutorily enforceable in the same manner as
the orders of a court. In this respect, the views of
the Commission are consistent with (though do
not go as far as) the 2006 amendments to Article
17 of the Uncitral Model Law.”
9. Pursuant to this 246th Report, sub-section (2) to
Section 17 was added by the 2015 Amendment Act, so
that the cumbersome procedure of an Arbitral
Tribunal having to apply every time to the High Court
for contempt of its orders would no longer be
necessary. Such orders would now be deemed to be
orders of the court for all purposes and would be
enforced under the Civil Procedure Code, 1908 in the
same manner as if they were orders of the court. Thus,
we do not find Shri Rana Mukherjee’s submission to be
of any substance in view of the fact that Section 17(2)
was enacted for the purpose of providing a “complete
solution” to the problem.”
23. A perusal of the two provisions i.e., Section 17(2) and Section 27(5) of
the Act, would also show that Section 27(5) stipulates specifically that if any
person is guilty of contempt of the Arbitral Tribunal, during the conduct of
arbitral proceedings, the punishments would be as though the said offences
had taken place in suits before the Civil Court. The relevant provisions are
extracted below:
“17. Interim measures ordered by arbitral tribunal.–
(1) A party may, during the arbitral proceedings, apply
to the arbitral tribunal–
(i) for the appointment of a guardian for a minor or
person of unsound mind for the purposes of arbitral
proceedings; or
(ii) for an interim measure of protection in respect of
any of the following matters, namely:–
(a) the preservation, interim custody or sale of any
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goods which are the subject-matter of the arbitration
agreement;
(b) securing the amount in dispute in the arbitration;
(c) the detention, preservation or inspection of any
property or thing which is the subject matter of the
dispute in arbitration, or as to which any question may
arise therein and authorising for any of the aforesaid
purposes any person to enter upon any land or building
in the possession of any party, or authorising any
samples to be taken, or any observation to be made, or
experiment to be tried, which may be necessary or
expedient for the purpose of obtaining full information
or evidence;
(d) interim injunction or the appointment of a receiver;
(e) such other interim measure of protection as may
appear to the arbitral tribunal to be just and convenient,
and the arbitral tribunal shall have the same power for
making orders, as the court has for the purpose of, and
in relation to, any proceedings before it.
(2) Subject to any orders passed in an appeal under
section 37, any order issued by the arbitral tribunal
under this section shall be deemed to be an order of the
Court for all purposes and shall be enforceable under
the Code of Civil Procedure,1908 (5 of 1908), in the
same manner as if it were an order of the Court.
27. Court assistance in taking evidence.–(1) The
arbitral tribunal, or a party with the approval of the
arbitral tribunal, may apply to the Court for assistance
in taking evidence.
xxxx
(5) Persons failing to attend in accordance with such
process, or making any other default, or refusing to give
their evidence, or guilty of any contempt to the arbitral
tribunal during the conduct of arbitral proceedings,
shall be subject to the like disadvantages, penalties and
punishments by order of the Court on the
representation of the arbitral tribunal as they would
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incur for the like offences in suits tried before the
Court.”
24. In light of the above, if such allegations were made before the Arbitral
Tribunal, as would have been made before a Judge hearing a civil suit, clearly
a reference for criminal contempt could have been made. The Arbitral
Tribunal is no different from a Civil Court in respect of dealing with contempt
against itself. Thus, any misconduct before an Arbitral Tribunal or a Sole
Arbitrator would be liable to be dealt with in accordance with law, if the same
constitutes civil law contempt.
25. The Court, however, in the present case has considered the affidavits
of apology which have been filed by Respondent No.1. The text of the said
apology is set out below:-
“2. In terms of the liberty granted by the Hon’ble
High Court of Delhi, I deeply regret and most humbly
tender my unconditional and unqualified apology to this
Ld. Tribunal for all the submissions made which were
perceived to demean the majesty of this Ld. Tribunal and
withdraw the same unconditionally.
3. I state with greatest humility that I have always had
the deepest and highest regard for this Ld. Tribunal and
that in view of the submissions made above, the
deponent expresses remorse and once again tenders its
unconditional apology and under the foregoing
circumstances the deponent humbly begs to be pardoned
for the same.
Whereas the Hon’ble High Court of Delhi vide order
dated 24.08.2023 had granted me as well as Mr.
Shailendra Kumar (employee of the Claimant
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for the alleged contempt. However, Mr. Shailendra
Kumar resigned from the services of the Claimant
Company on 03.10.2023 and is no longer an employee
of the Claimant Company.”
26. Even today, the Contemnor/Respondent No.1 is present before the
Court and tenders an unconditional and unqualified apology for his conduct
before the ld. Arbitral Tribunal. Moreover, the proceedings before the Arbitral
Tribunal have been substantially delayed due to the aforesaid conduct of the
Respondents, which clearly appears to have been the purpose of the
Respondent No.1 and the ATS Group.
Conclusion:
27. Accordingly, while accepting the apology of the Respondent No. 1 for
the aforesaid acts and the remorse which has been expressed, it is directed that
the Respondent No.1 shall pay, by way of demand draft, a sum of
Rs.10,00,000/- to any charitable organisation which may be identified by the
ld. Arbitrator.
28. For the said purpose, the worthy Registrar General shall contact the ld.
Arbitrator and obtain the details of the charitable organisation. Respondent
No. 1 shall then appear before the worthy Registrar General and hand across
a demand draft for the sum of Rs.10,00,000/-.
29. In addition, for the costs incurred by the Petitioners in these
proceedings, a sum of Rs.3,00,000/- shall be paid by the Respondent No. 1 to
the Petitioners as costs within one week.
30. The Respondent No. 1 has been cautioned that in future such conduct
shall not be repeated.
31. The present contempt reference is disposed of with all pending
applications, if any, in above terms.
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32. List before the worthy Registrar General on 18th November, 2024.
PRATHIBA M. SINGH
JUDGE
AMIT SHARMA
JUDGE
OCTOBER 08, 2024/MR/NK/MS/PR
(corrected & released on 14th October, 2024)
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