State Trading Corporation Of India Ltd. vs M/S Global Steel Holding Limited .

CIVIL APPEAL No.11907 OF 2018 [Arising out of SLP (C) No.14585 of 2015]

State Trading Corporation of India Ltd. ... Appellant(s)

Versus

M/s Global Steel Holding Limited & Ors. ... Respondent(s)

WITH Contempt Petition(c) No.747 of 2017 IN S.L.P. (c) No.14585 of 2015 AND Contempt Petition(c) No.1058 of 2018 IN S.L.P. (c) No.14585 of 2015 AND Contempt Petition(C) NO………...OF 2018 (D.NO. 24803 OF 2018)

J U D G M E N T Signature Not Verified

Digitally signed by ANITA MALHOTRA Abhay Manohar Sapre, J.

Date: 2018.12.07 14:54:07 IST Reason:

In S.L.P.(C) No.14585/2015 1

1. Leave granted.

2. This appeal is filed against the final judgment

and order dated 09.03.2015 passed by the Delhi

High Court in Execution Petition No.337 of 2014

with EA Nos.697­98 of 2014 and EA Nos.199­200 of

2015 whereby the High Court has dismissed the

Execution Petition and the accompanying

applications filed by appellant ­ STC herein on the

ground of lack of jurisdiction.

3. In order to appreciate the controversy involved

in this appeal, it is necessary to set out the relevant

facts hereinbelow.

4. On 04.04.2005, a tripartite agreement was

entered into between the appellant i.e. State Trading

Corporation a Government­owned Corporation

(hereinafter referred to as “STC”), respondent No.1 ­

M/s Global Steel Holding Ltd. (hereinafter referred

to as “GSHL”), incorporated in the Isle of Man

2 Channel Islands, and respondent No. 2 ­ M/s

Global Steel Philippines Inc., incorporated in the

Philippines (hereinafter referred to as “GSPI”).

Respondent No. 3 is Mr. Pramod Mittal, the

Chairman of the respondent nos. 1 and 2

companies, i.e. GSHL and GSPI. The agreement was

for purchase and sale of commodities known as ­

HR Coils and CR Coils.

5. Mr. Dushyant Dave, learned senior counsel

appeared for the appellant – STC, while the

respondents were represented by Mr. Kapil Sibal,

Senior Advocate along with Mr. Gautam Mittra.

6. In performance of the agreement, disputes

arose between the parties, particularly with respect

to the non­payment of outstanding dues to the

appellant ­ STC. The parties, therefore, decided to

settle their disputes by means of conciliation

proceedings with the assistance of two Conciliators.

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7. The parties (STC, GSHL and GSPI) entered into

a Settlement Agreement under Section 73 of the

Arbitration and Conciliation Act, 1996 (for short

“the Act”) on 15.11.2012. In terms of the

Settlement Agreement, the GSHL and GSPI agreed

to pay a total amount of US$ 355,818,019.29 with

interest @ 13.25% p.a. by 11.05.2012 as per para

(D) of the Settlement Agreement to the appellant –

STC, and in the manner set out in detail in clauses

A to K of the Settlement Agreement.

8. The GSHL and GSPI paid some amounts

pursuant to the Settlement Agreement to STC.

However, they failed to ensure full compliance with

the terms of the Settlement Agreement dated

15.11.2011 and committed default in paying full

payment to appellant ­ STC.

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9. The parties therefore entered into a Further

Settlement Agreement dated 17.05.2012 through

the intervention of the Conciliators.

10. As per the Further Settlement Agreement

dated 17.05.2012, GSHL and GSPI agreed to pay a

total amount of US $ 347,737,209.68 inclusive of

interest at the rate of 13.50 % p.a. (Rs.1605 crores

in Indian currency) by 10.11.2010 in the manner

set out in detail in clauses (i) and (vi) of the

agreement to the appellant ­ STC. Both the

Settlement Agreement and the Further Settlement

Agreement were executed by respondent No. 3 ­ Mr.

Pramod Mittal as Chairman of GSHL and GSPI,

respectively.

11. As per Clause 12 (iv) of the Further Settlement

Agreement (supra), respondent No. 3 ­ Mr. Pramod

Mittal furnished a Personal Guarantee dated

17.05.2012 wherein he personally guaranteed

5 payment of the outstanding amount payable by

GSHL and GSPI to the appellant – STC in terms of

the Settlement Agreement dated 15.11.2011

together with interest @ 13.25% p.a. and Further

Settlement Agreement dated 17.05.2012. The said

respondent undertook to pay the outstanding

amount, and stated that the guarantee shall remain

valid till the entire outstanding dues of GSHL and

GSPI were fully discharged.

12. Since GSHL and GSPI failed to fulfill their

complete obligations under the Further Settlement

Agreement dated 17.05.2012, the appellant ­ STC

herein filed an Execution Petition bearing

No.337/2014 in the High Court of Delhi on

30.08.2014 against GSHL (R­1), GSPI (R­2) and Mr.

Pramod Mittal, Chairman, GSHL(R­3) seeking to

execute the Settlement Agreements dated

15.11.2011 and 17.05.2012 against all the

6 respondents for recovery of the balance outstanding

amounts due and payable.

13. The appellant – STC, the decree holder, filed

Execution Applications Nos. 697/2014 and 199­

200/2015. Insofar as application No.697/2014 was

concerned, it was filed under Order 21 Rule 11 (2) of

CPC for attachment and sale of all shares and other

assets of the respondent No.1, with a further prayer

for issuance of warrants of arrest against the

Directors and Principal Officers of respondent Nos.1

and 2 till realization of entire dues.

14. The Delhi High Court vide order dated

09.03.2015, dismissed the Execution Petition along

with the accompanying applications on the ground

that admittedly none of the judgment­debtors is

located within the jurisdiction of the Court. The

Registered Offices of respondent Nos. 1 and 2 were

outside India. The Execution Petition could be

7 entertained by a Court within whose jurisdiction the

judgment­debtors, or their properties were situated.

That since none of them is ordinarily resident within

the jurisdiction of the Court, the Execution Petition

could not be entertained, and was dismissed with

liberty to the decree­holder to approach the

appropriate court for enforcement of the Settlement

Award in accordance with law.

15. Aggrieved by the Order dated 09.03.2015

passed by the Delhi High Court, the appellant ­ STC

(Decree Holder) filed the present Special Leave

Petition before this Court.

16. During the pendency of the Special Leave

Petition, various Orders were passed from time­to­

time directing the respondents to make payments to

STC. The details and break up of payments offered

and then made by the respondents to the appellant

­ STC on different dates are mentioned in the

8 Orders dated 19.08.2015, 21.09.2015, 14.12.2015,

05.2.2016, 06.02.2017, 10.04.2017, 31.07.2017,

22.03.2018, 15.05.2018, 13.08.2018, and

06.09.2018.

17. The Senior Counsel for the respondents, Mr.

Kapil Sibal submitted that an amount of Rs. 810

crores approximately was paid towards the

outstanding liability under the two Settlement

Agreements dated 15.11.2010 and 17.05.2012 to

the appellant ­ STC.

18. When the matter was taken up for final

hearing, the Senior Counsel Mr. Kapil Sibal

appearing for the respondents offered to deposit Rs.

800 crores, without prejudice to their right to

prosecute the case, within 4 weeks to show their

bona fides to the Court.

19. Accordingly, on 31.10.2018, the following

Order was passed:

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“Mr. Kapil Sibal, learned senior counsel appearing for respondent No. 2 in SLP (Civil) No. 14585/2015, during the course of hearing, states that without prejudice to the right to prosecute the case, they are prepared to deposit the sum of Rs. 800,00,00,000/­ (Rupees Eight Hundred Crores) within the period of 4 weeks from today.

Let them so deposit.

It is made clear that non­payment of the amount will be viewed seriously.”

20. That on 29.11.2018, the Senior Counsel for the

respondents brought Demand Drafts for Rs.810

crores in favour of the Decree Holder – STC. The

matter was posted for hearing on 04.12.2018.

21. When the matter was taken up for hearing on

04.12.2018, the Demand Drafts for Rs. 800 crores

were directed to be handed over to the Court Master

in a sealed envelope.

22. With the payment of Rs. 800 crores on

04.12.2018, the respondents have till date

10 deposited an amount of Rs.1610 crores

approximately in INR in discharge of their liability.

23. As a consequence, the entire liability of the

respondents till 10.11.2012 would stand

discharged.

24. The issue which now only remains for

resolution is the interest payable from 10.11.2012

onwards. The interest payable on the outstanding

amounts was left to be determined by the Court, by

the senior counsel appearing for both the parties.

25. At this juncture, we consider it appropriate to

place on record our appreciation of the valuable

assistance provided by both the senior counsel, Mr.

DA Dave and Mr. Kapil Sibal in enabling the parties

to resolve the disputes. The senior counsel

addressed the myriad legal issues which arose in

the case with clarity, persuasiveness, lucidity and

industry.

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26. Learned senior counsel for the respondents

submitted that even though the question with

respect to payment of interest pendente lite, and the

rate of interest, was not the subject­matter of the

original proceeding, it was prayed that this Court

may give a quietus to the long pendency of this

litigation by passing appropriate orders.

27. Both the senior counsel prayed that this

Court, in exercise of its jurisdiction under Articles

136 and 142 of the Constitution, exercise its

extraordinary jurisdiction to determine the amount

payable towards interest, and the period within

which it should be paid.

28. Having heard the learned senior counsel for

the parties, and on perusal of the record, we are of

the considered opinion that it is not necessary to

decide the various legal issues arising in the case

which were ably presented by both the learned

12 senior counsel in support of their case on the

question of jurisdiction of the Delhi High Court in

entertaining and deciding the Execution Petition

filed by the appellant.

29. Since the parties have requested for

termination of these proceedings finally in this

appeal itself, and secondly, the outstanding dues

have already been cleared by the respondents

during the pendency of this appeal though late

leaving only a limited controversy alive regarding

payment of interest, we are of the considered

opinion that there is no legal impediment in

deciding the issue of payment of interest and its

rate in this appeal finally to give quietus to this

litigation.

30. Having given our anxious consideration to all

the aforementioned factors, we are of the view that

the respondents are liable to pay Interest on the

13 principal sum of Rs.1610 crores to the appellant at

rate of 8% per annum payable from 10.11.2012, i.e.

when the entire payment became due.

31. We direct that:

(i) The Demand Drafts for Rs. 800 crores (Rupees

Eight Hundred Crores) furnished by the

respondents, be handed over to STC ­ Decree

Holder;

(ii) A lump­sum amount of Rs.600 crores (Rupees

Six Hundred Crores) worked out on the basis

of 8% S.I. per annum (rounded off) be paid by

the respondents to the appellant towards full

and final satisfaction of the amounts due

under the Settlement Agreement dated

15.11.2010, and Further Settlement

Agreement dated 17.05.2012.

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(iii) The amount of Rs.600 crores be paid by the

respondents to STC towards interest in 12

weeks from the date of this Order.

(iv) Upon payment of the said amount by

28.02.2019, all claims arising out of the two

Settlement Agreements (supra), would stand

finally settled, and put a complete closure to

all pending proceedings of any nature

whatsoever, between the parties, wherever filed

and/or pending against each other.

(v) If, however, the amount of Rs. 600 crores

awarded towards interest is not paid on or

before 28.02.2019, it would amount to

contempt of the Order passed by this Court,

and it would be open to the appellant to take

appropriate action against the respondents in

accordance with law for non­compliance.

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32. In light of the foregoing discussion and the

directions, the appeal, along with all pending

applications, stand disposed of. The contempt

petitions are also disposed of accordingly.

………………………………..J (ABHAY MANOHAR SAPRE)

…..………………………………J. (INDU MALHOTRA) New Delhi, December 06, 2018

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