Ghanshyam Tayal Vs Cemcon Engineering Company India Pvt. Ltd. (NCLAT Delhi)
Summary: The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, in Ghanshyam Tayal Vs Cemcon Engineering Company India Pvt. Ltd., dismissed Company Appeal (AT) No. 05 of 2026 challenging the order dated 14.10.2025 passed by the National Company Law Tribunal (NCLT), New Delhi, in Contempt Petition No. 12 of 2024 arising from Company Petition No. 213 of 2023. The appeal concerned alleged deliberate violation of an interim order dated 05.01.2024 restricting the operation of the company’s bank accounts during a dispute among family members over the company’s management. The Appellate Tribunal held that the appellant had failed to establish any deliberate or intentional disobedience of the interim order. It further held that an appeal under Section 19 of the Contempt of Courts Act, 1971 was not maintainable against an order dismissing or dropping contempt proceedings.
The underlying controversy arose from a company petition instituted by Ghanshyam Tayal under Sections 241 and 242 of the Companies Act, 2013, challenging matters connected with an Extraordinary General Meeting (EOGM) dated 29.11.2023 and the appointment of Romesh Tayal as a director of Cemcon Engineering Company India Pvt. Ltd. The dispute involved Ghanshyam Tayal and other members of the Tayal family, including Ankit Tayal, Romesh Tayal and Savi Tayal. The appellant alleged that, following the disputed appointment, Romesh Tayal approached Punjab & Sind Bank to modify the company’s online banking arrangements and other facilities. Consequently, the appellant approached the NCLT through CA No. 417 of 2023, seeking interim protection concerning decisions taken at the EOGM. By its order dated 05.01.2024, the NCLT directed that the company’s bank accounts should continue to be operated by the applicant and Respondent No. 2, as had been done before the EOGM, rather than by Respondent Nos. 2 and 3 together. The direction was intended to preserve the existing banking arrangements and ensure the smooth functioning of the company pending determination of the underlying dispute.
The appellant subsequently invoked Section 425 of the Companies Act, 2013, read with Sections 12 and 14 of the Contempt of Courts Act, 1971, alleging that the respondents had knowingly violated the restraint order by continuing to issue and transact cheques through the company’s bank accounts. Particular reliance was placed on cheques dated 08.04.2024, including cheque numbers 001320 and 001321, associated with an amount of ₹10,74,308, along with alleged transactions involving cheques dated 20.05.2024, 27.05.2024 and 08.06.2024. According to the appellant, these transactions demonstrated that Respondent No. 3 had continued to exercise banking authority despite the NCLT’s directions. The appellant also alleged that Respondent Nos. 2 and 3 had transferred 4,55,000 equity shares to Respondent No. 3 without following due process. On these grounds, the appellant sought initiation of contempt proceedings and punishment of the alleged contemnors.
The contempt petition was opposed by Respondent No. 3, who denied having signed any cheque after the interim order dated 05.01.2024 and disputed the allegation that company funds had been siphoned off. It was contended that no money had moved out of the relevant account in the manner alleged. The respondent also explained that cheques bearing the description “yourself” were used for RTGS transfers rather than necessarily representing cash withdrawals for personal benefit. The dispute accordingly required examination not merely of the dates on which cheques were presented or processed, but also of whether the alleged transactions constituted acts performed in breach of the interim directions. The NCLT examined the bank statements and the supporting material and concluded that the necessary ingredients of intentional disobedience had not been established.
On the factual aspect, the NCLAT agreed with the NCLT’s assessment that the bank statements did not demonstrate encashment or withdrawal of the amounts alleged by the appellant. The explanation regarding post-dated cheques, including the contention that the appellant himself had deposited cheques after the interim order, was considered in the context of the available record. Significantly, the Tribunal found that no material had been produced establishing that the relevant cheques were actually issued after 05.01.2024 in violation of the restraint. The mere allegation that cheques had been processed after the interim order was insufficient to establish that Respondent No. 3 had deliberately disobeyed the NCLT. The Appellate Tribunal therefore found no reason to interfere with the NCLT’s factual conclusions, including its finding that the contempt allegations had not been proved.
The NCLAT emphasised that punishment under Section 12 of the Contempt of Courts Act requires the alleged disobedience to be deliberate and intentional. Where the evidence fails to establish the commission of a prohibited act, or fails to connect the alleged contemnor with a wilful violation of the judicial direction, punitive contempt jurisdiction cannot be exercised merely on the basis of assertions. In the present case, the appellant had not substantiated the alleged issuance or encashment of cheques after the restraint order, nor established withdrawal of funds from the restricted accounts. The NCLT had accordingly declined to initiate contempt proceedings through its order dated 14.10.2025, and the NCLAT upheld that conclusion.
The Appellate Tribunal separately examined the statutory maintainability of the appeal. It observed that Section 425 of the Companies Act confers contempt jurisdiction upon the NCLT and NCLAT by applying the relevant provisions of the Contempt of Courts Act, 1971. In the Tribunal’s interpretation, the appeal contemplated by Section 19 concerns an order exercising jurisdiction to punish for contempt and does not extend to an order declining to punish or dropping contempt proceedings. The Tribunal further explained that a person bringing an alleged contempt to the attention of a court or tribunal acts essentially as an informer. Once the alleged violation is reported, the decision whether to continue contempt proceedings or drop them falls within the exclusive domain of the court or tribunal. Accordingly, dismissal of a contempt petition does not, merely by itself, confer upon the informant a right to maintain an appeal under Section 19.
Consequently, the NCLAT dismissed the company appeal on two independent grounds. First, the alleged wilful disobedience of the interim order dated 05.01.2024 had not been established on the available evidence. Secondly, an appeal challenging dismissal of contempt proceedings was not maintainable under Section 19 of the Contempt of Courts Act, 1971. The decision reinforces the distinction between substantive corporate-management disputes under Sections 241 and 242 of the Companies Act and the separate punitive jurisdiction exercised under Section 425. It also clarifies, in the context of the statutory interpretation adopted by the NCLAT, that a contempt applicant cannot insist upon punishment or invoke Section 19 merely because the adjudicating tribunal has declined to proceed against the alleged contemnor.
FULL TEXT OF THE ORIGINAL JUDGMENT/ORDER OF NCLAT NEW DELHI
Brief facts, in the instant company appeal, are, that the appellant is an applicant to the Contempt Petition No.12 of 2024, as it was preferred in CP No.213 of 2023. The appellant has sought to draw a contempt proceeding as against respondent Nos.2, 3 and 6, on the ground that they had deliberately violated the order that was passed by the Tribunal, as in spite of their being a restraint, still they had proceeded to issue cheques in contravention to the order that was rendered by the Tribunal on 05.01.2024.
2. The appellant in the contempt petition has submitted that they have been victimized despite order dated 05.01.2024, because of the fact, that the respondent continued to operate the bank accounts by issuance of cheques, which was on the face of it in contravention to the Order passed by the Tribunal on 05.01.2024, which imposed a restraint on the respondent from operating the bank accounts. It was contended that, because of the fact, that they persisted to issue cheques as referred in the proceedings of the contempt, they were liable to be punished under Section 12 read with Section 14 of the Contempt of Courts Act.
3. In order to better appreciate the argument extended by the Counsel for the appellant, reference to the Order passed by NCLT on 05.01.2024, becomes relevant at this juncture, as to what were the scope of restrictions, that has been imposed by the learned Tribunal, on the respondents against whom contempt is alleged. Para – 16 of the Order of 05.01.2024 reads as under: –
“However, keeping in view the developments that have taken place subsequent to the EOGM and the fact that the Respondent No. 3, whose appointment has been challenged in the present Company Petition, is operating the bank account along with the Respondent No.2, we deem it appropriate to direct that the Bank Accounts of the Company will continue to be operated by the Applicant and Respondent No.2 as was done before the EOGM dated 29.11.2023 in order to ensure smooth functioning of the Company.”
4. There was a specific direction issued, that the respondent No.3, whose appointment has been put to challenge in the company petition and when the issue was pending consideration before the Tribunal, he was restrained from operating the bank account along with respondent No.2. Further, a direction was issued that the bank accounts of the company will be continued to be operated by the applicant and respondent No.2, as was done prior to the decision taken in the EOGM of 29.11.2023. In the Contempt Petition, that was preferred before the learned Tribunal invoking the provisions contained under Section 425 of the Companies Act, the appellant had submitted, that the respondents have made certain transactions in spite of the restraint order of 05.01.2024, as the cheque dated 08.04.2024 was issued in favour of ‘yourself’ for an amount of Rs.10,74,308/-. There had been other cheques also i.e. cheques dated 20.05.2024, 27.05.2024 and 08.06.2024, which were alleged to have been signed by respondent No.3, which are said to have been transacted in violation of the Order of 05.01.2024. Thus, the Appellant submitted that there happens to be deliberate and intentional contempt, as despite knowing the effect of Order dated 05.01.2024, respondent No.3 has continued to issue cheques, particularly when they were restrained from issuing cheques, and therefore they were liable to be punished for drawing the contempt proceedings under the Contempt of Courts Act.
5. In order to further substantiate his contention, he submitted that as of now when the contempt petition was filed during the pendency of the Company Petition bearing No.213 of 2023 before the Hon’ble Tribunal and respective rights were yet to be determined and because of there being a specific restraint, and also because of the fact, that respondent Nos.2 and 3 have illegally, without following due process of law, have transferred 4,55,000 equity shares to respondent No.3 and such other transfers, those were referred in the application preferred under Section 425, the appellants in the Contempt Petition that was preferred on 14.05.2024, prayed for summoning the respondent in person and to punish them for willful disobeying the order of 05.01.2024.
6. Under the Companies Act, the powers to draw contempt proceedings has been contemplated under Section 425 of the Companies Act, which prescribes that, for the purposes of drawing the proceedings under Section 425, provisions of the Contempt of Courts Act, 1971 would be attracted to be made applicable. In that eventuality, the contempt petition preferred by the appellant would have to be read to be under Section 425 along with Section 12 and 14 of the Contempt of Courts Act of 1971.
7. It is the settled law that for the purposes of drawing a contempt proceedings, as against the alleged contemnor, it has had to be made out, that there was an intentional and deliberate contempt, prior to passing of an order of punishment under Section 12 of the Act of 1971, as against the alleged contemnor. In accordance with the facts that have been brought on record, the petitioner Ghanshyam Tayal, who was an applicant to the contempt petition, as well as, to the company petition too, is closely related with respondent Nos.2, 3 and 4 namely Ankit Tayal, Romesh Tayal and Savi Tayal, who are the members of the same family and out of whom Mr. Romesh Tayal is the father of Mr. Ankit Tayal and husband of Mrs. Savi Tayal. The proceedings was drawn by the appellant under Section 241 to be read with Section 242 by filing of a Company Petition on 24.11.2023, as regards to the issue of conduct of the EOGM, that was held on 29.11.2023, without following the due process resulting into appointment of respondent No.3 – Mr. Romesh Tayal as the director of the company.
8. It was alleged by the appellant in the contempt proceedings, that respondent No.3 after being appointed as a director under the EOGM of 29.11.2023, had approached respondent No.6 i.e. Punjab and Sind Bank, to alter the online banking system and other banking facilities, those were being currently availed by the company. It was the case of the appellant, that the appellant was informed about the said directions issued by respondent No.3, by bank i.e. respondent No.6 in Company Petition itself, vide its letter of 05.12.2023. Owing to the restrictions those have been solicited to be imposed by filing of an application by respondent No.3 to the bank and the response received by the appellant from the Bank, they were constrained to file CA 417/2023 before the learned NCLT seeking for stay of the agenda as passed in the EOGM of 29.11.2023. However, the learned Tribunal in order to carve out an exception, owing to the aforesaid contingency and besides also considering the fact that the dispute happens to be amongst the family members, had passed an order on 05.01.2024 restraining respondent No.3 from operating bank accounts with the son-respondent No.2.
9. In order to sustain the contempt, the appellant’s case has been that the respondent No.3 had issued self-drawn cheques on 08.04.2024 bearing Cheques No.001320 and 001321 amounting to Rs.10,74,308/- and also two other cheques were signed by respondent No.3, in the capacity of being the authorised representative of the company. In spite of the intimation having been imparted to the bank with regards to the passing of an Order dated 05.01.2024, the bank still proceeded to honour the cheques submitted by the respondents and the cash was permitted to be withdrawn under the garb of said cheques, which were issued by respondent No.3 after passing of the Order dated 05.01.2024.
10. The contempt proceeding was contested. The respondent No.3 filed its reply on 25.07.2024 and contended that the entire allegation of illegal siphoning of money on the basis of the aforesaid cheques, was absolutely not made out as no money has moved out of account as alleged to have been siphoned by respondent No.3, nor was it ever attempted by the alleged contemnor. Hence, they prayed that as the respondent No.3 has not signed any cheque, after passing of the order dated 05.01.2024, no contempt could be made out against him. In further clarification to his argument, it was submitted that since the cheques had a reference to ‘yourself’, such type of cheques are issued for the RTGS transfers and not for transfer to self. Under these backdrops, when the contempt petition came up for consideration before the learned Tribunal, the same has been rejected by the impugned order. Hence the instant company appeal.
11. Owing to the provisions contained under section 425 of the Companies Act, which attracts the provisions of the Contempt of Courts Act, 1971, for the purposes of dealing with the contempt proceedings while having reference to Section 425 of the Companies Act, it will be basically governed by the provisions of Contempt of Courts Act. The Contempt of Courts Act of 1971, provides for an appeal against an order, which has been passed in the contempt proceedings, the appropriate appellate provision is contained under Section 19 of the Contempt of Courts Act of 1971. The same is extracted hereunder: –
“19. Appeals. —
(1) An appeal shall lie as of right from any order or decision of High Court in the exercise of its jurisdiction to punish for contempt—
(a) where the order or decision is that of a single Judge, to a Bench of not less than two Judges of the Court;
(b) where the order or decision is that of a Bench, to the Supreme Court:
Provided that where the order or decision is that of the Court of the Judicial Commissioner in any Union territory, such appeal shall lie to the Supreme Court.
(2) Pending any appeal, the appellate Court may order that—
(a) the execution of the punishment or order appealed against be suspended;
(b) if the appellant is in confinement, he be released on bail; and
(c) the appeal be heard notwithstanding that the appellant has not purged his contempt.
(3) Where any person aggrieved by any order against which an appeal may be filed satisfies the High Court that he intends to prefer an appeal, the High Court may also exercise all or any of the powers conferred by sub-section (2).
(4) An appeal under sub-section (1) shall be filed—
(a) in the case of an appeal to a Bench of the High Court, within thirty days;
(b) in the case of an appeal to the Supreme Court, within sixty days, from the date of the order appealed against.”
12. On a simpliciter language used under Section 19, the contempt appeal was only maintainable as against the order of punishment under Section 12 of the Act of 1971, and not against an order of dropping of the contempt proceedings, observing thereof that no contempt was made out. So is the situation here in the instant contempt appeal. Because of the fact that the Tribunal in its conclusion of the order has observed that, in the light of the observation made in para – 17(5) of the impugned order, that, the details of the transaction that has been made by respondent No.3 after the order of 05.01.2024, as mentioned in the Order; it was contended by the respondent, that all these statements of transactions which have been detailed therein were by virtue of post-dated cheques, which were in possession of the petitioner. It was rather the petitioner himself, who had deposited those cheques in the bank after the passing of the interim Order of 05.01.2024. Further, there had been no material on record in the contempt proceedings, that the petitioner or the respondent had placed any such material to show any such cheques were ever issued after passing of the interim order by this Tribunal, nor the same has been proved otherwise.
13. The learned Tribunal based upon the rival contentions has come to the conclusion, that the bank statements those have been placed on record in support of the Contempt Petition, there were no entries in the records with regards to any encashment being made of the alleged cheques, moreover, the cheques were dated 08.04.2024 which were drawn in favour of ‘yourself’ and that has not been encashed as stated by respondent No.3. Besides, the bank statement filed by the petitioner does not reflect, that the said amount was ever encashed or ever withdrawn. In these eventualities, where there was no withdrawal of any amount from the restricted accounts standing with the bank, after passing of the interim Order of 05.01.2024, there would not have been any deliberate contempt, that could have been said to be made out, which could have been alleged to be a deliberate or intentional contempt of the Order of 05.01.2024.
14. For the purposes to punish an alleged contemnor, there has had to be an establishment of the fact beyond doubt that the act complained of, to bring it within the ambit of Section 12 of the Contempt of Courts Act, was a deliberate act. No such element was satisfied or even attempted to be satisfied by the applicant in pursuing the contempt petition. Accordingly, the contempt petition was dismissed by the learned Tribunal by the impugned order of 14.10.2025 holding thereof that, since there was no deliberate or intentional contempt, rather it’s the appellant who has acted maliciously by presenting post-dated cheques and that particularly when there was no withdrawal of amount of any cash after 05.01.2024, the contempt proceedings were declined to be initiated.
We do not see any reason to not to accept the finding of facts recorded by the Ld. Tribunal, that no contempt is apparently made out of the order of 05.01.2024, because there had been no issuance of cheques or any encashment after 05.01.2024 nor there was any withdrawal, which was substantiated by the appellant who wanted to draw contempt proceedings as against respondent No.3, hence dropping of a contempt is not vitiated, under facts of case and also as per law.
15. There could be yet an another aspect, which has to be taken into consideration, that when under the provisions of Section 425 of the Companies Act, the provisions of contempt is attracted by borrowing the provisions of the Contempt of Courts Act, 1971. In that eventuality, the appeal would be preferred and would lie under Section 19 of the Contempt of Courts Act. Section 19 of the Contempt of Courts Act, which is extracted above.
16. On a simpliciter reading of the language of Section 19 of the Contempt of Courts Act, it only prescribes for maintainability of an appeal as against the order of punishment of the contemnor. If that be the intention of legislature, dismissal of the contempt, no appeal would be maintainable and that too, more particularly, when under settled principles of law of contempt, the applicant only acts as an informer to the Tribunal about the act of contempt of its order, as against the alleged contemnor and as soon as the applicant informs the Tribunal or the Court about the alleged act of commission of contempt of its order, his role to pursue the contempt petition immediately ceases, because thereafter, it is exclusively an issue which would be falling within the domain of the Tribunal or the Court, to continue with the contempt proceedings or to drop it. Thus, what is a prerogative of the Court or Tribunal to continue the contempt proceedings upon being intimated and being satisfied about alleged flouting of its order, the dismissal of the contempt will not be taken as to be the prejudice that is caused to the applicant to sustain an appeal under Section 19 of the Contempt of Courts Act.
17. Hence, the company appeal lacks merit and the same is accordingly dismissed. First of all, as no contempt is made out and secondly, because no appeal would be maintainable as under Section 19 of the Contempt of Courts Act as against the dismissal of the contempt petition.
