Delhi High Court on 20.12.2018, in COASTAL PROJECTS LIMITED& ANR. v IFCI LIMITED & ANR., disposed  of the LPA’S  while upholding that an order given to Serious Fraud Investigation Office for  investigation  falls within the exercise  of  the contempt jurisdiction  by the Judge .

FACTS:

The appellant no. 1  being a Company   and respondent no. 1 had entered  into an agreement where  issuing of  Compulsory Convertible Debentures were agreed upon  through  private placement for cash .At the same time , the promoters  and the respondent No.1  too had entered into two other agreements. According to the agreement terms, the sum had been disbursed to appellant no. 1 by respondent no .1. As a result of  interest repayment default  ,the respondent no.1  requested the  promoters  for  purchasing    the CCDs  while  paying  hundred crores  along with  interest in a stipulated time of 15 days resulting in a dispute.

Being aggrieved, an arbitration clause was invoked by respondent no. 1 thereby appointing an Arbitrator, and while filing a petition as well, wherein by an order of the Court, the appellants were refrained from selling the promoters properties. While the petition was pending, a letter was issued by the respondent to the appellant no.1 as well as to several banks and financial institutions   which conveyed the decision in declaring the company as a ‘wilful defaulter’.

A writ petition was filed against respondent no.1 for  quashing  the abovementioned  letters that was eventually  disposed of  followed  by a promise of  paying hundred crores was made by the appellant through installments .However, upon the failure to abide by the terms of settlement and paying of installment,  an application to modify the order was made which requested in rescheduling the third installment ,  however ,despite that the appellants failed in complying with the orders and also  in terms of the payment resulting in the filing of contempt petition  by the respondent  wherein the appellant company was held  guilty of civil contempt  that was  subsequently  contested by   the  appellants through a recall  application. An order was given to make enquiry into the monetary affairs of the appellants.

DECISION HELD BY THE DELHI HIGH COURT:

The Delhi High Court disposed of the LPA’s by upholding that  the order that had been passed  were within Court’s power as well as the direction given  for investigating by SFIO , although certain modifications were needed in the sections of the  Companies Act, 2013, that should be  communicated to the Central Government  which after examining ,may give directions for  the investigation  while  communicating  such decision to  the Court.

Read Judgment here:

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