The direction came on a petition filed by Arcelor Mittal alleging contempt on the part of the Essar companies for wilfully disobeying the orders of the High Court by neither depositing the ordered amount with High Court nor furnishing a bank guarantee.
Arcelor Mittal was compelled to approach the High Court as the two 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 EHPL.
Arecelor had 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 the 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.
The dispute between the parties was that the Essar companies 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.
Source: Barandbench
