"Straightforward case:" Bombay High Court directs Essar companies to deposit over Rs. 80 crores as security amount for arbitration

The Bombay High Court directed Essar Services India Private Limited (ESIPL) to deposit an amount of Rs. 47.41 crores and Essar House Private Limited (EHPL) to deposit an amount of Rs. 35 crores as security deposit in an arbitration dispute with Arcelor Mittal Nippon Steel India Ltd..Justice GS Patel noted that the claim of Arcelor Mittal made out a “straightforward prima facie case”. .There is no reason why the Petitioner should be left, pending arbitration, with no security for its claim. I am not, in this order, directing payment by the Respondent to the Petitioner. I am requiring it to provide a security by making a cash deposit in this Court or by furnishing a security to the satisfaction of the Prothonotary and Senior Master. In my view, that is an eminently reasonable relief sought and one that must be granted..Arcelor Mittal (formerly Essar Steel India Ltd.) had approached the High Court for urgent protective interim orders before the commencement of arbitration process..The amount they were seeking was a refundable security deposit payable upon termination of two agreements executed with ESIPL and EHCL respectively..The dispute between the parties arose after the respective Essar companies refused to return the interest-free security deposit on the grounds that they unilaterally novated its obligation in the bilateral agreement which purportedly set-off their liability to make any repayment to Arcelor Mittal..Justice Patel directed ESIPL and EHCL to deposit their respective amounts with the Prothonotary and Senior Master within 8 weeks from the order. Alternatively, he permitted them to furnish a bank guarantee of any nationalised bank..He added that both companies will have to make a full disclosure of all its movable and immovable assets including monthly receivables and financial investments. He also restrained them from disposing of any assets except in the usual course of its business. If under extra-ordinary circumstances they have to, they can do so by taking the leave of the court with notice to Arcelor..Arcelor Mittal was represented by Senior Advocate Dr. Birendra Saraf instructed by Shardul Amarchand Mangaldas & Co. led by Partner Rishab Gupta, Principal Associate Sairam Subramanian, Senior Associate Rishabh Jogani and Associate Gourav Mohanty.Essar was represented by Senior Advocate Vikram Nankani instructed by Naik Naik & Co led by Partner Ameet Naik and Abhishek Kale, Manager Mansi Nair and Attorney Avdhoot Prabhu..[Read order]