Arcelor Mittal files contempt petition before Bombay High Court over ₹80 crore security payable by Essar

Arcelor Mittal Nippon Steel India has filed a contempt petition before the Bombay High Court related to a previous order in which Essar Services India Private Limited (ESIPL) and Essar House Private Limited (EHPL) were directed to deposit ₹80 crore as security deposit in an arbitration dispute. .The dispute between the parties was that ESIPL and EHPL 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..Arcelor Mittal (formerly Essar Steel India) was compelled to approach the High Court as the 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 EHCL respectively.They 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 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.This was challenged by the concerned Essar companies before the Supreme Court, where they also sought an urgent stay on the order of the High Court. .Meanwhile, Arcelor filed the present plea alleging contempt on the part of the Essar companies for wilfully and deliberately disobeying the orders of the High Court by not depositing the ordered amount in High Court nor furnishing a bank guarantee. Their plea stated that approaching the Supreme Court along with Essar companies' earlier actions only indicated their attempts to buy additional time and delay following the directions of the High Court. .The Bench of Justices SJ Kathawalla and Milind Jadhav today asked Arcelor whether the Essar companies had given any undertaking which had been breached. The same was categorically denied by Arcelor. The Bench then asked why Arcelor did not choose to file an execution application if there was no undertaking breached. Appearing for Arcelor, Senior Advocate Birendra Saraf informed the Court that it wanted affidavits from from ESIPL and EHCL stating on record that they had no means to make the Court-directed deposits. Advocate Ashish Kamath interjected, stating that Essar had always made its inability to make the payments clear, which had been recorded in the single-judge as well as the Division Bench orders. Saraf, however, pointed out that there were receivables to ESIPL and EHCL from companies which they had not disclosed, and sought for an order to have such disclosure..On this submission, the Bench directed ESIPL and EHCL to file an affidavit within two weeks placing on record the current status of all receivables and what steps they are taking to recover the same. .For Arcelor Mittal, Saraf was instructed by Shardul Amarchand Mangaldas & Co. led by Partner Rishab Gupta and Principal Associate Sairam Subramanian and Associate Swagata GhoshKamat was instructed by Naik Naik & Co Partners Ameet Naik and Abhishek Kale, Manager Mansi Nair and Attorney Avdhoot Prabhu.