Ashish Seth vs Sumit Mittal and Others

Listing Contempt Petition (C) No.34/2016 in Writ Petition (Crl.) No. 5 of 2015 after three months while dismissing Contempt Petition (C) Nos. 257 of 2016 and No. 889 of 2017, the Court HELD: 1. The relevant clauses of the MoS and the obligations to be fulfilled by the respective parties to the MoS showed that Seth Group have fully complied with their obligations, except deposit of the total amount of Rs.25.27 crores - payment to DTCP towards initial liability of Rs.59.05 crores of TFIPL. Seth Group have already paid Rs.9.40 crores against the total liability of Rs.25.27 crores towards EDC liability against the total liability of Rs.59.05 crores of JV Company. The balance amount is not deposited by the Seth Group as the Mittal Group have not fulfilled their obligations under the MoS. It is stated at the bar that the Seth Group is always ready and willing to fulfill their obligations in terms of the MoS, i.e. their liability as per Clause 1.2, subject to Mittal Group fulfill its obligations. The material on record showed that the Mittal Group have not fulfilled their obligations as per Clause 1.2, Clause 5.3 and Clause 8. Neither the Mittal Group nor TFIPL have deposited the balance amount to be paid towards EDC liability of Rs.59.05 crores (deducting Rs.25.27 crores to be paid by the Seth Group as per Clause 1.2). It is the case on behalf of the Mittal Group that in the MoS there is no specific term and the obligation that the said amount is to be paid by the Mittal Group. [Para 9.1][438-G-H; 439-A-C]

2. The liability of Rs.59.05 crores was with respect to the entire land – 48.03 acres at Sector 89, Faridabad. Therefore, the liability of the Seth Group would be with respect to their share out of 48.03 acres which, as agreed between the parties, would come to Rs.25.27 crores and therefore the balance was required to be paid by Mittal Group/JV Company. Unless and until the entire amount is deposited with the DTCP towards EDC, the aforesaid licenses cannot be renewed and after renewal they are required to be bifurcated and transferred. As the Mittal Group has refused to deposit the balance amount of EDC (after deducting Rs.25.27 crores which is the liability of Seth Group as per Clause 1.2), the licenses are not being renewed thereafter. If the contention and the submission on behalf of the Mittal Group is accepted, in that case, the entire MoS would be unworkable and the purpose and object of the MoS to resolve all the disputes would be frustrated. As the Mittal Group has not fulfilled its obligations it appears that the Seth Group has not deposited the balance amount of EDC liability. At this stage, it is required to be noted that as per Clause 5.8 Mittal Group shall not resign from the Board of Directors of JV Company and shall not transfer majority/controlling shareholding in TFIPL till renewal of licenses. As per the case of Seth Group, Mittal Group have retired from the Directorship of TFIPL and the balance sheet since then is being signed by the proxies. [Para 9.2][439-G-H; 440-A-D]

3. As per MoS dated 04.05.2015 and even as per the order passed by this Court 05.05.2015, all the parties to the MoS are bound to fulfill their respective obligations. Seth Group have fulfilled their obligations, except the payment of DTCP i.e. Rs.25.27 crores as per Clause 1.2 of the MoS (except Rs.9.49 crores which is paid). The respondent Mittal Group in Contempt Petition No. 34 of 2016 have deliberately and willfully not fulfilled their obligations which they are required to fulfill under the MoS dated 04.05.2015 and as such they have rendered themselves liable for the action under the Contempt of Courts Act. However, before taking any action, further two months’ time is given to the respondents to fulfill their part of obligations under the MoS dated 04.05.2015, more particularly, (i) To pay the entire EDC liability of TFIPL with interest in relation to license Nos. 34, 35 and 36 other than the share of the EDC liability which the Seth Group has undertaken to pay as per Clause 1.2 of the MoS; (ii) As per Clause 1.2, EDC liability of the Seth Group is to the extent of Rs.25.27 crores, out of the total EDC liability of TFIPL in relation License Nos. 34, 35 and 36 as on 24.03.2015 together with interest accrued thereon from 24.03.2015. Therefore, the Seth Group shall make the entire payment of Rs.25.27 crores towards their EDC liability in respect of License Nos. 34, 35 and 36 of 2007; (iii) The Mittal Group is further directed to renew the license Nos. 34, 35 and 36 of 2007; to execute GPA by JV Company (as per Clause 5.3), Board Resolution by TFIPL for availing benefit under EDC Relief Policy (as per Clause 1.2.1), NOC without any conditions (as per Clause 8) to the Seth Group.

(iv) Thereafter, the DTCP to bifurcate the Seth Group’s portion of the land in accordance with law and as per the policy and/or the rules and regulations, if any. It will be open to the respective parties to avail the benefit of the applicable EDC Relief Policy, which may be considered by the DTCP in accordance with the applicable EDC Relief Policy, if any. The aforesaid entire exercise shall be completed within a period of two months from the date of lifting of lockdown in the concerned area, failing which, this Court shall proceed to pass appropriate further order/orders under the Contempt of Courts Act for non-fulfillment of the obligations by the respondents. [Paras 9.2, 10, 10.1][440-E-H; 441-A-E]