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Lawyers Who Sign Pleadings Which...

Lawyers Who Sign Pleadings Which 'Scandalise' Court

Without Existence Of Adequate Grounds Can Be Held
Liable For Contempt: Bombay High Court
Sharmeen Hakim
(/sharmeen-hakim)
26 Dec 2023 4:53 PM

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against the Court without reasonable grounds to create an artificial situation so
that the matter was recused by a judge may be liable for a contempt action, the
Bombay High Court reiterated while contemplating action against two lawyers and
issuing contempt notice against their client.

The division bench comprising Justices Nitin Sambre and NR Borkar added that in
a conflict between a lawyer's obligations to the Court and his duty to the client,
what prevails first is his obligation to the Court.

Also Read - Remedy Under SARFAESI Act Is Not A Bar To Arbitration, Both Remedies Work
In Tandem: Bombay High Court (/high-court/bombay-high-court/remedy-under-sarfaesi-act-
is-not-a-bar-to-arbitration-both-remedies-work-in-tandem-bombay-high-court-245361?
utm_source=internal-artice&utm_medium=also-read)

“It is the duty of the advocates to advise their clients to refrain from making
allegations of such nature,” the court said relying on the SC judgement in M.Y.
Shareef & Another Versus The Hon'ble Judges of the High Court of Nagpur &
Others [1955 SCR (1) 757].

The division bench was dealing with a praecipe (application to circulate the
matter) filed through Advocate Zoheb Merchant, junior of Advocate Minal Jaiwant
Chandnani on behalf of their client/ respondent one Bhisham Hiralal Pahuja.
Enclosed with the precipice was a newspaper article casting aspersions on
Justice Sambre.

Also Read - Debt Owed To Financial Institutions Under SARFAESI Is Arbitrable, Not Debt
Under RDDB Act: Bombay High Court (/high-court/bombay-high-court/debt-owed-to-financial-
institutions-under-sarfaesi-is-arbitrable-not-debt-under-rddb-act-bombay-high-court-245360?
utm_source=internal-artice&utm_medium=also-read)

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and will grant him bail to maintain relations with him. It further stated that a
complaint has been filed against Justice Sambre with the Chief Justice of India.

When questioned in court, Advocate Minal Jaiwant Chandnani, under whom

Advocate Zoheb Merchant works, stood by the contents of the praecipe. However,
after the court observed that the conduct of both lawyers was scandalizing the
Courts and creating an artificial situation so that the matter was not taken up, the
Court recorded that the lawyers had tendered an unconditional apology.

Also Read - Bombay High Court Refuses To Suspend Artist Chintan Upadhyay's Sentence,
Says Evidence Supports Co-Accused's Confession, Bail Wasn't Granted On (/high-
court/bombay-high-court/bombay-high-court-refuses-artist-chintan-upadhyay-sentence-
suspension-double-murder-case-245310?utm_source=internal-artice&utm_medium=also-
read)

The court took strong exception to the conduct of the lawyers. It observed: "when
it was enquired with the Registry as to who has submitted the praecipe, it was
informed that both these lawyers have submitted the praecipe and that time the
Registry had advised them to refrain from doing so. After some time both these
lawyers came back and insisted the Registry to accept the praecipe."

Accordingly, the court has now directed the Pimpri-Chinchwad Commissioner of

Police to ensure service of contempt notice on respondent Bhisham Pahuja and to
submit details of the newspaper 'Rajdharma' which published the scandalous
article.

The court heavily relied on a Supreme Court judgment which held that lawyers
cannot hide behind client instructions when they sign pleadings that scandalize
the court. The court said it will consider whether the unconditional apologies
tendered by the lawyers are bonafide.
 “The Judges
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them free from any personal bias or prejudice. The parties like the aforesaid
lawyers and the litigants to whom they represent create an artificial perception
that by scandalizing the Courts and the Judges they can secure a order of recusal.
In such an eventuality, we are of the view that the lawyers and the litigants who
exhibit such behavior are required to be dealt with an iron hand by taking stern
action,” it concluded.

The matter will next be heard on January 12, 2024.

Click Here To Read/Download Order (https://www.livelaw.in/pdf_upload/ordjud-

2023-12-14t121131535231214121143-2-512238.pdf)

SC Initiates Consultation To Prevent Use Of Harmful Stereotypes Again…

Again…

Tags Justice Nitin Sambre (https://www.livelaw.in/tags/justice-nitin-sambre)

Justice NR Borkar (https://www.livelaw.in/tags/justice-nr-borkar)

contempt action (https://www.livelaw.in/tags/contempt-action)

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Remedy Under SARFAESI Act Is Not A Bar To

Arbitration, Both Remedies Work In Tandem: Bombay
High Court (/high-court/bombay-high-court/remedy-
under-sarfaesi-act-is-not-a-bar-to-arbitration-both-
remedies-work-in-tandem-bombay-high-court-245361)
Ausaf Ayyub
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26 Dec 2023 2:30 PM

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The High Court of Bombay has held that the remedy under the SARFAESI Act is
not a bar to the arbitration proceedings. It held that both the remedies are for
different stages of debt recovery and work in tandem.

The bench of Justice Manish Pitale held that SARFAESI Act does not contain any
provision for the crystallization of the debt and all the proceedings under the Act is
only for the purpose of the enforcement of the crystallized debt, therefore, the
financial institution covered therein can take recourse to the A&C Act for the
purpose of crystallisation of the debt.

Facts

The legal dispute unfolded against the backdrop of a financial arrangement

between the petitioner and the respondents. The petitioner, identified as a financial
institution, had extended loan facilities to the respondents for the acquisition of
vehicles. To formalize this financial relationship, Loan-cum-Hypothecation-cum-
Guarantee Agreements were executed, each of which included a crucial arbitration
clause.

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Initially, the respondents adhered to the terms of the loan agreements by making
timely payments. However, the situation took a downturn when the respondents
started defaulting on their payment obligations. In response to these defaults, a
correspondence ensued between the parties regarding the outstanding amounts.
The tension escalated when the petitioner discovered that one of the financed
vehicles had been sold by the respondents.
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Apprehensive of further defaults and potential disposal of vehicles by the

respondents, the petitioner invoked the arbitration clause contained in the
agreements. To formalize this invocation and seek appropriate remedies, the
petitioner initiated legal proceedings by filing two petitions under Section 9 of the
Arbitration and Conciliation Act, 1996, and an application under Section 11 of the
same Act.

Contentions of the Parties

The respondent raised the following objections to the maintainability of the

petitions:

That the petitioner, being a financial institution under the SARFAESI Act,
should resort to the Debt Recovery Tribunal (DRT). They contended that
arbitration, despite an existing arbitration clause, was not a viable option.

The respondents emphasized the SARFAESI Act's exclusivity and asserted

that the law categorically prohibits arbitration once the special tribunal avenue
is available.

Petitioner countered the objections by making the following submissions:

That the objection to jurisdiction rested on a misinterpretation of the law.

While acknowledged as a financial institution under the SARFAESI Act, the
petitioner asserted that this designation was specific to the SARFAESI Act
and did not extend to the Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 (RDDB Act).

That disputes pertaining to debt determination, a critical aspect for arbitration,

fell outside the SARFAESI Act's purview, making arbitration a legitimate
avenue.

Analysis by the Court

The court emphasized the specificity of the petitioner's financial institution status
under the SARFAESI Act, emphasizing that it did not extend to the RDDB Act.
 The Court iZooto
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crystallization of the debt and all the proceedings under the Act is only for the
purpose of the enforcement of the crystallized debt, therefore, the financial
institution covered therein can take recourse to the A&C Act for the purpose of
crystallisation of the debt.

The Court held that a debt owed to a financial institution covered only under the
SARFAESI Act is arbitrable, however, a debt owed to a financial institution to which
the provisions of RDDB Act also applies is non-arbitrable.

The Court while distinguishing both the acts held that the proceedings under RDDB
Act contains exhaustive provisions for the determination as well as the recovery of
the determined debt, however, SARFAESI Act contains provisions only for the
enforcement of the debt and no provision for the determination/crystallization of
the debt.

Ultimately, the court dismissed the objection raised by the respondents, affirming
that arbitrable nature of disputes. The Court observed that the petitioner had made
out a case for interim measures, accordingly, the Court granted the interim
protection and appointed a receiver to take custody of the vehicles and attached
the bank account of the respondent. The Court also appointed the arbitrator to
adjudicate on the disputes between the parties.

Case Title: Tata Motors Finance Solutions Ltd v. Naushad Khan, Commercial
Arbitration Petition (L) No. 8654 of 2022

Date: 20.12.2023

Counsel for the Petitioner: Mr. Chetan Kapadia, Senior Advocate a/w. Ms. Vidisha
Rohiya, Ms. Ami Brahmbhatt and Ms. Bhavna Dube Patil & Mr. Chetan Kapadia,
Senior Advocate a/w. Ms. Vidisha Rohiya, Ms. Ami Brahmbhatt and Ms. Bhavna
Dube Patil
 Counsel
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Mehul Thakkar, Md. Jamil Khan, Zia Syed and Cavin Gala.

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512217.pdf)

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financial-institutions-under-sarfaesi-is-arbitrable-not-debt-under-rddb-act-bombay-
high-court-245360)

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