SAM and Co litigation team appeals HC on warrant issued against Yu Tele-ventures

In a temporary yet significant development, the Dispute Resolution Team of SAM and Co (acting on behalf of Yu Tele-ventures and its three directors, Rahul Sharma, Sumeet Kumar and Vikas Jain) successfully appealed against the order of the Learned Single Judge of the Delhi High Court. The Learned Single Judge had held Yu Tele-ventures and the individual Directors guilty of contempt of Court and issued bail-able warrants against them.

The Litigation Team of Shardul Amarchand Mangaldas led by Ajit Warrier, Partner, Sandeep Grover, Principal Associate, Aditya Nayyar, Associate and Shreya Munoth, Associate filed an appeal against the order of the learned single judge. In addition to the firm's lawyers, senior advocates P.V. Kapur, Sandeep Sethi and Dayan Krishnan were engaged by SAM and Co for the two appeals.

There were two sets of appeal, one filed on behalf of Yu Tele-ventures and the other on behalf of the individual Directors. The said appeals were heard by a Division Bench comprising the Chief Justice G. Rohini and Justice Rajiv Sahai.

As a background, the contempt petition was filed in a suit which Ericsson has filed against Micromax. The Single Judge, while adjudicating the contempt issue on an application filed by Ericsson, observed that there were common Directors for both Micromax and its wholly owned subsidiary, Yu Tele-ventures. The Learned Single Judge held that "while in corporate entity may be a separate juristic person, it is nevertheless managed and run by human beings who give it direction and substance" and lifted the corporate veil.

On lifting the corporate veil, the Learned Single Judge had observed that, "the corporate veil can be pierced and the parent company can be held liable for the conduct of its subsidiary.

The division bench of the Delhi HC, while setting aside the single judge's order, noted that the learned single judge had not heard the appellants in the appeals and had proceeded on an erroneous basis.

The division bench observes that, "That being the case, we are of the view that the finding of the learned Single Judge in the order under appeal that they are guilty of contempt cannot be treated as conclusive."

The division bench further held that the appellants "shall subject themselves to the contempt proceedings and shall appear on December 15 through their respective counsels".

At the hearing on December 15 before the Ld. Single judge, the personal presence of directors was dispensed with. Further, Yu Tele-ventures, purely as an interim arrangement, have tendered interim payments to Ericsson without prejudice to all its rights and contentions.