Case: ASHISH SETH Vs. SUMIT MITTAL AND OTHERS

2. The facts leading to the present contempt petitions in nutshell are as under:That one Triveni Ferrous Infrastructure Private Limited (hereinafter referred to as TFIPL) was a joint venture company constituted of two groups – one being the Seth Group [consisting of Mr. Surrender Seth, Mr. Ashish Seth, M/s Ferrous Forging Ltd., M/s Ferrous Alloys Forging Pvt. Ltd. (FAFPL), M/s Ferrous Township Pvt. Ltd. (FTPL) and M/s Ferrous Infrastructure Pvt. Ltd. (FIPL)] and the second being the Mittal Group [consisting of Mr. Sumit Mittal and Mr. Madhur Mittal]2.1 That TIFPL acquired some land at Sector 70 and some 48.05 acres of land at Sector 89, Faridabad. The said TIFPL also availed licences Nos. 34, 35 and 36 from competent authorities in the year 2007 in respect of the land bearing Sector 89 with an intent to develop the said Sector 89 land. Subsequently both the parties being Seth Group and Mittal Group agreed that the development in the said land be divided and carried out separately and thereupon the development rights in Sector 89 land, parcel of 48.03 acres of land belonging to TIFPL, was sold in the following manner:2.2 That certain disputes arose between both the groups in respect of the payment of liabilities out of TFIPL which gave rise to various litigations including Writ Petition (Criminal) No. 5/2015 and Writ Petition (Criminal) No. 11/2015. The disputes were referred to mediation. A Memorandum of Settlement dated 4.5.2015 (hereinafter referred to as MOS) was executed between the Seth Group, Mittal Group and TFIPL. The said MOS was produced before this Court in Writ Petition (Criminal) No.5/2015and this Court disposed of the aforesaid writ petition in terms of the MOS. Under the MOS and the order passed by this Court in the aforesaid writ petition which was disposed of in terms of MOS dated 4.5.2015 reciprocal obligations were to be fulfilled by both the Seth Group and the Mittal Group. The obligations of the Seth Group were as mentioned in paragraph 1 to 4 of the Contempt Petition No. 34/2016 and the obligations of the Mittal Group and TFIPL were as per Clauses 5.1 to 5.9 of the contempt petition. Broadly speaking the obligations of the Seth Group and the obligations of the Mittal Group under the MOS and the order passed by this Court were as under:OBLIGATIONS OF THE SETH GROUPOBLIGATIONS OF MITTAL GROUP8.2 Before discussing the rival submissions made by the learned counsel appearing on behalf of the respective parties, the background which ultimately led to the MoS dated 04.05.2015 are required to be referred to and considered8.3 Criminal proceedings were initiated against Ashish Seth of Seth Group and others which was the subject matter before this Court in Writ Petition (Criminal) No. 5 of 2015. The disputes involved were commercial disputes. It appears that during the course of hearing, a suggestion was given, as the controversy in the case pertained to payment of money as alleged, that the matter be sent for mediation. This Court, with the consent of the parties, sent the matter for mediation, subject to Ashish Seth depositing a sum of Rs.10 Crore before this Court. That Ashish Seth deposited the sum of Rs.10 Crore. This Court requested Mr. Justice R.V . Ravindran, a former Judge of this Court, to mediate between the parties. Thereafter, learned Mediator mediated and initially submitted the interim report. The interim report of the learned Mediator reads as follows:This Honble Court by order 09.02.2015, referred the matter to mediation so as to enable the parties to arrive at a negotiated settlementIn pursuance of the above, mediation meetings were held on 14.02.2015, 16.02.2015, 17.02.2015, 18.02.2015, 10.03.2015, 15.03.2015 and 17.04.2015 at New Delhi. The meetings were attended by Mr. Surender Seth and Mr. Ashish Seth with their counsel, Mr. Sachin Puri on one side, and Mr. Sunit Mittal and Mr. Mathur Mittal with their counsel Mr. Sanjay S. Chhabra on the other sideAfter detailed negotiations and discussions and exchange of various alternatives, parties have arrived at a broad consensus, without prejudice to their respective rights and contentions. Parties are further negotiating to give shape to the terms agreed, in a manner which will effectively express what has been agreed, and put an end to the disputes and at the same time safeguarding their respective interestsAs several issues relating to legal and taxation issues require to be sorted out with the advice of experts, the parties have not been able to finalize the terms and execute the Memorandum of SettlementOn the joint request of the parties, further mediation meetings are scheduled for 11.04.2015, 12.04.2015 and 15.04.2015 for further negotiations and finalization of the draft Memorandum of SettlementIt is expected that the said process is likely to take at least two more weeks and, therefore, it is respectfully submitted that the time for completion of mediation process be extended till the end of this monthWHEREAS TFIPL is an Infrastructure Development Company in which the Seth Group represents that it holds 50% share (i.e. FFL and FAFPL have 33% and 17% shares respectively); and Mittal Group represents that it holds the remaining 50% share;WHEREAS disputes arose among the Seth Group on the one hand and the Mittal Group on the other, with respect to lands admeasuring 37.58125 acres and 29.1953 acres, situated at Sector 70, Faridabad (Haryana) on account of Mittal Group claiming that the Seth Group should pay certain amounts to TFIPL and on account of certain issues relating to management and maintenance of statutory records and books of account of TFIPLWHEREAS the said disputes have given rise to the following legal proceedings which are either pending in Courts of Law and/or are under investigation by the Competent Authority:(a) Company Petition bearing C.P. No. 158 (ND) of 2013 filed by FAFPL and FFL against the TFIPL, Sumit Mittal, Madhur Mittal and others qua the affairs of TFIPL, pending before Company Law Board, New Delhi;(b) Complaint Case No. 613/2014 pending before the Jurisdictional Magistrate at Agra (U.P.) arising from FIR No. 513/2014 against Surender Seth, Ashish Seth and others, registered at Police Station, New Agra, Agra;(c) FIR No. 808/2014 against Surender Seth, Ashish Seth and others, registered with the Economic Offence Wing, New Delhi;(d) Crl. M.C. No. 5621/2014 on the file of Honble Delhi High Court (Ashish Seth Vs. State & Another);(e) Crl. M.C. No. 5622/2014 on the file of Honble Delhi High Court (Surender Seth Vs. State and Another);(f) W.P. (Crl.) No. 5/2015 on the file of Honble Supreme Court of India (Ashish Seth Vs. Govt of NCT of Delhi & Others);(g) W.P. (Crl.) No. 11/2015 on the file of Honble Supreme Court of India (Surender Seth Vs. Govt of NCT of Delhi & Others)WHEREAS Criminal Case No.235/2014, filed by one Mr. Hari Mohan Gupta (a witness in FIR No.513/2014) against Ashish Seth is pending before the Special Judge, Agra (U.P.) and Ashish Seth has filed a petition under Section 482 Cr.P.C. being Petition No. 134/2015, before the Honble Allahabad High Court, for quashing the said proceedingsWHEREAS the Honble Supreme Court of India in the proceedings mentioned at Serial No. (f) and (g) above, vide Order dated 14.01.2015 referred the parties to mediation and subsequently, vide Order dated 09.02.2015 requested Justice R.V . Ravindran, former Judge of Honble Supreme Court of India to act as a Mediator to assist the parties to arrive at a negotiated settlement;WHEREAS after deliberations and discussions between the two groups ove several sittings, the parties have agreed to resolve all their disputes amicable as per the terms hereinafter set outThus, the parties entered into the MoS and agreed to resolve all their disputes amicably. Therefore, as such, all the parties to the MoS dated 04.05.2015 are bound to comply with the relevant terms and conditions and their respective obligations. As per the terms of the settlement agreed between the parties, there are certain obligations to be fulfilled by the respective parties, which the respective parties are bound to fulfill and comply with in its true spirit. The obligations of Seth Group are specifically mentioned in Clauses 1 to 1.5.1. The Seth Group has further agreed and undertaken to perform their part of obligations with the Mittal Group and TFIPL as mentioned in Clauses 3 to 3.14 and Clause C. Similarly, the Mittal Group and TFIPLs obligations, representations and warranties are also specifically mentioned in Clause D, which are specifically mentioned in Clauses 5 to 5.9As agreed between the parties and in consideration of the obligations in Clauses 1.1, 1.3 and 1.4 and on furnishing of all requisite bank guarantees as required in terms of Clause 1.2 by the Seth Group under the MoS, all FIRs, complaints and cases mentioned in Clause 6.1 to Clause 7 were required to be withdrawn/quashed/cancelled/terminated. The joint obligation of the parties are specifically mentioned in Clause F (relevant Clauses 8 & 9). As per Clause 10, TFIPL and Mittal Group confirmed that there are no outstanding claims of Seth Group or any of its constituents under the agreement dated 15.07.2007 in respect of FSI admeasuring 11,28,204 Sq Ft. including FSI for EWS calculated on a total area of 14.80 acres on the land situated in Sector 89 Faridabad under License Nos. 34, 35 and 36 of 2007 granted in the name of TFIPL and others. Clause 12 which is an important and relevant clause reads as under:12. It is hereby confirmed that other than the payment of the EDC amount required to be made under Clause 1.2.1 and under Clause 3.8 above, Seth Group shall not be liable for any other EDC payment under License Nos. 34, 35 and 36 of 2007 either on renewal and/or upon bifurcation of License Nos. 34, 35 and 36 of 2007, except to the extent of Rs.25,27,92,000/- together with interest accrued thereon from 24.03.2015, imposed by DTCP, Haryana. It is further clarified that the liability to pay EDC of Seth Group in a sum of Rs.25,27,92,000/- against the total EDC liability of Rs.59.05 crores as on 24.03.2015, shall not be varied subject, however, to the condition that in the event of the total liability, which has been assessed at Rs.59.05 crores as on 23.04.2015, being revised from Rs.59.05 crores, to any higher amount as on 24.03.2015, on account of revised calculation or similar reason. In such eventuality, the Seth Group will bear the proportionate increase in regard to the amount in excess of Rs.59.05 croresClause G is specifically with respect to renewal of licenses, more particularly, license Nos. 34, 35 and 36 of 2007. The relevant clauses with respect to renewal of licenses are Clauses 17, 18 and 19, which read as under:17. Mittal Group shall apply for renewal of license by 23.06.2015 subject to compliance of clause 1.2 (to the extent of providing Bank Guarantee), 1.3 & 1.4 by the Seth Group. The Seth Group have provided documents/undertakings with respect to the lands falling to share of the Seth Group under Agreement dated 15.06.2007, i.e. (i) Status of construction/allotment of EWS Flats, and (ii) Service Plan status, its drawing, estimates and its approval from HUDA, Chandigarh annexed as Annexure-16, to enable Mittal Group to apply for renewal of license. Seth Group does not have any further document in this regard, however, it is clarified that in case any indemnity, undertaking, letter and/or similar document is required to be executed after filing of the application for renewal of license, pertaining to the lands falling in the share of Seth Group under Agreement dated 15.06.2007, Seth Group shall do the needful at the earliest if so requested by Mittal Group18. On application made for renewal of license in terms of clause 17, Mittal Group will secure renewal of license within 90 days. All administrative and miscellaneous charges, compounding fee, penalties and other charges levied and payable by PAL, ORS and Heritage for renewal of license shall be paid by the Mittal Group. All such charges in respect of FIPL agreement shall be exclusively paid/borne by Seth Group by similarly paying to TFIPL immediately on being demanded19. Seth Group shall pay a sum of Rs.25,00,000/- (Twenty Five Lacs only) to Mittal Group for hiring/engaging consultancy services for renewal of License Nos. 34, 35 & 36 of 2007 in favour of TFIPL at the time of filing of the application for renewal of license by the Mittal GroupAs per Clause 27, with the execution of the said MoS and subject to compliance of undertaking and fulfillment of all obligations of the Seth Group and Mittal Group/TFIPL as undertaken in the MoS, it was agreed between the parties that all pending disputes amongst the parties. shall stand resolved and TFIPL and/or Mittal Group have no claim of any nature against the Seth Group and similarly Seth Group shall have no claim of any nature against the TFIPL and/or Mittal Group. The MoS further provides the consequences of breach/non-payment of the amounts. The relevant clauses are Clauses 36, 37 and 38, which read as under:36. In the event of any default by Seth Group of their obligations and warranties, the Mittal Group and TFIPL will be entitled to initiate legal proceeding for enforcing performance of the obligations/warranties given by Seth Group, including initiation of contempt proceedings against the Seth Group in accordance with law37. In case there is a default in payment as agreed in Clause Nos. 1.1, 1.3 & 1.4 of furnishing of all requisite Bank Guarantees as required in terms of clause 1.2 by the Seth Group, the Mittal Group and TFIPL will also be entitled to approach the Honble Supreme Court for revival of the complaints/FIRs stated at serial Nos. (b) & (c) of the list of cases mentioned in the preamble above. Provided however, on Mittal Group and TFIPL obtaining performance of the obligations, the revised criminal proceedings and contempt proceedings, if any, shall be terminated38. In the event of any default by Mittal Group of their obligations and warranties, the Seth Group will be entitled to initiate legal proceeding for enforcing performance of the obligations/warranties given by the Mittal Group, including initiation of contempt proceedings against the Mittal Group in accordance with lawThis MoS was placed before this Court in the aforesaid Writ Petition and this Court recorded the settlement in entirety and as agreed between the parties and as prayed, the MoS dated 04.05.2015 became a part of the order and this Court directed the parties to adhere to the terms and conditions of the settlement and the undertakings given therein. This Court specifically further observed that every facet of it shall tantamount to an order of this Court and in case of failure the parties shall be at liberty to move this Court for an appropriate direction. Thus, as per the MoS and even as per the order passed by this Court dated 05.05.2015, all the parties to the MoS shall have to comply with and/or fulfill their respective obligations as mentioned in the MoS dated 04.05.2015. As observed hereinabove, the disputes were commercial disputes and therefore all the parties to the disputes agreed to resolve all their disputes, which culminated into the MoS and thereafter the order passed by this Court.

Reasoning: 8.1 At the outset, it is required to be noted that as such the present proceedings are filed by the respective parties to the MoS dated 04.05.2015, which subsequently was made the order passed by this Court dated 05.05.2015 to initiate appropriate proceedings against each other under the provisions of the Contempt of Courts Act. It is not in dispute that all were parties to the MoS/consent order9. The entire object and purpose of entering into the settlement was to resolve all the disputes between the parties. Therefore, it is the duty of the Court that the settlement entered into between the parties and the consent order passed by this Court should be given effect to in its letter and spirit. All the parties to the consent terms are required to fully comply with the terms of settlement/consent terms and the consent order. One party cannot be permitted to say that that portion of the settlement which is in their favour be executed and/or complied with and not the other terms of the settlement/consent terms/consent order9.1 From the facts narrated hereinabove and even otherwise considering the relevant clauses of the MoS and the obligations to be fulfilled by the respective parties to the MoS, it appears 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. It appears that Seth Group have already paid Rs.9.40 crores against the total libaiility of Rs.25.27 crores towards EDC liability against the total liability of Rs.59.05 crores of TFIPL as per Clause 1.2. It appears that 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. From the material on record, it appears 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 it is the liability of the TIDCO and not the Mittal Group and in the MoS there is no specific term and the obligation that the said amount is to be paid by the Mittal Group. It is required to be noted that all the terms and conditions/obligations of the Seth Group, Mittal Group and TFIPL are required to be read conjointly. The license Nos. 34, 35 and 36 of 2007 are required to be transferred in favour of Seth Group. It appears that TFIPL acquired some land at Sector 70 and some 48.03 acres of land at Sector 89, Faridabad. TFIPL also availed licenses Nos. 34, 35 and 36 from the competent authorities in the year 2007 in respect of land bearing at Sector 89 with an intent to develop the Sector 89 land. Subsequently, however , both the parties – Seth Group and Mittal Group agreed that it would be the best that the development of the said land be divided and carried out separately and thereupon the development rights in the Sector 89 land parcel of 48.03 acres of land belonging to TFIPL was sold in the manner mentioned as under: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 is naturally required to be paid by Mittal Group/TFIPL. 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 TFIPL 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 proxies9.2 As observed hereinabove, as per the 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. As observed hereinabove, 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).