- Bench - Justice Mukta Gupta
- Appellant - Dholi Spintex Pvt. Ltd.
- Respondent - Louis Dreyfus Company India Pvt. Ltd.
Issues
• The plaintiff Dholi Spintex Pvt. Ltd. prayed for an injunction order restraining the defendant-Louis Dreyfus from proceeding with and/or continuing with and/or participating in any manner whatsoever in the proceedings with the ICA – International Cotton Association – since the latter was accused of being involved in underhand dealings with the ICA
Facts
1. Dholi Spintex prays for a temporary injunction restraining the defendant-Louis Dreyfus from proceeding with and/or continuing with and/or participating in any manner whatsoever in the proceedings referred to as ICA initiated before the International Cotton Association including making any payments pursuant to the directions of the ICA in its email dated 24 th September, 2020.
2. When this application came up before the Court on 28th September, 2020 this Court besides issuing notice in the application, passed the an order issuing show cause notice to the Managing Director of the defendant as to why proceedings under the Contempt of Court Act be not initiated against him.
3. Pursuant to a contract dated 30th May, 2019 which provided in Clause-6 of the agreement that in case of any dispute arising out of this contract, the same will be resolved through arbitration in accordance with the ICA Rules and ICA procedure, venue of the arbitration being London, Louis Dreyfus invoked the technical arbitration before the ICA on 13th April, 2020 and appointed its nominee arbitrator
4. On 29th April, 2020 ICA wrote to Dholi Spintex informing the request for arbitration and asking Dholi Spintex to nominate its arbitrator in 14 days. Since Dholi Spintex failed to nominate its arbitrator, on 2nd June, 2020 ICA appointed the nominee arbitrator for Dholi Spintex being Mr.David Adcroft.
5. On 11th June, 2020 Louis Dreyfus filed its claim before the ICA which was responded by Dholi Spintex on 6 th July, 2020 requesting for 30 days for necessary action citing COVID-19 situation. On 16th July, 2020, Louis Dreyfus submitted its reply to Dholi Spintex‟s jurisdictional objections to the Arbitral Tribunal and on 20th July, 2020 ICA wrote to Dholi Spintex to reply to/provide additional comments received from Louis Dreyfus. Dholi Spintex did not reply to the Tribunal and instituted the suit being CS (Comm.) 286/2020 before this Court seeking a decree of declaration declaring Clause-6 of the Contract dated 30th May, 2019
Appellant’s Contentions
1. Learned Senior Counsel for the plaintiff at the start of hearing pointed out that an email has been received by the plaintiff informing that there has been some participation on behalf of the defendant before the ICA.
2. The message from the Tribunal notes that a document was being looked into by the ICA Tribunal for which the defendant through a call informed the ICA Secretariat where the document was located.
3. Therefore, Dholi Spintex prays for a temporary injunction restraining the defendant-Louis Dreyfus from proceeding with and/or continuing with and/or participating in any manner whatsoever in the proceedings referred to as ICA initiated before the International Cotton Association (in short „ICA‟) including making any payments pursuant to the directions of the ICA in its email dated 24th September, 2020.
4. The plaintiff has been constrained to file the present application in view of the communication now received from the ICA dated 24th September, 2020 which indicates that the Tribunal is publishing an Award on 2nd October, 2020 however, the Award will not be released until payment of an additional deposit of £4277.50p received from either of the parties.
Respondent’s Contentions
1. Learned counsel appearing on behalf of the defendant at the start of hearing pointed out that an email has been received by the plaintiff informing that there has been some participation on behalf of the defendant before the ICA.
2. The message from the Tribunal notes that a document was being looked into by the ICA Tribunal for which the defendant through a call informed the ICA Secretariat where the document was located.
3. Learned counsel for the defendant states that defendant would abide by his statement and would issue a clarification to the Tribunal that pending decision in the applications before this Court, the defendant is not participating in the proceedings before the ICA.
4. Learned counsel for the defendant states that the defendant had written a letter intimating their statement made before this Court on 31st July, 2020. Learned counsel for the defendant further states that the defendant will also communicate to the Tribunal the order of this Court dated 1st September, 2020.
Judgement
The Court holds that Mr. Madhu Sharma is guilty of violating the undertaking before the Court. However, the Court will not be proceeding further to initiate a criminal contempt proceedings against Mr. Madhu Sharma for filing contrary affidavit before this Court.
Relevant Paragraphs
• 8. From the email sent to ICA Tribunal on 4 th August, 2020 it is evident that defendant did not abide by its undertaking made before this Court on the 31st July, 2020 and fully participated in the proceedings before the ICA thereby wilfully disobeying the undertaking. Further, Louis Dreyfus also did not abide by the undertaking and direction dated 1st September, 2020 as it did not issue the clarification to the ICA that it will not participate in the proceedings. The undertakings as given before this Court and directed to be communicated was communicated only on 24th September, 2020 by which time proceedings before Arbitral Tribunal had already concluded and it was informed to the parties to furnish the balance fee and that the award will be available on 2nd October, 2020.
• 9. From a reading of the orders as noted above and the email dated 4th August, 2020, it is evident that the defendant has wilfully not complied the undertaking before this Court on 31st July, 2020 as also on 1 st September, 2020 and hence Mr.Madhu Sharma is guilty of contempt of Court. 10. To worsen the things further Louis Dreyfus's Director/CFO, that is, Mr.Madhu Sharma has filed two contradictory affidavits before this Court.
• 11. Thus the case of Mr. Madhu Sharma in his affidavit to the show cause notice is that the e-mail dated 4th August, 2020 is bona-fide, inadvertent and non-deliberate. It is claimed that on 10th June 2020 Louis Dreyfus had initiated the arbitration and filed its claim with supporting documentary evidence much prior to the institution of the suit. The arbitration between Louis Dreyfus and Dholi Spintex was a document only arbitration to be decided in a time bound manner. Dholi Spintex filed the present suit on 27th July, 2020 and informed the ICA of the filing of the suit on 28th July, 2020 at 06:48 hours and requested the Arbitral Tribunal not to proceed with the arbitration until the outcome of the present suit. On 28th July, 2020 at 17:05 hours the Tribunal through ICA sought certain information from the parties.
• 12. It is in the light of these facts when the suit came up for hearing for the first time on 31st July, 2020, the learned counsel for Louis Dreyfus made a statement that since both the parties had submitted to the jurisdiction of the Arbitral Tribunal constituted under the ICA bye-laws, the defendant is not required to take any further steps thereon. However, Mr. Yadav did not file the reply to the ICA mail dated 28th July, 2020 on the 29th July, 2020 or even 30th July, 2020 or 31st July, 2020.
• 15. Louis Dreyfus being a company, different officers of the company cannot take different stands and come up with the plea now being taken up that Mr. Madhu Sharma did not know what the officers/managers were doing. Further the explanation of Louis Dreyfus now rendered that the statement made by the counsel on 31st July, 2020 was on the ground that Dholi Spintex and Louis Dreyfus had submitted to the jurisdiction of Arbitral Tribunal constituted under the ICA bye-laws is also clearly an afterthought. Not only Louis Dreyfus has disobeyed the undertaking before this Court but from the subsequent orders it would also be evident that Louis Dreyfus continued with its action before the Tribunal
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