S.G. Mittal Enterprises Private Limited Vs Satara Sahakari Bank Ltd. and Others (Bombay High Court)
Conclusion: Contempt Petition was not maintainable, as the NCLT had independent and effective jurisdiction under Section 425 of the Companies Act, 2013 to punish for contempt of its own orders, including those passed under the IBC. The Contempt Petition was dismissed at the threshold, with liberty to the Petitioner to pursue any other appropriate remedy available in law.
Held: Petitioner filed a contempt petition before the High Court alleging breach of Consent Terms recorded by the National Company Law Tribunal (NCLT), Mumbai, in proceedings initiated under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) by Respondent No.1–Bank. The dispute arose from a Cash Credit Facility granted to the Petitioner, which led to insolvency proceedings on account of alleged default. During the pendency of the proceedings, the parties entered into a settlement and executed Consent Terms whereby the Petitioner agreed to pay a consolidated amount of ₹5,71,07,504/-. NCLT accepted the Consent Terms and disposed of the insolvency petition. Petitioner claimed to have paid the entire settlement amount and sought issuance of a “No Dues Certificate”. However, the Bank demanded an additional sum of ₹18,57,061.47/- and allegedly reported outstanding dues to credit information agencies, adversely affecting the Petitioner’s credit facilities. Aggrieved thereby, the Petitioner invoked the contempt jurisdiction of the High Court alleging wilful disobedience of the NCLT’s order. Petitioner contended that the Bank’s refusal to issue a No Dues Certificate and its demand for additional amounts amounted to a clear breach of the Consent Terms and the NCLT’s order, which had attained finality. It was argued that the IBC does not confer contempt powers on the NCLT and that Section 425 of the Companies Act, 2013 is confined only to proceedings under that Act. Relying on statutory interpretation principles and Supreme Court decisions, the Petitioner submitted that contempt jurisdiction being penal in nature could t be implied, and therefore the High Court had parallel jurisdiction under Section 10 of the Contempt of Courts Act, 1971 read with Article 215 of the Constitution of India to punish contempt of NCLT orders. Respondents opposed the maintainability of the petition, contending that Section 425 of the Companies Act, 2013 expressly confers contempt jurisdiction on the NCLT and NCLAT in respect of contempt of their own orders, irrespective of whether such orders are passed under the Companies Act or the IBC. It was submitted that permitting parallel contempt jurisdiction before the High Court would undermine the statutory scheme and allow parties to bypass the forum specifically empowered to enforce its orders. The Court held that contempt jurisdiction was extraordinary, penal and coercive in nature and must be expressly conferred by statute. On a plain reading of Section 425 of the Companies Act, 2013, the Court held that the NCLT and NCLAT are vested with the same powers as the High Court to punish for contempt of themselves, without any distinction based on the statute under which jurisdiction is exercised. The Court observed that the NCLT derives its existence and authority from the Companies Act, 2013, and that the IBC merely designates the existing NCLT as the Adjudicating Authority for insolvency matters. Tribunal could not be treated as having a fragmented jurisdiction depending on the statute invoked. Consequently, its contempt powers extend to all proceedings before it, including those under the IBC. The Court further held that once contempt jurisdiction was expressly vested in the Tribunal, the High Court ought not to exercise parallel contempt jurisdiction under Section 10 of the Contempt of Courts Act. Supervisory jurisdiction under Articles 226 and 227 of the Constitution was distinct and could not be invoked through contempt proceedings. The Court also clarified that contempt proceedings could not be used as a substitute for execution or for resolving disputed issues arising from Consent Terms.
1. Heard Mr. Singh learned Advocate for Petitioner. None appears for Respondents.
