Bombay High Court directs Essar directors to appear before Court in Arcelor Mittal contempt plea

The Bombay High Court on Thursday directed the directors of Essar Services India Private Limited (ESIPL) and Essar House Private Limited (EHPL) to remain personally present in Court tomorrow in a contempt of court petition [Arcelor Mittal Nippon Steel India Ltd v. Essar House Private Limited and Essar Services India Private Limited].A Bench of Justices GS Patel and Madhav Jamdar took exception to the conduct of the Essar companies."If these companies believe they can go around disobeying orders of this Court without consequence they are mistaken. The consequences of this disobedience will now be visited, inevitably, on the directors of the Respondents (Essar)," the Court said. For the reason that contempt proceedings are quasi criminal in nature, the Bench directed the directors to personally remain present in Court at 10.30 am on Friday..The direction came on a petition filed by Arcelor Mittal alleging contempt on the part of the Essar companies for wilfully disobeying the orders of the High Court by neither depositing the ordered amount with High Court nor furnishing a bank guarantee.Arcelor Mittal was compelled to approach the High Court as the two Essar companies' failure to repay the refundable security deposit raised serious doubts about their financial ability. The amount in question was a refundable security deposit payable upon termination of the two agreements executed with ESIPL and EHPL.Arecelor had approached the High Court with an interim application under Section 9 of the Arbitration and Conciliation Act seeking depositing of the amount in the High Court before the commencement of the arbitration process.A single-judge of the High Court had in December 2020 directed the deposit of the security amount, which was upheld by a Division Bench.The dispute between the parties was that the Essar companies had refused to return the interest-free security deposit on the grounds that they unilaterally novated their obligation in the bilateral agreement, which purportedly set-off their liability to make any repayment to Arcelor Mittal..The Bench also called for a complete disclosure on assets on affidavit - which included a list of all bank accounts and income tax returns. The alternative to this, the order stated, was for Essar to deposit 50% of the amount due by it. .Senior Advocate Dr Birendra Saraf with Advocates Karl Tamboly, Rishab Gupta, S Subramanian & Swagata Ghosh briefed by Shardul Amarchand Mangaldas, appeared for Arcelor.Advocates Cyrus Ardeshir, Akshay Puranik, Abhishek Kale, Devashish Tiwari and Soumya Gulati briefed by Naik Naik & Co appeared for Essar companies.[Read order]