RELIANCE COMMUNICATION LIMITED & ORS. versus STATE BANK OF INDIA & ORS. on 20 February 2019

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[2019] 4 S.C.R.

ARELIANCE COMMUNICATION LIMITED & ORS.

v.

STATE BANK OF INDIA & ORS.

(Writ Petition (Civil) No. 845 of 2018)

With

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(Contempt Petition (C) No. 1838 of 2018, 55 of 2019 and 185 of 2019in W.P.(C) No. 845 of 2018)

FEBRUARY 20, 2019

[R. F. NARIMAN AND VINEET SARAN, JJ.]

CContempt of Courts Act, 1971 – s.12(4) – Agreement betweenEricsson and Reliance Communications (RCom) – Ericsson agreedto provide managed services, i.e., operation, maintenance, andmanagement of RCom’s network – It raised invoices, however onreceiving no payment, ultimately issued notices – Notices replied bythree Reliance Companies (RCom and its group companies, RelianceDTelecom Ltd. & Reliance Infratel Ltd. – Understanding reached formaking payment of the outstanding invoices – However, even thisunderstanding fell through – Ericsson terminated the agreementcalling upon the three Reliance Companies to pay the outstandingamount in full – Ericsson filed three applications u/s.9, InsolvencyECode – National Company Law Tribunal (NCLT) appointed threeInterim Resolution Professionals to carry out the corporateinsolvency resolution process – In appeal, NCLAT by order dtd.30.05.2018, stayed the orders – Statement of counsel appearing onbehalf of the Reliance Companies that the matter was agreed to besettled for a sum of INR 550 crore, which would be paid within 120Fdays’ time – Undertakings filed – Writ petition filed by the threeReliance Companies before Supreme Court seeking quashing/closureof the corporate insolvency resolution process in view of settlementof disputes – By order dt. 03.08.2018, Supreme Court recorded thatthe timeline of 120 days shall be strictly adhered to and payment ofGINR 550 crore is to be made on or before 30.09.2018 – Pursuant tothe order, undertakings dt.09.08.2018 given by the Chairmen ofthese Companies in Supreme Court, however, stating that the sumof INR 550 crore will be paid “upon sale of assets of the company”–First contempt petition filed by Ericsson– Reliance Companiesapplied for extension of time for payment by 60 days – Supreme H

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Court inter alia ordered that as a last opportunity, the amount mustbe paid on or before 15.12.2018 – Second application to extendtime – Dismissed, as withdrawn – Second contempt petition filed byEricsson for non-payment of INR 550 Crore on or before15.12.2018– Third contempt petition filed by Ericsson – Held: Orderdt. 03.08.2018 clearly recorded that the payment of INR 550 crorewill be made on or before 30.09.2018, and an undertaking was tobe given by the Chairmen of the Reliance Companies to that effect– Order separately noted that the sale of assets will continue, asstated in the orders of the NCLT and the NCLAT– Undertakingsthat were to be given by the Chairmen of the Reliance Companiesconcerned were only that the payment of INR 550 crore was to bemade on or before 30.09.2018 – There was no linkage with anysale of assets of these Companies – However, a perusal of theseundertakings would show that they are contrary to the undertakingsgiven by the authorized persons of these very Companies pursuantto the NCLAT order dt.30.05.2018– Those undertakings wereunconditional, however, these undertakings are now conditionalupon sale of assets of the Companies – Statements made by RComand its group companies that they were “disabled” from paying theamount of INR 550 crore plus interest; that they “were and are unableto pay”; is belied by the letter dt. 21.01.2019 written by theadvocates of the Reliance Companies inter alia stating that the fullpayment would be made by 31.01.19 if two conditions were metnamely, withdrawal of contempt petitions and withdrawal ofarbitration proceedings – The three Reliance Companies had nointention, at the very least, of adhering to the time limit of 120 daysor to the extended time limit of 60 days plus, as given by way ofindulgence – Undertakings given on the footing that the amount ofINR 550 crore would be paid only out of the sale of assets was falseto the knowledge of the three Reliance Companies and was adeliberate misstatement made with the purpose of circumventing theorders of Supreme Court – This itself affects the administration ofjustice, and is therefore, contempt of court – In the facts of thepresent case, wilful default is made out – However, contempt petitionagainst the Chairman of SBI would not lie inasmuch as the Ericssontransaction and the sale of assets by the Joint Lenders’ Forum arecompletely independent of each other – The three RelianceCompanies are guilty of contempt of this Court – Contempt of this A

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ACourt needs to be purged by payment of the sum of INR 550 croretogether with interest till date – As stated in the letter dt. 21.01.2019,subject to any calculation error, INR 453 crore must be paid toEricsson in addition to the deposit of INR 118 crore made in theRegistry of Supreme Court – Registry to pay over the sum of INR118 crore to Ericsson within one week from today – RCom group isBdirected to purge the contempt of this Court by payment to Ericssonof the sum of INR 453 crore within four weeks from today – Indefault, the Chairmen who have given undertakings to SupremeCourt will suffer three months’ imprisonment – In addition to theaforesaid sum being paid, a fine amounting to INR 1 crore for eachCCompany must also be paid to the Registry within four weeks fromtoday, which sum will be paid to the Supreme Court Legal ServicesCommittee – In default, the Chairmen of these Companies will sufferone month’s imprisonment – Insolvency & Bankruptcy Code, 2016.

Disposing of the Contempt Petitions, the Court

Disposing of the Contempt Petitions, the Court DHELD: 1.1 The undertaking makes it clear that theunderstanding of the three Reliance Companies with regard tothe NCLAT order dated 30.05.2018 was that a sum of INR 550crore will be paid by 30.09.2018 without there being any linkageto sale of assets, as separately stated in the order. Even otherwise,reading the order as a whole, it is clear that whereas INR 550Ecrore had to be paid within 120 days, sale of assets could takeplace at any time in the future without any time limit beingmentioned. This being the case, it is futile to contend that thisorder itself made it clear that the sum of INR 550 crore was to beobtained only from sale of assets. Both the undertakings as wellFas a plain reading of the NCLAT order, militate against any suchlinkage. [Para 8][82-G-H; 83-A-B]

1.2 The order dated 03.08.2018 clearly recorded that thepayment of INR 550 crore will be made on or before 30.09.2018,and an undertaking was to be given by the Chairmen of theReliance Companies to that effect. The order separately notedGthat the sale of assets will continue, as has been stated in theorders of the NCLT and the NCLAT. A reading of this order alsoleaves no manner of doubt that the undertakings that were to begiven by the Chairmen of the Companies concerned were onlythat the payment of INR 550 crore was to be made on or before H

30.09.2018. There is no doubt whatsoever that there was nolinkage with any sale of assets of these Companies. Despite theaforesaid position being clear, on 09.08.2018, the affidavits ofundertaking, in pursuance of Supreme Court’s order dated03.08.2018, were given by the Chairmen of the RelianceCompanies. Similar undertakings were filed on behalf of theChairmen of the other two Reliance Companies. A perusal of theseundertakings would show that they are contrary to theundertakings given by the authorized persons of these veryCompanies pursuant to the NCLAT order dated 30.05.2018.Whereas those undertakings were unconditional, theseundertakings are now conditional upon sale of assets of theCompanies. These undertakings have obviously not been givenin accordance with Supreme Court’s order dated 03.08.2018. Tofurther compound this misdemeanor, an application to extendtime by 60 days was moved on 27.09.2018, in which the samelinkage was made to sale of assets before the sum of INR 550crore could be paid. Ericsson immediately protested in the formof a contempt petition, being the first contempt petition that wasfiled on 01.10.2018, in which it was clearly pointed out that thesaid undertaking would show contumacious behavior coupled withthe fact that the Reliance Companies were wriggling out of thecommitment made to Supreme Court. When the first contemptpetition and the first application for extension of time came upfor hearing before Supreme Court, vide order dated 23.10.2018,it was made clear that as a matter of indulgence, a last opportunitywould be granted to pay the aforesaid sum on or before15.12.2018, making it clear that this is conditional upon paymentof interest of 12% per annum for delayed payment beyond30.09.2018. It was also made clear that no further extension wouldbe granted and that Ericsson may revive the petition for contemptif payment is not so made. This order again leads to only oneconclusion – that the averment made in the application forextension of time that the sum of INR 550 crore will be paid outof sale of assets was not accepted by this Court, as sale of assetscould have taken place even beyond 15.12.2018. This furtherbecomes clear from the fact that the contempt petition would berevived if this payment were not to be made, i.e., it would beopen for Ericsson to contend that the undertaking given to this AB

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ACourt was not as per this Court’s order, and that there had beenwilful and contumacious default on part of the RelianceCompanies. [Paras 9,10][83-B-E; 84-F-H; 85-A-D]

1.3 When a further application for extension of time wasmade on the selfsame ground, Supreme Court made it clear byBits order dated 13.12.2018 that in view of the order passed on23.10.2018, no further extension of time could be granted, andrevival of the contempt petition would necessarily follow. As aresult of this, this I.A. was dismissed as withdrawn on the saiddate. Meanwhile, in parallel proceedings, Supreme Court did itsutmost to lend a helping hand, so that, independently of theseCorders, sale of assets could also be affected. The DoT was calledbefore this Court and was asked to give its NOC for sale ofspectrum. However, it was pointed out that this NOC could onlybe given according to certain guidelines, one of which mandatedthat the buyer of the spectrum would have to undertake that itDwould be responsible for payment of the erstwhile debts of theseller. The sale of spectrum to Reliance Jio, therefore, did notfructify, not because the DoT wrongfully refused to give its NOC,as has been alleged by the Reliance Companies in their pleadingsfiled in this case. It fell through only because the prospectivebuyer, Reliance Jio, refused to give the undertaking that if calledEupon, 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 wasfiled in view of non-payment of the sum of INR 550 crore on orbefore 15.12.2018. Contempt Petition No.185 of 2019 dated F05.02.2019 was filed pointing out two subsequent facts. First,that by a letter dated 21.01.2019, the Reliance Companies werewilling to pay the entire sum of INR 550 crore with interest if twoconditions were met, namely, withdrawal of contempt petitionsand withdrawal of arbitration proceedings. Ericsson replied on23.01.2019, stating that this could only be done by moving anGapplication before this Court as contempt proceedings werepending. Secondly, this petition points out that, maliciously, insteadof moving such appropriate application, from 01.02.2019 onwards,an about-turn was taken, and Ericsson was left in the lurch as adecision was taken by the three Reliance Companies that theH

corporate insolvency resolution process could be revived.[Para 13][86-B-D]

corporate insolvency resolution process could be revived.[Para 13][86-B-D]

1.5 The undertakings given on 09.08.2018 by the threeChairmen of the three Reliance Companies were neither as perthe Court’s understanding of its order dated 03.08.2018, nor theunderstanding of the three Companies themselves, as is clearfrom the undertakings given by the three Directors pursuant tothe order dated 30.05.2018. In this view of the matter, it is clearthat the three Reliance Companies had no intention, at the veryleast, of adhering to the time limit of 120 days or to the extendedtime limit of 60 days plus, as was given by way of indulgence, bythe order dated 23.10.2018. The undertakings given on thefooting that the amount of INR 550 crore would be paid only outof the sale of assets was false to the knowledge of the threeReliance Companies. This itself affects the administration ofjustice, and is therefore, contempt of court. Despite the RelianceCompanies’ continuous protestations to the contrary, the letterdated 21.01.2019 from the advocate for the three RelianceCompanies made it clear that the entire payment would be madeby 31.01.2019, albeit on fulfilment of two conditions. In their replyto the Contempt Petition No.55 of 2019, RCom and its groupcompanies had stated that they were “disabled” from paying theamount of INR 550 crore plus interest; that they “were and areunable to pay”. Obviously, the letter dated 21.01.2019 by theadvocates on behalf of the Reliance Companies would belie eachof the aforesaid statements made in the said reply affidavit. Thethree Reliance Companies have wilfully not paid the sum of INR550 crore plus interest and have thus breached the undertakingsgiven 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 inthis Court by the Chairman of RCom to Contempt Petition No.55 of 2019 is the statement that RCom has not taken or receivedany advantage on account of the undertaking submitted beforethis Court. This, again, is a wholly incorrect statement, given thefact that a writ petition was filed in this Court seeking quashingof the corporate insolvency resolution process on settlement ofthe matter with Ericsson, which could not be achieved withoutsuch undertaking being given to this Court. Any unconditional AB

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Aapology given that there was no intention to make any wrongfulundertaking or that the undertaking was submitted bona fide mustbe rejected. It is clear that this reply affidavit clearly demonstratesthe cavalier attitude of the deponent of this affidavit to the highestcourt of the land. To say that the sum of INR 550 crore would bepaid only out of sale of assets of the three Reliance Companies isBa deliberate misstatement made in the undertakings as well asthe applications for extension of time filed before this Court, whichwas done with the purpose of circumventing the orders of thisCourt. In the facts of the present case, wilful default is made out.INR 550 crore plus interest was to be paid without any linkage toCsale of assets within a fixed time limit. As is clear from the letterdated 21.01.2019, the Reliance Companies are able to pay thisamount, 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 SBIwould not lie inasmuch as the Ericsson transaction and the saleDof assets by the Joint Lenders’ Forum are completelyindependent of each other. Also, the statement made in paragraph18 of the Contempt Petition No. 185 of 2019 that, “alltherespondents in the contempt petition were bound to have handed

over the amount of INR 550 crore to the petitioner on or beforeE15.12.2018 ……” is patently incorrect inasmuch as respondentno. 4 (SBI) has nothing to do with this amount of INR 550 crorewhich had to be paid over to Ericsson only by the three RelianceCompanies. The contempt petition against the Chairman of SBIis, therefore, dismissed. [Para 22][92-G-H; 93-A-B]F1.8 The contempt of this Court needs to be purged bypayment of the sum of INR 550 crore together with interest tilldate. As stated by the letter dated 21.01.2019, subject to anycalculation error, an amount of INR 453 crore must be paid toEricsson in addition to the deposit of INR 118 crore made in the Registry of Supreme Court. The Registry of this Court is directedGto pay over the sum of INR 118 crore to Ericsson within a periodof one week from today. The RCom group is directed to purgethe contempt of this Court by payment to Ericsson of the sum ofINR 453 crore within a period of four weeks from today. In defaultof such payment, the Chairmen who have given undertakings toHthis Court will suffer three months’ imprisonment. In addition to A

the aforesaid sum being paid, a fine amounting to INR 1 crore foreach Company must also be paid to the Registry of this Courtwithin four weeks from today. This sum will be paid over to theSupreme Court Legal Services Committee. In default of paymentof such fine, the Chairmen of these Companies will suffer onemonth’s imprisonment. [Para 24][95-C-F]

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Lakshman Prasad Agarwal v. Syed Mohammad Kareem2009 (6) SCALE 413; Rosnan Sam Boyce v. B.R. CottonMills 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.Dharam Godha (2003) 11 SCC 1; Dinesh Kumar Guptav. United India Insurance Co. Ltd. (2010) 12 SCC770 : [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.

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Attorney-General v. British Broadcasting Corporation[1980] 3 All ER 161; Attorney-General v. LevellerMagazine Ltd. and Ors. [1979] 1 All ER 745; PatelRajnikant Dhulabhai v. Patel Chandrakant Dhulabhai(2008) 14 SCC 561 : [2008] 10 SCR 1169; NooraliBabul 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 ChandubhaiGordhanbhai (1976) 2 SCC 951 : [1976] 2 SCR 786 –referred to.

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Case Law Reference

2009 (6) SCALE 413[1990] 2 SCR 381[1979] 3 SCR 685(2003) 11 SCC 1[2010] 13 SCR 599(1994) 4 SCC 34(2016) 15 SCC 164

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[2019] 4 S.C.R.

CIVIL ORIGINAL JURISDICTION: Writ Petition (Civil) No.B845 of 2018.

Under Article 32 of the Constitution of India.

WITH

Contempt Petition (C) Nos. 1838 of 2018, 55 of 2019 and 185 of2019 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,DMs. Divyya Kapur, Ms. Megha Karnwal, Bharath Gangadharan, KauserHusain, 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,Ehaving been filed by Ericsson India Pvt. Ltd. [“Ericsson”] againstReliance Communications Ltd. [“RCom”], Reliance Telecom Ltd.[“RTL”], and Reliance Infratel Ltd. [“RITL”] [hereinafter, collectivelyreferred to as the “Reliance Companies” or “Companies”].

2. The brief facts necessary to appreciate these matters are asFfollows:

On 25.01.2013, Ericsson and RCom entered into a ManagedService Agreement whereby Ericsson agreed to provide RCom managedservices, i.e., operation, maintenance, and management of RCom’snetwork. Ericsson raised invoices from time to time in consideration ofservices provided, and on receiving no payment, ultimately issued threeGnotices, each dated 07.05.2017, under the Insolvency and BankruptcyCode, 2016 [“Insolvency Code”] to the three Reliance Companies,calling upon them to pay an amount of INR 9.78 crore. These noticeswere replied to on 19.05.2017, whereby the three Reliance Companiesstated that the performance of Ericsson had been inconsistent. After H

this date, discussions took place between the parties, and an understandingwas reached for making payment of the outstanding invoices. However,even this understanding fell through, and on 07.09.2017, Ericsson issueda letter to the three Reliance Companies, terminating the agreementbetween them, and calling upon them to pay the outstanding amount infull. At this stage, on 08.09.2017, Ericsson filed three applications underSection 9 of the Code as operational creditors. On 15.05.2018, theNational Company Law Tribunal [“NCLT”] admitted the aforesaidpetitions and appointed three Interim Resolution Professionals on18.05.2018 to carry out the corporate insolvency resolution process. Atthis stage, appeals were filed against the NCLT order. The NationalCompany Law Appellate Tribunal [“NCLAT”], by order dated30.05.2018, stayed the orders dated 15.05.2018 and 18.05.2018 passedby the NCLT, and recorded the statement of counsel appearing on behalfof the Reliance Companies that the matter had been agreed to be settledfor 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 Ericssonwere to file respective affidavits of undertaking in terms of the statementsmade before the NCLT. These undertakings were so filed in June, 2018.At this stage, the three Reliance Companies filed a writ petition in thisCourt on 17.07.2018 in which they asked for quashing/closure of thecorporate insolvency resolution process in view of settlement of disputesbetween them and Ericsson. In this writ petition, by an order dated03.08.2018, this Court heard learned counsel who appeared on behalf ofRCom and its group companies, and recorded that the timeline of 120days shall be strictly adhered to and payment of INR 550 crore is to bemade on or before 30.09.2018. Undertakings to this effect were to befiled before this Court by Chairmen of the Companies concerned. Theundertakings that were given by the Chairmen of these Companies,pursuant to this order, were dated 09.08.2018 and are a serious bone ofcontention between the parties in that these undertakings stated that thesum 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 movedby Ericsson, in which it was expressly stated that the undertakings werenot in terms of this Court’s order and that the Companies aforestatedhave no intention of abiding by their commitment to pay the necessarysum of money within the time stated. Meanwhile, on 27.09.2018, theReliance Companies applied for extension of time for payment by 60

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Adays, expressly stating that since sale of other spectrum had not reacheda stage of completion, in order to enable the Companies to make payments,they would require this extension. Both the application for extension andthe 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 amountmust be paid on or before 15.12.2018, and that interest at the rate ofB12% per annum would also have to be paid for delayed payment beyond30.09.2018. It was also made clear that the petition for contempt maybe revived if payment is not so made by this date. A second applicationto extend time was moved on 12.12.2018, citing the same excuse ofother spectrum not yet being saleable. This time, extension of time wasCasked for making the payment within two weeks from the date on whicha No-Objection Certificate [“NOC”] is given by the Department ofTelecommunications [“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 datedD21.01.2019 was written by the advocates of the three RelianceCompanies, who stated that on 09.01.2019, INR 118 crore had alreadybeen deposited with the Registry of this Court, and that the totaloutstanding, as on date, together with interest, would be roughly INR570 crore. This letter specifically states that the net figure of INR 453Ecrore would be paid by 31.01.2019, conditional upon withdrawal of thetwo contempt petitions (a second contempt petition, being ContemptPetition No. 55 of 2019, was also filed on 02.01.2019) and upon withdrawalof pending arbitration proceedings. This was replied to by the advocatesof Ericsson, stating that an appropriate application may be moved in theSupreme Court, as once notice of contempt is issued, the Court aloneFcan pass necessary orders to effectuate the settlement. However, on01.02.2019, the RCom group wrote to various stock exchanges, makingit clear that they will now not resist the corporate insolvency resolutionprocess that had hitherto been stayed. This led to the filing of a thirdcontempt petition, namely, Contempt Petition No. 185 of 2019, in which,Gvarious prayers were asked for, including issuance of a notice of contemptagainst the Chairman of the State Bank of India [“SBI”], who headedthe Joint Lenders’ Forum comprising of 46 financial creditors of theRCom group.

3. Shri Dushyant Dave, learned Senior Advocate appearing onbehalf of Ericsson, painstakingly took us through the NCLAT order datedH

30.05.2018 as well as our orders. According to the learned SeniorAdvocate, the administration of justice has been sought to be interferedwith by the Reliance Companies in two ways. First and foremost, thepayment of INR 550 crore to his client was not conditional upon sale ofspectrum as is clear from all the orders passed. In fact, this was theunderstanding of the NCLAT order dated 30.05.2018 by the RelianceCompanies, as was clear from the undertakings that were filed by theirDirectors pursuant to this order. However, mischievously, the undertakingsfiled pursuant to this Court’s order dated 03.08.2018 brought in thiscondition for the first time, and was directly contrary to this Court’sorder dated 03.08.2018. He argued that this was the occasion for movingthe first contempt petition on 01.10.2018 in which this was pointed out.He also argued that the reply made to the contempt petition, togetherwith the correspondence between the parties, would show that no bonafide 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 beliedby their own advocates’ letter dated 21.01.2019, in which it was statedthat full payment would be made within a period of 10 days. He, therefore,argued that both on account of furnishing false undertakings to this Courtas well as wilfully breaching the said undertakings and this Court’s orders,the administration of justice has been sought to be interfered with. Hecited judgments in order to buttress these contentions.

4. On the other hand, Shri Mukul Rohatgi and Shri Kapil Sibal,learned Senior Advocates appearing on behalf of RCom, and RITL andRTL, respectively, have argued that at best, if the settled amount of INR550 crore, in the place of INR 1500 crore, was not paid to Ericsson, thecorporate insolvency resolution process, which was stalled, would beginafresh, and Ericsson would then stand in line as an operational creditorto claim the entire sum of INR 1500 crore. In any case, it is also obviousfrom the NCLAT order dated 30.05.2018, which was referred to by theorders of this Court, that the sum of INR 550 crore was to be paid fromthe sale of assets of the corporate debtor, which is part and parcel of theorder dated 30.05.2018. The undertakings given by the Chairmen of thethree Reliance Companies, dated 09.08.2018, are therefore, in accordancewith 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 werenot in accordance with these orders, no complaint was ever made byEricsson, which went along with the undertakings. They also arguedthat, throughout, the three Reliance Companies did their best to pay INR

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A550 crore, as is clear from the correspondence between the parties andtheir conduct. Also, as recently as 07.01.2019, the moment they gotincome tax refunds amounting to INR 118 crore, this sum was depositedin the Registry of this Court, in compliance of this Court’s orders.Therefore, according to them, there was no breach of undertakings, norhas there been any wilful default. Despite their best efforts, the DoTBinsisted on adhering to certain guidelines, as a result of which, it did notgive its NOC for sale of spectrum, and therefore, it had now becomeimpossible for the three Reliance Companies to pay the aforesaid amount.The very fact that they have now succumbed to the corporate insolvencyresolution process going forward would show their bona fides. In anyCcase, they stated that they are still ready and willing to pay whateverthey can, by way of income tax refunds. Another sum of INR 129 crorehas now come by way of income tax refunds, which can be furtheradjusted. Also, an extremely recent refund order of INR 134 crore canalso be used in part payment of the sum of INR 550 crore. Thus, a totalsum of INR 391 crore, out of INR 550 crore, can, in fact, be paid as ofDtoday. All this would show that they are doing their best to make thispayment, and therefore, cannot be characterized as wilful defaulters.They also made a fervent prayer that the special leave petition and thewrit petition should be dismissed as withdrawn, as the inevitable hasnow occurred, and the corporate insolvency resolution process has toEnow go forward. They also cited various judgments to buttress theirsubmissions.

5. Shri Neeraj Kishan Kaul, learned Senior Advocate appearingon behalf of the Chairman, SBI, has argued that the Joint Lenders’ Forum,being allowed to sell assets outside of the corporate insolvency resolutionFprocess has nothing to do with the Ericsson transaction. According tohim, prayers (c) and (j) of the Contempt Petition No. 185 of 2019 are notreliefs that can be given in a contempt petition. Also, it is whollyunnecessary to file an affidavit stating the total amount received fromsale of assets of the corporate debtors post the settlement dated30.05.2018. Equally, prayer (j), asking for a direction for SBI to bring inGamounts due and payable so as to purge itself of contempt does not lieagainst the Joint Lenders’ Forum in view of the fact that the Ericssontransaction 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

The order of the NCLAT, dated 30.05.2018, states:

“These appeals have been preferred by the Appellants-Directorsand Shareholders of ‘Reliance Infratel Ltd.’; ‘Reliance TelecomLtd.’ and ‘Reliance Communications Ltd.’ against the commonorders dated 15th May, 2018 and 18th May, 2018, passed by theAdjudicating Authority (National Company Law Tribunal),Mumbai Bench, Mumbai, whereby and whereunder, theapplication(s) under Section 9 of the Insolvency and BankruptcyCode, 2016 (hereinafter referred to as “I&B Code”) preferredby the Respondent- ‘Ericsson India Pvt. Ltd.’- (‘OperationalCreditor’) have been admitted, order of ‘Moratorium’ has beenpassed and ‘Insolvency Resolution Professional’ has beenappointed.

Apart from the ground that an arbitration proceeding is pendingand the Hon’ble Supreme Court has passed an order, some othergrounds have also been taken to assail the impugned orders.

2. The ‘Financial Creditors’- ‘Joint Lenders Forum’, someother Banks and ‘Ericsson India Pvt. Ltd.’- (‘OperationalCreditor’) have appeared. It is informed that interests of a numberof Banks are involved who are awaiting the decision of thisAppellate Tribunal as they intend to recover the amount.

3. Mr. Tushar Mehta, learned Senior Counsel for the ‘JointLenders Forum’- (‘Financial Creditors’) submitted that they havereached an agreement with the ‘Corporate Debtors’ for sale ofassets of the ‘Corporate Debtors’, pursuant to which, the ‘FinancialCreditors’ 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.

4. According to them, in view of the impugned order, theBank is not in a position to recover the amount and there isrecurring loss of more than crores per day.

5. Mr. Rajeeve Mehra, learned Senior Counsel appearingon behalf of the ‘Standard Chartered Bank’ has also taken similarplea and supported the stand taken by the learned Senior Counselfor the ‘Joint Lenders Forum’.

6. Mr. Kapil Sibal, learned Senior Counsel appearing onbehalf of the Appellants submitted that if the impugned order isstayed and/or set aside, the parties may settle the matter.

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7. The case was taken up yesterday (29th May, 2018) andon the request of the parties, the case was adjourned to find outwhether the Appellants and the ‘Operational Creditors’ can settlethe matter.

8. Mr. Salman Khursid, Mr. Arun Kathpalia and Mr. AnilKher, learned Senior Counsel appear on behalf of the ‘OperationalCreditors’ in the respective cases. They submitted that theRespondent- ‘Ericsson India Pvt. Ltd.’- (‘Operational Creditor’)has agreed to settle the matter if affront payment of Rs. 600Crores (Rupees Six hundred Crores Only) is made by theAppellants/’Corporate Debtors’.

9. Mr. Kapil Sibal, learned Senior Counsel for the Appellantsinformed that the Appellants have agreed to pay a sum of Rs. 550Crores (Rupees five hundred fifty Crores only) (jointly) in favorof ‘Ericsson India Pvt. Ltd.’- (‘Operational Creditor’) and soughtfor 120 days’ time to pay the total amount.

10. Learned Senior Counsel appearing on behalf of ‘EricssonIndia Private Limited’- (‘Operational Creditor’), on instructionsfrom the Respondent, informed that the 1st Respondent has agreedto receive a sum of Rs. 550 Crores (Rupees Five hundred fiftyCrores only), if the total amount is paid within 120 days as proposedby the learned Senior Counsel for the Appellants.

11. Taking into consideration the stand taken by the partiesand 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 Appellantshave made out a prima facie case, as agreed and suggested bylearned Senior Counsel for the Appellants and learned SeniorCounsel for the ‘Joint Lenders Forum’ and the learned SeniorCounsel for the ‘Operational Creditor’- ‘Ericsson India Pvt. Ltd.’,we pass the following orders:

i. Until further orders, the impugned orders dated 15th May,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 allowthe managements of the ‘Corporate Debtors’ to function. Hemay attend the office of the ‘Corporate Debtors’ till furtherorder is passed by this Appellate Tribunal. Thereby, the‘Corporate Insolvency Resolution Process’ initiated against the ‘Corporate Debtors’ namely— ‘Reliance Infratel Ltd.’;‘Reliance Telecom Ltd.’ and ‘Reliance Communications Ltd.’shall remain stayed, until further orders.

ii. The ‘Financial Creditors’/’Joint Lenders Forum’ with whomthe assets of the ‘Corporate Debtors’ have been mortgagedas also the ‘Corporate Debtors’ are given liberty to sell theassets of the ‘Corporate Debtors’ and to deposit the total amountin the account of the lead Bank of Joint Lenders Forum whichshall be subject to the decision of these appeals. If the appealsare rejected, in such case, the ‘Financial Creditors’/’JointLenders Forum’ and other Banks with whom the amount isdeposited, will have to return the total amount in the respectiveaccounts of the ‘Corporate Debtors’.

iii. The Chairman, Managing Directors, Directors and othermembers of the ‘Corporate Debtors’ namely— ‘RelianceInfratel Ltd.’; ‘Reliance Telecom Ltd.’ and ‘RelianceCommunications Ltd.’ are directed to pay a sum of Rs. 550Crores (Rupees Five Hundred Fifty Crores Only) (jointly) infavour of ‘Ericsson India Pvt. Ltd.’ within 120 days i.e. by30th September, 2018. In case of non-payment of the amountand part of the same, the concerned appeal(s) may be dismissedand this Appellate Tribunal may direct to complete the‘Corporate Insolvency Resolution Process’ and may passappropriate order. The payment of Rs. 550 Crores (RupeesFive Hundred Fifty Crores Only) in favour of the ‘OperationalCreditor’ shall be subject to the decision of these appeals. Ifthe appeals are dismissed, the ‘Operational Creditor’ will payback the amount to the ‘Corporate Debtors’.

12. The Appellants and the ‘Operational Creditors’ are directedto file their respective affidavits of undertaking in terms of theirstatement 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 fileInterlocutory Application if orders and directions given above arenot complied. Interlocutory Application Nos. 701-702, 709-710and 712-713 of 2018 stand disposed of with aforesaid observationsand directions.

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The order of the Supreme Court, dated 03.08.2018, states:“Applications seeking exemption from filing certified copy of theimpugned orders are allowed.

Permission to file Appeals is granted.

Applications for impleadment are allowed.

Reading the interim Order dated 30.05.2018 of the NationalCompany Law Appellate Tribunal, it is clear that Ericsson IndiaPvt. Ltd., who is an Operational Creditor, is willing to settle itsdebt of over Rs. 1500 Crores for a sum of Rs. 550 Crores (RupeesFive Hundred Fifty Crores only) which is to be paid within 120days from the date of that order i.e. by 30th September, 2018.

Having heard Mr. P. Chidambaram, learned Senior Counsel forNeptune Steel Strips Ltd. and Mahima Mercantile Credits Ltd.,Mr. Kapil Sibal, learned Senior Counsel for RelianceCommunications Limited & Ors. and Mr. Tushar Mehta, learnedASG for Joint Lenders Forum/SBI, we are of the view that thistime-line shall be strictly adhered to and payment of Rs. 550 Crores(Rupees Five Hundred Fifty Crores only) be made on or before30th September, 2018.

In the meanwhile, the undertaking that is to be given by theChairman of the Company concerned shall be given within a periodof one week from today.

Mr. Tushar Mehta, learned ASG appearing for the Joint LendersForum agrees to this. Mr. Dushyant Dave, learned Senior Counselfor Ericsson India Pvt. Ltd. also agrees to it.

In this view of the matter, list on Monday, the 1st October, 2018.Needless to say, the sale of the assets concerned will go throughas has been stated in the orders of the Tribunal and AppellateTribunal.

The order of the Supreme Court, dated 23.10.2018, states:“I.A. No. 141871/2018:

The applicants in this I.A. state that - thanks to a situation whichis beyond their control - they have not been able to make therequisite payment on or before 30.09.2018 in accordance withthe undertaking given to this Court.

At the request of Mr. Kapil Sibal, as a last opportunity, we makeit clear that the amount that is to be paid to Mr. Dave’s client shallbe paid on or before 15.12.2018. We also make it clear that interestshall begin ticking on this amount at the rate of 12% p.a. for delayedpayment beyond 30.09.2018.

We make it clear that no time beyond 15.12.2018, in any case,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.

Pending applications, if any, stand disposed of.

The order of the Supreme Court, dated 13.12.2018, states:

“IA No. 180453/2018 in W.P. (C.) No. 845/2018 is dismissed aswithdrawn.

List the matters on Friday, the 14th December, 2018.

xxx xxx xxx”

7. A perusal of the NCLAT order dated 30.05.2018 would showthat the financial creditors’/Joint Lenders’ Forum stated that they havereached an agreement with the corporate debtors for the sale of assetsof the corporate debtors, pursuant to which they can recover a sum ofINR 18,100 crore. Also, from restructuring and sale of further assets, afurther sum of INR 37,000 crore could be recovered, which would thensuffice to pay off the entire debt of the secured creditors. This orderalso recorded that Ericsson had agreed to settle the debt in its favour(which amounted to roughly INR 1500 crore) for the sum of INR 550crore within a period of 120 days. As a result of this, the erstwhilemanagement continued in the saddle; the corporate insolvency resolutionprocess was stayed until further orders; the financial creditors’/JointLenders’ Forum was given liberty to sell assets of the corporate debtorsand to deposit the amount so received in an account of the lead bank,i.e., SBI; and the sum of INR 550 crore was directed to be paid by30.09.2018. It was made clear that in case of non-payment, the concernedappeals may be dismissed, and the NCLAT may direct the completionof the corporate insolvency resolution process. In any case, the amountso deposited with the financial creditors’/Joint Lenders’ Forum would A

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Abe subject to the decision of these appeals, and that if the appeals aredismissed, the financial creditors’/Joint Lenders’ Forum will pay backthis amount to the corporate debtors. Most importantly, the corporatedebtors and creditors were directed to file their respective affidavits ofundertaking in terms of the statements recorded.

B8. At this stage, it is important to set out one sample undertakingthat has been filed on behalf of one of the Reliance Companies, i.e., bythe Director of RITL. This affidavit of undertaking reads as follows:“BEFORE THE NATIONAL COMPANY LAW APPELLATETRIBUNAL, NEW DELHI

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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, 36[th] 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 RelianceInfratel Ltd. in the above said matter and as such I am wellacquainted with all the facts and circumstances of the caseand am fully competent to swear this affidavit for the RelianceInfratel Ltd.

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2) That I am giving this affidavit cum undertaking on behalf ofthe Reliance Infratel Ltd. pursuant to the order of this Hon’bleTribunal dated 30.05.2018.

3) That the Reliance Infratel Ltd. alongwith RelianceCommunications Ltd. and Reliance Telecom Ltd. and theirFrespective directors shall jointly pay a sum of Rs.550 Crores(Rupees Five Hundred Fifty Crores Only) to Ericsson IndiaPvt. Ltd. (Operational Creditors) within a period of 120 daysi.e. by 30[th] September, 2018.

xxx xxx xxx”GThis undertaking makes it clear that the understanding of the threeReliance Companies with regard to the NCLAT order dated 30.05.2018was that a sum of INR 550 crore will be paid by 30.09.2018 withoutthere being any linkage to sale of assets, as separately stated in theorder. Even otherwise, reading the order as a whole, it is clear thatwhereas INR 550 crore had to be paid within 120 days, sale of assetsH

could take place at any time in the future without any time limit beingmentioned. This being the case, it is futile to contend that this order itselfmade it clear that the sum of INR 550 crore was to be obtained onlyfrom sale of assets. Both the undertakings as well as a plain reading ofthe NCLAT order, militate against any such linkage.

9. On 03.08.2018, the writ petition that was filed before this Courtwas taken up. It is important to note that this writ petition expresslystates that this Court was approached so that it could pass orders underArticle 142 of the Constitution of India to quash/close the corporateinsolvency resolution process, which no other court or tribunal could do.This was done on the footing that the parties have “fully, mutually, andfinally settled all the disputes between them” as has been noted in theNCLAT order dated 30.05.2018. When this writ petition came up forhearing, the order dated 03.08.2018 clearly records that the payment ofINR 550 crore will be made on or before 30.09.2018, and an undertakingwas to be given by the Chairmen of the Reliance Companies to thateffect. The order separately noted that the sale of assets will continue,as has been stated in the orders of the NCLT and the NCLAT. A readingof this order also leaves no manner of doubt that the undertakings thatwere to be given by the Chairmen of the Companies concerned wereonly that the payment of INR 550 crore was to be made on or before30.09.2018. There is no doubt whatsoever that there was no linkagewith any sale of assets of these Companies.

10. Despite the aforesaid position being clear, on 09.08.2018, theaffidavits of undertaking, in pursuance of this Court’s order dated03.08.2018, were given by the Chairmen of the Reliance Companies. Asample undertaking, filed by the Chairman of RCom, reads as follows:

“IN THE SUPREME COURT OF INDIA

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AFFIDAVIT OF UNDERTAKING/COMPLIANCE

I, Anil Dhirubhai Ambani, S/o Late Shri Dhirajlal DhirubhaiHirachand Ambani, aged about 60 years, residing at 39, ‘Sea Wind’,Cuffe Parade Colaba, Mumbai – 400005, do hereby solemnlyaffirm and state on oath as under:

1. That I am the Chairman of the Reliance CommunicationsLimited (“Company”), the holding company of Reliance TelecomLimited and Reliance Infratel Limited, the Petitioners in the above A

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AWrit Petition, I am well acquainted with the facts of the caseand as such I am competent to swear this affidavit.

2. By order dated 30 May, 2018, the Hon’ble National CompanyLaw Appellate Tribunal (“NCLAT”) by way of an interim orderrecorded settlement between the parties and permitted sale ofBthe assets for repayment to the banks. Pursuant to the saidorder, the Petitioner gave an Undertaking dated 1[st] June 2018before the NCLAT inter alia stating as under:

“that the Reliance Infratel Ltd. alongwith RelianceCommunications Ltd. and Reliance Telecom Ltd. and theirrespective Director shall jointly pay a sum of Rs.550 Crores(Rupees Five Hundred Fifty Crores only) to Ericson IndiaPvt. Ltd. (Operational Creditors) within a period of 120days i.e. 30[th] September, 2018.”

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3. In the Petitions filed before this Hon’ble Court for ordersunder Article 142 of the Constitution of India to be able to proceedDwith the sale and to effectuate the settlement, this Hon’ble Courtpassed the following order:

“......In the meanwhile, the undertaking that is to be givenby the Chairman of the Company concerned shall be givenwithin a period of one week from today.”

E4. Accordingly, in light of the order of this Hon’ble Court dated3[rd] August, 2018, read with the order of the Hon’ble NCLATdated 30[th] May, 2018, I hereby undertake that upon the sale ofthe assets of the Company, the Company and its directors willhonour their undertaking extracted above.”

FSimilar undertakings were filed on behalf of the Chairmen of theother two Reliance Companies. A perusal of these undertakings wouldshow that they are contrary to the undertakings given by the authorizedpersons of these very Companies pursuant to the NCLAT order dated30.05.2018. We have seen that whereas those undertakings wereunconditional, these undertakings are now conditional upon sale of assetsGof the Companies. These undertakings have obviously not been given inaccordance with this Court’s order dated 03.08.2018. To furthercompound this misdemeanor, an application to extend time by 60 dayswas moved on 27.09.2018, in which the same linkage was made to saleof assets before the sum of INR 550 crore could be paid. Contrary toHShri Rohatgi’s argument, Ericsson immediately protested in the form of a contempt petition, being the first contempt petition that was filed on01.10.2018, in which it was clearly pointed out that the said undertakingwould show contumacious behavior coupled with the fact that theReliance Companies were wriggling out of the commitment made to thisCourt. When the first contempt petition and the first application forextension of time came up for hearing before this Court, this Court, videorder dated 23.10.2018, made it clear that as a matter of indulgence, alast opportunity would be granted to pay the aforesaid sum on or before15.12.2018, making it clear that this is conditional upon payment of interestof 12% per annum for delayed payment beyond 30.09.2018. It was alsomade clear that no further extension would be granted and that Ericssonmay revive the petition for contempt if payment is not so made. Thisorder again leads to only one conclusion – that the averment made in theapplication for extension of time that the sum of INR 550 crore will bepaid out of sale of assets was not accepted by this Court, as sale ofassets could have taken place even beyond 15.12.2018. This furtherbecomes clear from the fact that the contempt petition would be revivedif this payment were not to be made, i.e., it would be open for Ericssonto contend that the undertaking given to this Court was not as per thisCourt’s order, and that there had been wilful and contumacious defaulton part of the Reliance Companies.

11. When a further application for extension of time was made onthe selfsame ground, this Court made it clear by its order dated 13.12.2018that in view of the order passed on 23.10.2018, no further extension oftime could be granted, and revival of the contempt petition wouldnecessarily follow. As a result of this, this I.A. was dismissed aswithdrawn on the said date.

12. Meanwhile, in parallel proceedings, this Court did its utmost tolend a helping hand, so that, independently of these orders, sale of assetscould also be affected. The DoT was called before this Court and wasasked to give its NOC for sale of spectrum. However, it was pointed outthat this NOC could only be given according to certain guidelines, one ofwhich mandated that the buyer of the spectrum would have to undertakethat it would be responsible for payment of the erstwhile debts of theseller. The sale of spectrum to Reliance Jio, therefore, did not fructify,not because the DoT wrongfully refused to give its NOC, as has beenalleged by the Reliance Companies in their pleadings filed in this case. Itfell through only because the prospective buyer, Reliance Jio, refused to AB

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Agive the undertaking that if called upon, it would pay the erstwhile debtsof 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 ofnon-payment of the sum of INR 550 crore on or before 15.12.2018.BContempt Petition No.185 of 2019 dated 05.02.2019 was filed pointingout two subsequent facts. First, that by a letter dated 21.01.2019, theReliance Companies were willing to pay the entire sum of INR 550crore with interest if two conditions were met, namely, withdrawal ofcontempt petitions and withdrawal of arbitration proceedings. Ericssonreplied on 23.01.2019, stating that this could only be done by moving anCapplication before this Court as contempt proceedings were pending.Secondly, this petition points out that, maliciously, instead of moving suchappropriate application, from 01.02.2019 onwards, an about-turn wastaken, and Ericsson was left in the lurch as a decision was taken by thethree Reliance Companies that the corporate insolvency resolution processcould be revived.D

14. The law of contempt has been recognized in English law atleast from the 12[th] Century A.D. to the present time [see The History ofContempt of Court: The Form of Trial and the Mode of Punishment bySir John C. Fox, at page 1]. It is always important to bear in mind, aswas stated in Attorney-General v. British BroadcastingECorporation, [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 isnot to protect the dignity of the courts or the judges but to protectFthe 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 thatthe ancient but misleading term “contempt of court” disappearedGfrom 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

“…… It is justice itself that is flouted by contempt of court, notthe individual court or judge who is attempting to administer it.

(at page 749)

15. It is also important to remember that while considering thequestion of disobedience of an order, what must be regarded is the letterand the spirit of the order, together with the bona fide or genuine beliefof the alleged contemnor as to such order [see Lakshman PrasadAgarwal v. Syed Mohammad Kareem, 2009 (6) SCALE 413 atparagraph 5].

16. In Rosnan Sam Boyce v. B.R. Cotton Mills Ltd., (1990) 2SCC 636, this Court referred to a party who gave an undertaking basedon an implication or assumption which was false to its knowledge. ThisCourt held:

“9. …… We are, of course, quite conscious of the fact that theproceedings in the contempt are quasi-criminal in nature, that thelaw of contempt has to be strictly interpreted and that therequirements of that law must be strictly complied with beforeany person can be committed for contempt. However, as we havepointed out, respondent 1 gave an undertaking based on animplication or assumption which was false to its knowledge andto the knowledge of respondent 2. Respondent 2 was equallyinstrumental in the giving of this undertaking. This implication orassumption was made explicit by the clarification given by thelearned counsel for respondent 1 as set out earlier. Respondent 2was equally responsible for instructing counsel to give thisclarification which was false to the knowledge of both, respondents1 and 2. Both respondent 1 and respondent 2 have tried to deceivethe court and the appellant. In view of this, we fail to see how itcan be said that they are not guilty of contempt.……”

Finally, the Court directed the court receiver to take possession ofthe suit premises from the tenant/sub-tenant and hand it over to thelandlord, as agent, so that the contempt committed be purged.

17. We have seen from the above narration of facts that theundertakings given on 09.08.2018 by the three Chairmen of the threeReliance Companies were neither as per the Court’s understanding ofits order dated 03.08.2018, nor the understanding of the three Companiesthemselves, as is clear from the undertakings given by the three Directorspursuant to the order dated 30.05.2018. In this view of the matter, it is A

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Aclear that the three Reliance Companies had no intention, at the veryleast, of adhering to the time limit of 120 days or to the extended timelimit of 60 days plus, as was given by way of indulgence, by the orderdated 23.10.2018. The undertakings given on the footing that the amountof INR 550 crore would be paid only out of the sale of assets was falseto the knowledge of the three Reliance Companies. This itself affectsBthe administration of justice, and is therefore, contempt of court. What isof greater relevance is the fact that, despite the Reliance Companies’continuous protestations to the contrary, the letter dated 21.01.2019 fromthe advocate for the three Reliance Companies made it clear that theentire payment would be made by 31.01.2019, albeit on fulfilment of twoCconditions. This letter is of great importance and is set out in entiretyhereinbelow:

“21 January, 2019

To,

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DSUB: COMPLETION OF SETTLEMENT

Dear Sir,

We are concerned for our clients Reliance CommunicationsLimited (RCom), Reliance Infratel Limited (RITL) and RelianceTelecom Limited (RTL, and collectively with RCom and RITL,Ethe RCom Group), who have instructed us to write to you onbehalf of your client Ericsson India Private Limited (Ericsson) asunder:

1. The Hon’ble Supreme Court has vide its order dated 3 August,2018 in Writ Petition (C) No. 845 of 2018, recorded the settlementarrived at between the RCom Group and Ericsson before theHon’ble National Company Law Appellate Tribunal (NCLAT)on 30 May, 2018, pursuant to which Rs.550 crores was to bepaid to Ericsson by 30 September, 2018 as full and final settlementof all dues and claims.

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2. Vide its order dated 23 October, 2018, the Hon’ble SupremeCourt extended the date for the RCom Group to make paymentto Ericsson and directed that interest at 12% p.a. on such amountto be paid from 1 October, 2018. As on 31 January 2019, suchinterest would amount to Rs.20.016 crores being an amount ofRs.22.24 crores less TDS of Rs. 2.224 crores.

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3. Thus, the total net amount payable by the RCom Group toEricsson 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 withthe Registry of the Supreme Court on 9 January, 2019 (DepositedPayment), pursuant to the Hon’ble Supreme Court’s order dated7 January, 2019.

5. The RCom Group will make the balance net settlementpayment of Rs.452.016 crores (Balance Settlement Payment)in favour of Ericsson on 31 January, 2019 to complete all theirpayment obligations to Ericsson.

6. Ericsson is therefore required to:

a. Withdraw Contempt Petition (Civil) Diary No.122/2019 andContempt Petition (C) No.1838/2018 in W.P.(C) No.845/2018filed on its behalf, immediately upon receipt of the BalanceSettlement Payment and towards the same, prepare and sendfor our consideration and for us to mutually agree by 29January, 2019, the draft application to be made to the Hon’bleSupreme Court for withdrawal of the said Contempt Petitions; b. Withdraw all its claims and contentions as per the Arbitrationbetween RCom and its affiliates, and Ericsson, pending beforethe Hon’ble Arbitral Tribunal comprising Justice Mr. S.B. Sinha,Justice Mr. Swatanter Kumar, and Justice V.S. Sirpurkar, andtowards the same, prepare and sent for our consideration andfor us to mutually agree by 29 January 2019, the draft applicationto be made to the Hon’ble Arbitral Tribunal for withdrawal ofall claims and contentions, and the consequent termination ofproceedings.

c. Sign and return the attached No Dues Confirmationsimultaneous with the Demand Draft for an amount of Rs.452.016 crores, being handed over to Ericsson on 31 January2019.

Yours sincerely,

18. It may be pointed out that in their reply to the Contempt PetitionNo.55 of 2019, RCom and its group companies had stated that theywere “disabled” from paying the amount of INR 550 crore plus interest;that they “were and are unable to pay”; and finally, that:

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39. The Respondents had submitted the Undertaking on behalf ofRCom Group Companies based on the lenders’ consent formonetization of the Other Spectrum for Rs.975 crores and in thegenuine hope and bonafide belief that Asset Monetization SchemeBwould be implemented and Ericsson shall be paid an amount ofRs.550 crores along with interest, however, the same has becomeimpossibleto be achieved.

19. Obviously, the letter dated 21.01.2019 by the advocates onCbehalf of the Reliance Companies would belie each of the aforesaidstatements made in the said reply affidavit. There is, therefore, no doubtwhatsoever that the three Reliance Companies have wilfully not paidthe sum of INR 550 crore plus interest and have thus breached theundertakings given to this Court.

20. Another disturbing feature of the reply affidavit filed in thisDCourt by the Chairman of RCom to Contempt Petition No. 55 of 2019 isthe statement that RCom has not taken or received any advantage onaccount of the undertaking submitted before this Court. This, again, is awholly incorrect statement, given the fact that a writ petition was filed inthis Court seeking quashing of the corporate insolvency resolution processEon settlement of the matter with Ericsson, which could not be achievedwithout such undertaking being given to this Court. We are of the viewthat any unconditional apology given that there was no intention to makeany wrongful undertaking or that the undertaking was submitted bonafide must be rejected. It is clear that this reply affidavit clearlydemonstrates the cavalier attitude of the deponent of this affidavit to theFhighest court of the land.21. However, Shri Rohatgi and Shri Sibal relied upon the followingjudgments:

(i) Babu Ram Gupta v. Sudhir Bhasin, (1980) 3 SCC 47 was acase where an express undertaking to hand over possession to a receiverGwas not given. In this view of the matter, it was held that it would not bepossible to state that the appellant had wilfully disobeyed or committedbreach of such undertaking. This case has no application on facts to thepresent case.

(ii) In Ashok Paper Kamgar Union v. Dharam Godha, (2003)H11 SCC 1, this Court held:

“17. Section 2(b) of the Contempt of Courts Act defines “civilcontempt” and it means wilful disobedience to any judgment,decree, direction, order, writ or other process of a court or wilfulbreach of undertaking given to a court. “Wilful” means an act oromission which is done voluntarily and intentionally and with thespecific intent to do something the law forbids or with the specificintent to fail to do something the law requires to be done, that is tosay, with bad purpose either to disobey or to disregard the law. Itsignifies a deliberate action done with evil intent or with a badmotive or purpose. Therefore, in order to constitute contempt theorder of the court must be of such a nature which is capable ofexecution by the person charged in normal circumstances. It shouldnot require any extraordinary effort nor should be dependent, eitherwholly or in part, upon any act or omission of a third party for itscompliance…….”

This case again has no application to the facts of this case. Wehave seen that right from the beginning, the sum of INR 550 crore wasundertaken to be paid, without having to depend upon any act or omissionof a third party. To say that the sum of INR 550 crore would be paid onlyout of sale of assets of the three Reliance Companies is a deliberatemisstatement made in the undertakings as well as the applications forextension of time filed before this Court, which was done with the purposeof circumventing the orders of this Court. We are also of the view that inthe facts of the present case, wilful default is made out, as has beenpointed 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 ignorean important statutory ingredient of contempt of a civil naturegiven out under Section 2(b) of the Contempt of Courts Act, 1971that the disobedience to the order alleging contempt has to satisfythe test that it is a wilful disobedience to the order. Bearing thisimportant factor in mind, it is relevant to note that a proceedingfor civil contempt would not lie if the order alleged to have beendisobeyed itself provides scope for reasonable or rationalinterpretation of an order or circumstance which is the factualposition in the instant matter. It would equally not be correct toinfer that a party although acting due to misapprehension of the ABC

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correct legal position and in good faith without any motive to defeator defy the order of the Court, should be viewed as a seriousground so as to give rise to a contempt proceeding.

24. To reinforce the aforesaid legal position further, it would berelevant and appropriate to take into consideration the settled legalBposition as reflected in the judgment and order delivered in AhmedAli v. Supdt., District Jail [1987 Cri LJ 1845 (Gau)] as also inB.K. Kar v. High Court of Orissa [AIR 1961 SC 1367 : (1961)2 Cri LJ 438] that mere unintentional disobedience is not enoughto hold anyone guilty of contempt and although disobedience mighthave been established, absence of wilful disobedience on the partCof the contemnor, will not hold him guilty unless the contemptinvolves a degree of fault or misconduct. Thus, accidental orunintentional disobedience is not sufficient to justify for holdingone guilty of contempt. It is further relevant to bear in mind thesettled law on the law of contempt that casual or accidental orunintentional acts of disobedience under the circumstances whichDnegate any suggestion of contumacy, would amount to a contemptin theory only and does not render the contemnor liable topunishment and this was the view expressed also in State of Biharv. 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 asthe only reasonable or rational interpretation of the orders involved inthis case leads to the result that INR 550 crore plus interest was to bepaid without any linkage to sale of assets within a fixed time limit. This isalso not a case of accidental or unintentional disobedience. As is clearFfrom the letter dated 21.01.2019, the Reliance Companies are able topay this amount, but are wilfully refusing to do so. Similarly, the judgmentsin 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 ofthis case are far from cases where directions or orders are impossibleGof compliance.

22. At this stage, we may point out that the contempt petitionagainst the Chairman of SBI would not lie inasmuch as the Ericssontransaction and the sale of assets by the Joint Lenders’ Forum arecompletely independent of each other, as argued by Shri Dave himself,Hand as has been held by us hereinabove. Also, the statement made in paragraph 18 of the Contempt Petition No. 185 of 2019 that, “alltherespondents in the contempt petition were bound to have handed overthe amount of INR 550 crore to the petitioner on or before 15.12.2018……” is patently incorrect inasmuch as respondent no. 4 (SBI) hasnothing to do with this amount of INR 550 crore which had to be paidover to Ericsson only by the three Reliance Companies. The contemptpetition against the Chairman of SBI is, therefore, dismissed.

23. Having held the three Reliance Companies guilty of contemptof this Court, it is now necessary to point out Section 12(4) of theContempt of Courts Act, 1971, which reads as follows:

“12. Punishment for contempt of court.—

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(4) Where the person found guilty of contempt of court in respectof any undertaking given to a court is a company, every personwho, at the time the contempt was committed, was in charge of,and was responsible to, the company for the conduct of the businessof the company, as well as the company, shall be deemed to beguilty of the contempt and the punishment may be enforced withthe leave of the court, by the detention in civil prison of each suchperson :

Provided that nothing contained in this sub-section shall renderany such person liable to such punishment if he proves that thecontempt was committed without his knowledge or that heexercised all due diligence to prevent its commission.

The question now is as to the punishment to be awarded. ShriRohatgi pointed out that in Supreme Court Bar Assn. v. Union ofIndia, (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 toenforce his remedy and there is also an element of public policyfor punishing civil contempt, since the administration of justicewould be undermined if the order of any court of law is to bedisregarded with impunity. Under some circumstances, complianceof the order may be secured without resort to coercion, throughthe contempt power. For example, disobedience of an order topay a sum of money may be effectively countered by attaching AB

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Athe earnings of the contemner. In the same manner, committingthe person of the defaulter to prison for failure to comply with anorder of specific performance of conveyance of property, may bemet also by the court directing that the conveyance be completedby an appointed person. Disobedience of an undertaking may inthe like manner be enforced through process other than committalBto prison as for example where the breach of undertaking is todeliver possession of property in a landlord-tenant dispute. Apartfrom punishing the contemner, the court to maintain the majestyof law may direct the police force to be utilised for recovery ofpossession and burden the contemner with costs, exemplary orCotherwise.”

Thus, disobedience of an order to pay a sum of money may becountered by orders of attachment instead of committal to prison. Onthe other hand, Shri Dave pointed out that this Court had, in ChhaganbhaiNorsinbhai v. Soni Chandubhai Gordhanbhai, (1976) 2 SCC 951,Dheld that in cases of perverse and deliberate flouting of undertakings,the High Court rightly observed that it had no option except to convictthe appellant and sentence him to three months’ imprisonment, with whichthis Court agreed. He also pointed out that in Patel Rajnikant Dhulabhaiv. Patel Chandrakant Dhulabhai, (2008) 14 SCC 561, so-calledapologies, which are only tactful moves when contemnors are in a tightEcorner, should not be accepted and a jail sentence should be awarded[see paragraphs 77 and 78]. He also referred to and relied upon NooraliBabul Thanewala v. K.M.M. Shetty, (1990) 1 SCC 259, where thisCourt held:

“11. When a court accepts an undertaking given by one of theFparties and passes orders based on such undertaking, the orderamounts in substance to an injunction restraining that party fromacting in breach thereof. The breach of an undertaking given tothe court by or on behalf of a party to a civil proceedings is,therefore, regarded as tantamount to a breach of injunction althoughthe remedies were not always identical. For the purpose ofGenforcing an undertaking that undertaking is treated as an orderso that an undertaking, if broken, would involve the sameconsequences on the persons breaking that undertaking as wouldtheir disobedience to an order for an injunction. It is settled lawthat breach of an injunction or breach of an undertaking given toHa court by a person in a civil proceeding on the faith of which the court sanctions a particular course of action is misconductamounting to contempt. The remedy in such circumstances maybe in the form of a direction to the contemnor to purge the contemptor a sentence of imprisonment or fine or all of them. On the factsand circumstances of this case in the light of our finding that therewas a breach of the undertaking we think that mere imposition ofimprisonment or fine will not meet the ends of justice. There willhave to be an order to purge the contempt by directing respondent1-contemnor to deliver vacant possession immediately and issuingnecessary further and consequential directions for enforcing thesame.”

24. Given the facts as aforesaid, we are of the view that thecontempt of this Court needs to be purged by payment of the sum ofINR 550 crore together with interest till date. As stated by the letterdated 21.01.2019, subject to any calculation error, an amount of INR453 crore must be paid to Ericsson in addition to the deposit of INR 118crore made in the Registry of this Court. The Registry of this Court isdirected to pay over the sum of INR 118 crore to Ericsson within aperiod of one week from today. The RCom group is directed to purgethe contempt of this Court by payment to Ericsson of the sum of INR453 crore within a period of four weeks from today. In default of suchpayment, the Chairmen who have given undertakings to this Court willsuffer three months’ imprisonment. In addition to the aforesaid sum beingpaid, a fine amounting to INR 1 crore for each Company must also bepaid to the Registry of this Court within four weeks from today. Thissum will be paid over to the Supreme Court Legal Services Committee.In default of payment of such fine, the Chairmen of these Companieswill suffer one month’s imprisonment.

Contempt Petitions are disposed of, as aforesaid.

Divya Pandey

Contempt Petitions disposed of.

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