Case Law Details
Gramox Paper & Boards Pvt. Ltd. Vs NCLT (Kerala High Court)
The Kerala High Court considered a writ petition challenging an order dated 20.02.2026 passed by the National Company Law Tribunal (NCLT), Kochi Bench. The petitioner primarily challenged the portion of the NCLT’s order imposing a liability of ₹1,00,000 per day in the event of non-compliance with an earlier direction. The petitioner also contended that it was unable to challenge the order before the appellate tribunal due to the bar contained in Section 421(2) of the Companies Act, 2013 relating to consent orders.
The dispute arose from an earlier NCLT order directing the petitioner company to execute documents for transferring certain properties to the second respondent and to pay legal expenses relating to the transfer. The petitioner complied with the direction regarding payment of legal expenses but stated that it was unable to execute the property transfer because of certain legal issues concerning the property situated in Karnataka. Alleging non-compliance with the earlier order, the second respondent initiated contempt proceedings before the NCLT in 2024.
During those proceedings, the petitioner’s counsel gave an undertaking before the NCLT that the earlier order would be complied with within 40 days. The NCLT recorded the undertaking and further provided that if the petitioner failed to comply within the stipulated period, it would be liable to pay ₹1,00,000 per day. The NCLT also recorded that the second respondent would remain present before the Sub-Registrar upon receiving written notice for completion of the necessary formalities and adjourned the matter for filing of a compliance memo.
Before the High Court, the petitioner clarified that its grievance was confined to the portion of the NCLT order imposing the daily monetary liability. The second respondent argued that it had obtained favourable orders as early as 2018 and that the contempt proceedings became necessary because the petitioner had failed to comply with those directions.
The High Court observed that it had doubts regarding the NCLT’s power to impose a liability of ₹1,00,000 per day in the manner reflected in the impugned order. However, the Court also noted that the order appeared to be a consent order based on the undertaking recorded on behalf of the petitioner. Consequently, the appropriate course was for the petitioner to challenge the order before the appellate tribunal.
While acknowledging that Section 421(2) bars appeals against consent orders, the High Court expressed the view that the petitioner might not have consented specifically to the imposition of the daily liability of ₹1,00,000. Therefore, it held that the latter portion of the NCLT’s order imposing the daily liability could be challenged before the appellate tribunal under Section 421(1) of the Companies Act.
Accordingly, the High Court disposed of the writ petition by granting the petitioner three weeks to file an appeal before the appellate tribunal under Section 421(1). It directed that the interim protection earlier granted by the High Court would continue for five weeks to enable the petitioner to file the appeal. The Court also directed that if the appeal was filed within the stipulated period, the appellate tribunal should treat it as having been filed within limitation.
FULL TEXT OF THE JUDGMENT/ORDER OF KERALA HIGH COURT
Heard Smt.R.Aishwarya, learned counsel for the petitioners, as well as Sri.Issac Thoams, learned counsel for the 2nd respondent herein.
2. The petitioners have filed the captioned writ petition, seeking to challenge Ext.P10 order dated 20.02.2026, issued by the National Company Law Tribunal, Kochi Bench (hereinafter referred to as the ‘NCLT’).
3. The petitioner company was directed, pursuant to Ext.P1 order, to execute a document by which certain properties were to be transferred to the 2nd respondent herein. The order at Ext.P1 further directed the petitioner to pay certain amounts towards the legal expenses for the transfer. Admittedly, the second part of Ext.P1 order, referred to above, has been complied with by the petitioner herein. However, the petitioner states that on account of certain legal issues in the State of Karnataka, wherein the property is situated, the petitioner is not in a position to comply with the first direction referred to above. In the meantime, pointing out that the petitioner has not complied with the directions issued, the 2nd respondent herein sought to initiate Contempt of Court proceedings before the NCLT. The afore proceedings have been instituted before the NCLT by the 2nd respondent in the year 2024. On 20.02.2026, the NCLT issued Ext.P10 order, which reads as under:
“Learned Counsel Mr.Issac Thomas appears physically on behalf of the Petitioner. Learned Counsel Mr.K.V.Krishnakumar appears on behalf of the Respondent through virtual mode. Ld. Counsel, Mr.Vinod P.V. appears on behalf of State Bank of India through virtual mode.
Counsel for the Respondent submitted an undertaking at Bar that the Respondent shall comply with the original order within 40 days. Upon instructions, he further stated that in case the Respondent fails to comply with the earlier order within the said period, this Tribunal may impose any condition and the Respondent shall be bound by the same. Having heard it is recorded that in case of non-compliance, the Respondent shall be liable to pay Rs.1,00,000/- per day.
Counsel for the Applicant submitted that, upon receipt of written notice, the Applicant shall remain present before the office of the Sub-Registrar for completion of the necessary formalities on its behalf.
For filing the compliance memo, the case is adjourned to 30.04.2026.”
4. Smt. Aishwarya, learned counsel for the petitioners, would fairly point out that the petitioner is essentially aggrieved with the last sentence of the second paragraph of the order, by which the petitioner has been saddled with a liability of Rs.1,00,000/- per day, in the event of the petitioner not complying with the directions in the earlier portion of the order. However, she would add that the petitioner is not in a position even to challenge the order at Ext.P10 before the appellate Tribunal, going by the embargo prescribed under Section 421(2) of the Companies Act, 2013 (hereinafter referred to as the ‘Act).
5. Per contra, Issac Thomas, learned counsel for the 2nd respondent, would point out that the 2nd respondent had obtained orders in its favour as early as in the year 2018, and it is only because the petitioner did not comply with the directions that the 2nd respondent had to institute a Contempt of Court case in the year 2024, which ultimately resulted in Ext.P10 order.
6. I have my own doubts as regards the power of the NCLT for having issued an order in the nature of Ext.P10, by which a huge penalty of Rs.1,00,000/- per day is saddled on the petitioner herein. However, this Court notices that the afore order is a consent order, going by the wording/ undertaking recorded on behalf of the petitioner herein. When that be so, it is for the petitioner to challenge the afore order either by filing an appeal or by challenging Ext.P10 before the appellate Tribunal.
7. True, Section 421(2) of the Act specifically lays down that no appeal shall lie to the appellate Tribunal from a consent order.
However, I am of the opinion that the petitioner might not have consented to be mulcted with a liability of Rs.1,00,000/-per day. Therefore, the latter portion of the second paragraph of Ext.P10 order, in my opinion, could be challenged by the petitioner under the provisions of Section 421 of the Act. Hence, I dispose of the writ petition, as under:-
i. The petitioner to challenge Ext.P10 under Section 421(1) of the Act, before the appellate Tribunal within a period of three weeks from today. So as to enable the petitioner to file an appeal, as above, the interim protection granted by this Court on 31.03.2026 is to continue for a period of five weeks.
ii. It is also made clear that if an appeal is being filed by the petitioner within the afore period, the appellate Tribunal to consider the same as one filed within the limitation.
Author Bio
