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Above: Justice Indira Banerjee was asked to recuse herself from a hotel property case; (left) Royal Plaza Hotel, owned by Ashok G Mittal

With Justice Indira Banerjee reporting an attempt to influence her in a case, threats to judicial fairness are out in the open

~By Venkatasubramanian

In August 30, newly-appointed Supreme Court judge Justice Indira Banerjee, while hearing a civil appeal, disclosed that someone tried to influence her over the phone, but refrained from revealing further details of the caller or what he wanted in connection with the case.

A legal website reported Justice Banerjee as saying that any attempt to influence the Court will be viewed seriously. Justice Arun Mishra, who was sitting on the bench with Justice Banerjee, stated that the attempt to influence her amounted to contempt of court. However, the bench did not initiate any contempt proceedings against the anonymous accused.

Justice Mishra, according to the website, also said that when a judge is in the High Court, nobody dares to approach him, but as soon as he comes to the Supreme Court, people start spreading rumours. Justice Mishra added that judges have been dealing with such attempts for some time now, though he did not elaborate.

Justice Banerjee expressed her anguish that such attempts to influence her were made by senior members of the Bar who came on the pretext of congratulating her and then started talking about pending matters. She said that she “immediately dissuaded such persons from talking about pending matters”. This reflects poorly on the stature of senior members of the Supreme Court Bar.

Senior advocate Shyam Divan, representing one of the respondents in this case, requested Justice Banerjee not to recuse herself from hearing it, else it could be used as a means to get other judges to do so from cases they were handling.

The case in which Justice Banerjee is alleged to have been approached by a party is Ram Parshotam Mittal & Ors v Hotel Queen Road Pvt Ltd and Ors. The case is an appeal against a Delhi High Court judgment, delivered on May 31, 2013, by Justice S Muralidhar in Hillcrest Realty v Hotel Queen Road Pvt Ltd and Ors.

There were three appeals before the High Court under Section 10(F) of the Companies Act, 1956, arising out of an order passed by the Company Law Board (CLB) on January 31, 2006. One of them was by Ashok G Mittal, founder of Litolier Group, Mumbai, and chairman of Royal Plaza Hotel in Delhi.

In 2002, the centre had taken a policy decision to disinvest its shares in India Tourism Development Corporation which owns various hotel properties. One of them was Indraprastha Hotel, formerly known as Ashok Yatri Niwas. In terms of the approved scheme of demerger, the hotel property was transferred to Hotel Queen Road Pvt Ltd (HQR), which was created as a special purpose to enable the disinvestment.

The paid-up capital of HQR was Rs 90 lakh comprising nine lakh equity shares of Rs 10 each. The centre held 89.97 percent of shares, the Indian Hotels Company Ltd (IHCL) 10 percent and the balance of shares were held by others. The centre invited bids for sale of its shares in HQR. Moral Trading and Investment Ltd (Moral), a public limited company, was the successful bidder. By a Share Purchase Agreement (SPA) dated October 8, 2002, Moral acquired the shares of the centre and IHCL, which came to a total of 99.97 equity shares acquired for Rs 45 crore. Of this, Rs 33.37 crore was funded by borrowing/loans from banks. Thus, HQR became Moral’s subsidiary. Moral’s shares were listed on the Delhi Stock Exchange.

RP Mittal and his family members held the controlling interest in Moral. However, Ashok Mittal, the younger brother of RP Mittal, said that the balance sum for the acquisition of shares came from contributions by both of them. Ashok Mittal claimed that while he invested Rs 5.5 crore, RP Mittal brought in Rs 6.23 crore. RP Mittal and his wife, Sarla, were appointed additional directors of HQR on October 8, 2002.

Both became whole-time directors in December 2002.  The Memorandum of Association (MoA) of HQR was altered to increase its authorised share capital to Rs 33 crore. In June 2003, the authorised capital was again altered by increasing the Cumulative Redeemable Preference Shares (CRPS) to Rs 30 crore.

Hillcrest Realty Sdn Bhd (Hillcrest), a company registered in Malaysia, was allotted 28,29,290 CRPS in HQR in two spells—May 5, 2003 and July 19, 2003 against a total investment of Rs 28.29 crore. To fund the redevelopment of the hotel, a term loan of Rs 40 crore was raised from Indian Overseas Bank. The loan was secured by joint personal guarantees of RP Mittal, Sarla Mittal and Ashok Mittal, the collateral security of personal assets of RP Mittal and Sarla Mittal and the corporate guarantee of Moral.

Allotments of equity shares between them led to the dispute.  Hillcrest and Ashok Mittal contended before the CLB that there had been financial mismanagement of HQR by RP Mittal and Sarla Mittal. Secondly, it was contended that Hillcrest had invested in CRPS on the understanding that HQR would remain a subsidiary of Moral and that in the event of HQR failing to pay any dividend for two years, Hillcrest would be entitled to exercise its voting rights on all resolutions. The parties had raised other contentions as well.

In its judgment, the CLB held that Ashok Mittal had failed to produce any document to substantiate his contention that he was instrumental in Hillcrest investing in HQR. Secondly, the CLB held that Hillcrest and Ashok Mittal could not furnish proof of any understanding that Moral would continue to be the holding company of HQR and Hillcrest would be entitled to voting on preference shares in the event dividend was not paid for two years.

Extreme negotiations

Justice Indira Banerjee is not the first Supreme Court judge to admit to have faced pressure tactics by unscrupulous elements while adjudicating a case. In 1997, Justice JS Verma, who later went on to become the chief justice of India, revealed that he and his brother judges, Justices SP Bharucha and SC Sen, were under “tremendous outside pressure” to recuse themselves from hearing Vineet Narain & Ors vs Union of India pertaining to the Jain Hawala scandal.

The US $18 million bribery scandal involved accusations of money being paid to high-ranking politicians and bureaucrats so that they would look the other way while funds were being transferred to Hizbul Mujahideen militants in Kashmir. The news had come to the fore in 1991 with the arrest of two of these militants. The politicians named included LK Advani, VC Shukla, P Shiv Shankar, Sharad Yadav, Balram Jakhar and Madan Lal Khurana, spanning three political parties, the Congress, BJP and JD(U), as well as then Prime Minister PV Narasimha Rao.

Justice Verma famously stated in open court that it was high time that “we must tell of outside pressure on us for quite some time now to see that we recuse ourselves from the case. These things are not going to work. None of us will recuse. All kinds of things are happening, people are trying to reach us first. A person tried to reach me. The same person approached brother SC Sen and he was worried. I asked him to ignore it.”

“The case is with us. We will deal with it the way it should be dealt with,” Justice Verma said.

Justice Verma even said some people connected with the courtroom might be involved in these activities. “Today they contacted brother Bharucha. Their gameplan would never succeed,” he had added.

However, the case fell through due to shoddy investigation. All petitions filed were finally closed due to lack of evidence. The CBI had been in charge of the investigation. Joginder Singh had served as its director between 1996 and 1997.

But as a fallout of the PIL by journalist Narain, the bench ruled that the director of the CBI should be appointed on the recommendations of a committee headed by the central vigilance commissioner, with the Home Secretary and the Secretary in the Department of Personnel as members. The committee should also take the opinion of the incumbent CBI director before forwarding its recommendations to the Cabinet.

The highest respect attached to it notwithstanding, a judge’s job is, therefore, by no means an easy or even a safe one.

The sole object of Hillcrest was to gain control of HQR by removing RP Mittal and Sarla Mittal who had not only given their personal guarantees but also their personal assets as collateral securities and by themselves carried the affairs of the HQR right from the time of acquisition, the CLB held. Consequently, the lawful action taken by term holders having an overwhelming majority of equity shares to “prevent an outsider from taking control of the company” could not be said to be an act of oppression, the CLB held.

Ashok Mittal, being a minority shareholder, was trying to oppress the majority and any action “taken legally to prevent such an occurrence by the majority cannot be considered to be oppressive”, the CLB reasoned.

It, however, directed RP Mittal and Sarla Mittal to transfer shares to Ashok Mittal on the strength of a loan of Rs 5.5 crore given by him to Moral. This led to further litigation between the parties, culminating in the Supreme Court in July 2009.

The Delhi High Court, relying on the 2009 judgment of the Supreme Court, held that the CLB’s finding that the appellants were unable to demonstrate acts of oppression did not hold good. Justice Muralidhar set aside the CLB decision upholding the validity of the Board resolutions of July 27, 2004, January 7, 2005 and May 10, 2005. Independent of the prima facie finding of the Supreme Court that HQR is not a private but a public limited company, the Delhi High Court found that the CLB’s order of January 31, 2006, could not be sustained in law. Besides, the High Court directed filing of a complaint against RP Mittal to initiate an inquiry into the offence of filing false evidence under Section 191 of the Indian Penal Code.

In the Supreme Court, RP Mittal, Sarla Mittal and Moral are the appellants, while Hotel Queen Road Pvt Ltd, Hillcrest, and Ashok Mittal are the respondents. Senior advocate Pinaki Misra represented the appellants, while a galaxy of senior lawyers such as Rakesh Dwivedi, Shyam Divan, Jaideep Gupta and Vikas Singh represented the respondents.

After the disclosure by Justice Banerjee that someone sought to influence her over the phone, the bench concluded the hearing and reserved its judgment in the case.

Although Justice Banerjee decided not to recuse herself from the case, the fact that a party tried to approach a judge on the bench has been considered reason enough for her to do so. In such cases, judges recuse themselves without disclosing the reason to avoid further controversy.  That Justice Banerjee departed from this trend speaks volumes of her courage to take the counsel into confidence by disclosing the fact so that if either of the parties had any grievance about her hearing the matter further, it could be addressed first.

Although the bar has expressed confidence in Justice Banerjee’s neutrality and objectivity in hearing this case, her allegation should be taken to the logical conclusion by the chief justice of India directing an inquiry into it and initiating contempt of court proceedings against the persons found guilty of seeking to influence the judge.

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