Featured image for Supreme Court Judgment dated 09-10-2020 in case of petitioner name Ashish Seth vs Sumit Mittal & Others
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Enforcement of Settlement Agreement: Supreme Court Ruling in Contempt Case

The case of Ashish Seth vs. Sumit Mittal & Others involves a legal dispute arising from the alleged non-compliance with a settlement agreement. This matter was brought before the Supreme Court as a contempt petition due to the failure of the Mittal Group to fulfill their obligations as per the Memorandum of Settlement (MOS) dated 4.5.2015.

The key issue in this case was whether the Mittal Group had willfully disobeyed the directions of the Supreme Court and whether further action under the Contempt of Courts Act was warranted.

Background of the Case

The dispute was between two business groups, the Seth Group and the Mittal Group. They had entered into a Memorandum of Settlement (MOS) on 4.5.2015, which was made a part of the Supreme Court’s order on 5.5.2015. However, allegations were made that the Mittal Group had not complied with their obligations under the MOS.

The Seth Group initiated Contempt Petition No. 34/2016 against the Mittal Group, asserting that they had deliberately and willfully failed to adhere to the settlement agreement and the Supreme Court’s earlier directions.

Pleadings of the Parties

Petitioner’s (Seth Group) Arguments

The Seth Group contended that:

  • The Mittal Group had failed to renew the license numbers 34, 35, and 36 of 2007.
  • Despite the court granting additional time for compliance, the obligations under the MOS had not been met.
  • The Mittal Group was obstructing the renewal process by insisting on unnecessary documentation and failing to make payments.
  • The ultimate sufferers were homebuyers who had invested in the project and were waiting for their homes.

Respondent’s (Mittal Group) Arguments

The Mittal Group defended their actions by stating:

  • The renewal of licenses required specific documents, and the Seth Group had not provided them in a timely manner.
  • They were willing to comply with the MOS but required the necessary approvals and documentation.
  • They intended to avail themselves of the new government policy “Samadhan Se Vikas”, a one-time settlement scheme for outstanding EDC dues.

Supreme Court’s Judgment

The Supreme Court carefully examined the obligations of both parties under the MOS and the previous court orders. The key points in the judgment were:

  • Willful Non-Compliance: The Court found that the Mittal Group had not fulfilled its obligations despite being given ample opportunities.
  • Directions for License Renewal: The Mittal Group was directed to complete the renewal process within two weeks and pay the required renewal license fees.
  • Equitable Responsibility: The Seth Group was required to pay a portion of the liabilities, but the primary obligation remained with the Mittal Group.
  • EDC Liability Settlement: Both groups agreed to avail the Samadhan Se Vikas scheme, requiring them to pay the principal outstanding amount and 25% of the accrued interest, with the remaining interest being waived.
  • Warning of Contempt Action: The Court made it clear that failure to comply with the orders would result in strict action under the Contempt of Courts Act.

Key Observations by the Supreme Court

The Supreme Court emphasized:

“The Mittal Group is hereby specifically warned not to create any further hindrances in getting license numbers 34, 35, and 36 of 2007 renewed. Non-compliance with these directions will be viewed very seriously, warranting action under the Contempt of Courts Act.”

Furthermore, the Court clarified that:

“It is the responsibility of the Mittal Group to ensure compliance with the settlement agreement, and any delay caused due to administrative or financial reasons will not be entertained as an excuse.”

Conclusion

The Supreme Court directed both parties to comply strictly with their respective obligations under the MOS and the court’s orders. The judgment reinforced the importance of honoring settlement agreements and ensuring that obligations to third parties, such as homebuyers, are met without unnecessary delays.

This ruling serves as a precedent on enforcing settlement agreements and upholding the integrity of court orders through contempt proceedings.


Petitioner Name: Ashish Seth.
Respondent Name: Sumit Mittal & Others.
Judgment By: Justice Ashok Bhushan, Justice M.R. Shah.
Place Of Incident: Faridabad, Haryana.
Judgment Date: 09-10-2020.

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