The Delhi High Court has recently witnessed a surge in petitions filed under Section 9 of the Arbitration and Conciliation Act, 1996 with numerous parties seeking urgent interim relief against Gensol Engineering and BluSmart Mobility. This wave of litigation has been prompted by growing concerns over alleged financial improprieties involving the promoters of Gensol Engineering, who are also among the co-founders of BluSmart Mobility. The petitioners have raised serious apprehensions regarding the potential dissipation of assets and corporate misgovernance, prompting them to approach the Delhi High Court for protective measures pending commencement of arbitration.
Given the nature of proceedings under Section 9, which typically seek urgent interim relief, any disobedience or non-compliance with the directions or orders passed therein can give rise to contempt proceedings. In one such case, Shefasteq (OPC) Pvt Ltd has been constrained to initiate contempt proceedings against BluSmart Mobility, Gensol EV Lease (which is a subsidiary of Gensol Engineering) and Go Auto amongst others upon failing to handover possession of 10 vehicles to the Court appointed receiver pursuant to the directions issued by the Delhi High Court. The Court has issued notice on 28 May 2025 for disobedience of the Section 9 order, marking a serious escalation in the dispute.
Jurisprudence on civil contempt
The purpose of the law of contempt is to secure public respect and confidence in the judicial process. The power of the Supreme Court and a High Court to punish for breach of its orders is expressly recognised by Articles 129 and 215 of the Constitution of India, respectively. Despite such a power being conferred by the Constitution, what would constitute civil or criminal contempt, what is the procedure for initiating action and how to punish for contempt is provided by the Contempt of Courts Act, 1971.
The definition of "civil contempt" provides for two categories of cases - (a) willful disobedience to a process of Court; and (b) willful breach of an undertaking given to Court. No distinction is therefore statutorily drawn between an order passed after an adjudication and an order passed by consent. The legislative intention in separately providing for both clearly was to distinguish between the two and create distinct classes of contumacious behaviour.
For holding a person to have committed contempt, it must be shown that there was "wilful" disobedience of the judgment or order of the Court or the undertaking given to the Court, mere disobedience is not sufficient. It is a settled position of law that "wilful" means an act or omission which is done voluntarily and with the specific intent to do something the law forbids or with the specific intent to fail to do something the law requires to be done, that is to say, with bad purpose either to disobey or to disregard the law. A wilful and deliberate act of violation of even an interim order passed by a competent Court would fall within the ambit of contempt.
An order of a Court has to be complied with, and it would not amount to a valid defence that in the contemnor's own understanding or because of legal opinion tendered to him, the order did not warrant compliance being erroneous. The rightness or wrongness of an order cannot be urged in contempt proceedings. If a party against whom such order is made has a grievance, the only remedy available to him is to challenge the order by taking appropriate proceedings known to law. But it cannot be made ineffective by not complying with the directions. Flouting an order of the Court would render the party liable for contempt.
Although, if a defence appearing to be valid in law and having substance is raised before the Court by a party in default which shakes the very foundation of the order alleged to have been violated, it would always be open to the Court, depending on the nature of order and the breach alleged, to first secure compliance of the order by allowing the contemnor to purge the contempt without prejudice to his rights and contentions and, after such compliance, to revisit the order as per law and the circumstances present before it and then pass appropriate orders.
In exceptional cases, the Court may also accept a defence, if raised, of impossibility to comply with an order and come to the conclusion that since it is impossible to enforce its order, action to punish may not be initiated. A refusal to comply with the order may also be justified by grave concerns of public policy. Much would depend on the facts and circumstances of the case and the nature of the contempt under enquiry, etc., which would enable the court to exercise its discretion either way.
The court's power when dealing with the question of contempt, in a sense, is discretionary, although it is clear that the Court exercising the jurisdiction to punish for contempt does not function as an original or appellate court for determination of the disputes between the parties. The contempt jurisdiction is confined to the question whether there has been any deliberate disobedience of the Court order and if the conduct of the party who is alleged to have committed such disobedience is contumacious. The Court exercising contempt is not entitled to enter into questions which have not been dealt with and decided in the judgment or order. If the judgment or order does not contain any specific direction regarding a matter or if there is any ambiguity in the directions issued in the judgment or order, it is open to the parties to approach the Court which disposed of the matter for clarification of the order instead of the Court exercising contempt jurisdiction by taking upon itself to decide the original proceeding.
The action for contempt must be initiated either by filing an application or by the Court issuing notice suo motu, within a period of one year from the date on which the contempt is alleged to have been committed. The role of such a party, who brings a petition for contempt and activates the Court's machinery, is merely that of an informer and the Court's authority to punish for contempt is substantially a matter between the Court and the contemnor.
The power to punish for contempt must always be exercised consciously, wisely and with circumspection as punishing a person or entity for contempt of Court is indeed a drastic step and normally such action should not be taken. At the same time, however, it is not only the power but the duty of the Court to uphold and maintain the dignity of Courts and majesty of law which may call for such extreme step. Contempt proceeding against a person who has failed to comply with the Court's order serves a dual purpose i.e. vindication of the public interest by punishment of contemptuous conduct and coercion to compel the contemner to do what the law requires of him.
Pertinently, whether an unconditional apology tendered by the contemnor relieves it from being found guilty of contempt been considered by the Supreme Court in several decisions. It has been held that unless apology is offered at the earliest opportunity and in good grace, the apology is shorn of penitence and liable to be rejected. More often than not, Courts have found that the apology is offered at the time when the contemnor finds that the court is going to impose punishment, by which time it ceases to be an apology acceptable in the eyes of law.
Given the nature of the proceedings under Section 9, Shefasteq has alleged wilful disobedience of the Court's directives, underscoring a pattern of disregard for judicial authority amidst the broader allegations of financial misconduct. The contempt action adds a new layer of legal complexity to the already contentious dispute, with the Court likely to take a stern view of any attempt to undermine its authority or frustrate the arbitral process.
There also remains the possibility of more such petitions being filed if further violations occur of the interim reliefs granted so far by the Delhi High Court. The specific details of the relief granted against Gensol Engineering and BluSmart Mobility so far under Section 9 are set out below.
Details of Section 9 petitions
- Orix Leasing and Financial Services India Ltd Vs. Gensol Engineering Ltd & Ors [O.M.P.(I) (COMM.) 146/2025]: The Court injuncted Gensol Engineering and BluSmart Mobility on 25 April 2025 from selling or encumbering or otherwise creating third party rights in the 175 vehicles leased to BlueSmart under a Master Lease Agreement by Orix Leasing and Financial Services. On 19 May 2025, the Court also appointed a receiver to take possession of the vehicles and preserve them so that they remain in good and working condition. Orix has in the meantime also taken steps to file an application for appointment of arbitral tribunal under Section 11 of the Act, in which notice has been issued to Gensol Engineering and BluSmart Mobility on 30 May 2025.
- Clime Finance Pvt Ltd Vs. Gensol Engineering Ltd & Ors [O.M.P.(I) (COMM.) 147/2025]: By orders dated 29 April 2025 and 21 May 2025, the Court restrained Gensol Engineering and BluSmart Mobility from selling or transferring or otherwise creating third party rights in 95 vehicles leased to them by Clime Finance, pursuant to default in payment of lease rentals from March 2025. The Court also appointed a receiver to take possession of the vehicles and preserve them so that they remain in good and working condition.
- SMAS Auto Leasing India Pvt Ltd Vs. Gensol Engineering Limited & Ors [O.M.P.(I) (COMM.) 163/2025]: On 7 May 2025, the Court restrained Gensol Engineering and BluSmart Mobility from selling or transferring or otherwise creating third party rights in 164 and 46 vehicles leased to them by SMAS Auto Leasing, under separate Master Lease Agreements with Gensol Engineering and BluSmart Mobility respectively. The Court also appointed a receiver to take possession of the EVs and preserve them so that they remain in good and working condition.
- Shefasteq (OPC) Pvt Ltd Vs. Blu-Smart Fleet Pvt Ltd & Ors [O.M.P.(I) (COMM.) 164/2025]: On 7 May 2025, the Court restrained BluSmart Mobility, Gensol EV Lease and Go Auto from selling or transferring or otherwise encumbering 10 vehicles that were purchased by Shefasteq from Go Auto for addition into BluSmart's fleet further to an apprehension that Go Auto might handover the EVs to BluSmart or sell it to another third party. The Court also appointed a receiver to take possession of the vehicles and preserve them so that they remain in good and working condition.
- Vriksh Advisors Private Limited Vs. Gensol Engineering Limited & Ors [O.M.P.(I) (COMM.) 176/2025]: On 15 May 2025, the Court restrained Gensol Engineering and BluSmart Mobility from selling or transferring or otherwise creating third party rights in 76 vehicles leased to them by Vriksh Advisors, upon default in payment of lease rentals for April 2025. The Court also appointed a receiver to enable Vriksh Advisors to take possession of the vehicles.
References:
- S. Tirupathi Rao Vs. M. Lingamaiah & Ors [(2024) SCC OnLine SC 1764]
- Deepika Chauhan and Another Vs. Indra Pasricha [(2023) SCC OnLine Del 1552]
- C. Elumalai & Ors Vs. A.G.L. Irudayaraj & Anr [(2009) 4 SCC 213]
- Union of India & Ors v. Subedar Devassy PV [(2006) 1 SCC 613]
- T.N. Godavarman Thirumulpad v. Ashok Khot & Anr [(2006) 5 SCC 1]
- Ashok Paper Kamgar Union Vs. Dharam Godha & Ors [(2003) 11 SCC 1]
- Jhareswar Prasad Paul & Anr v. Tarak Nath Ganguly & Ors [(2002) 5 SCC 352]
- Aligarh Municipal Board & Ors v. Ekka Tonga Mazdoor Union & Ors [(1970) 3 SCC 98]
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