2020 (9) TMI 1221 - Tri - Insolvency and Bankruptcy

Tribunal dismisses contempt application under IBC, highlighting distinct NCLT functions and contempt limitations.

The Tribunal dismissed the contempt application [CA-1081/2019], ruling that the Insolvency and Bankruptcy Code (IBC) does not confer contempt ... Contempt application for invoking Section 425 of the Companies Act 2013 for contempt jurisdiction against the Respondents - seeking direction to Respondents to pay advocate fees for the services rendered by the applicant during CIRP period to the respondent - HELD THAT:- Contempt jurisdiction is an extraordinary jurisdiction, not exercisable by ordinary courts/ Tribunals, unless it is specifically conferred upon. NCLT, when it deals with IBC matters, it is Adjudicating Authority created by IBC, no way connected with Companies Act, and the jurisdiction is not interchangeable between Adjudicating Authority under IBC and the Tribunal under Companies Act 2013, except to the extent law permits. Contempt jurisdiction is in fact a jurisdiction conferred upon Constitutional Courts, which is hardly percolated down. It is given in a few enactments, it cannot be stretchable in the way we perceive, therefore it is made clear that IBC is devoid of contempt jurisdiction, accordingly this Application is dismissed leaving it open to the Applicant to seek remedy through recourses available. Contempt application dismissed. Issues: Contempt jurisdiction under Section 425 of the Companies Act 2013 in relation to the Insolvency and Bankruptcy Code (IBC).Analysis:The judgment pertains to a Contempt Application filed by the Applicant invoking Section 425 of the Companies Act 2013 against the Respondents for non-compliance with a previous order. The order directed the Respondents to pay advocate fees for services rendered during the Corporate Insolvency Resolution Process (CIRP). The Tribunal noted that Section 425 of the Companies Act 2013 does not extend contempt jurisdiction to the IBC. While amendments have been made to specify the applicability of certain provisions of the Companies Act to the IBC, no such amendment has been made regarding Section 425 and contempt jurisdiction under the IBC.The Tribunal emphasized that contempt jurisdiction is an extraordinary power not typically exercised by ordinary courts or Tribunals unless explicitly granted. The National Company Law Tribunal (NCLT) functions as the Adjudicating Authority under the IBC and is distinct from the Tribunal under the Companies Act 2013. The jurisdiction between the two entities is not interchangeable except as permitted by law. Contempt jurisdiction is usually conferred upon Constitutional Courts and is not broadly applicable. The Tribunal clarified that the IBC does not possess contempt jurisdiction, and the Applicant is advised to seek alternative remedies available under the law.In conclusion, the Tribunal dismissed the contempt application [CA-1081/2019], stating that the IBC does not have contempt jurisdiction. The Applicant was encouraged to pursue other available legal avenues for seeking redress.