Accepting the apology, the Delhi High Court last week observed “even if there is no wilful disobedience, yet, carelessness or negligence can also amount to contempt of court”.
The development took place on a petition filed by DM South India Hospitality. According to the company, it had taken a loan of ₹185 crore from L&T Finance in March 2017 of which ₹100 crore was repayable over 15 years.
Tto secure the loan, the company and other pledgors provided security worth over ₹600 crore, including shares of blue-chip companies listed on stock exchanges.
The company alleged that while there was no outstanding of any overdue in the principal amount or interest, L&T Finance sold the pledged shares in April 2019 citing fall in value of securities below the required value of shares.
DM South initiated arbitration proceedings against L&T Finance on the ground that the sale of pledged shares by L&T Finance was illegal.
The company claimed that the arbitrator vide an award in November 2021 ruled that L&T Finance was not entitled to sell the shares under the loan agreements. The arbitrator also awarded cost of litigation to DM South amounting to ₹5.77 crore to be paid by L&T Finance.
DM South approached Delhi HC stating that it is ready to pay the entire remaining loan outstanding of ₹31.48 crore but L&T Finance should release all securities worth over ₹600 crore.
Accordingly, in December 2021 DM South handed over a demand draft of ₹25.72 crore to counsel of L&T Finance and thereupon the high court directed L&T Finance to release all securities within 72 hours barring 10 crore listed shares. The high court further directed DM South to pay the balance amount of ₹5.77 crore within one week which the company claims to have complied with.
However, since L&T Finance allegedly did not fully release the securities until January, the company again moved the high court seeking contempt proceedings against L&T Finance. Finding prima facie force in the plea, the high court issued show cause contempt notice to L&T Finance.