2022 (9) TMI 144 - AT - Companies Law

Contempt case closed as acts not willful; Creditors can pursue IBC actions

The Tribunal concluded that there were no grounds to punish the contemnors (Nos. 1 and 4) as their acts did not amount to willful interference with the ... Criminal contempt for lowering the authority of this Appellate Tribunal, interfering with the course of proceedings before this Tribunal and for obstructing administration of justice, finding them guilty for Contempt of Court - limitation for action of contempt - Section 20 of the Contempt of Courts Act - HELD THAT:- Admittedly, the Contempt case is filed on 14th September, 2021, the alleged acts of Contemnors constituting criminal contempt must be within a year proceeding to the date of filing i.e., 14th September, 2021. For the contemptuous acts of Contemnors beyond one year preceding to date of filing, the Tribunal is not competent to issue notice for criminal contempt. The alleged acts of contemnors prior to 14th September, 2020 are not cognizable. The Contemnors nos. 1 & 4 being erstwhile Resolution Professionals and Members of Supervising Committee did not take steps to implement the Resolution Plan. The Contemnors are only Supervising Committee Members, not the SRA who is under obligation to implement the Resolution Plan infusing funds, when the Contempt Case against SRA is not prosecuted, the Contemnor Nos. 1 and 4, who are Members of Supervising Committee, cannot be found guilty for criminal contempt for the reason that the SRA has to infuse funds to implement Resolution Plan and unless the SRA infused funds, the Committee can do nothing to implement the Resolution Plan. Therefore, the alleged acts of Contemnors 1 and 4 cannot be said to be willful or intentional, to saddle with any liability for criminal contempt. Criminal Contempt is defined under Section 2(C) of Contempt of Courts Act, 1917. A special procedure is provided to take cognizance of criminal contempt, other than criminal contempt in the face of Supreme Court or High Court. In case of criminal contempt, other than contempt referred under Section 14 of the Act, Supreme Court or High Court may take action on its own motion or on a motion made by Advocate General or any other person, with the consent in writing of Advocate General. In relation to Union Territory of Delhi, such Law Officer, as the Central Govt. may by notification in the Official Gazette, specifying in this behalf or any other person with the consent of such Law Officer in writing - In the present contempt case, the procedure contemplated under Section 15 of Contempt of Courts Act, 1971 has not been complied, consequently, the Contempt Case is liable to be closed as cognizance was taken in violation of mandatary procedure prescribed in Section 15 and major part of alleged acts of contempt are barred by Limitation prescribed by Section 20 of the Act. There are no ground to punish the Contemnor Nos 1 and 4. However, it is open to the Creditors to take action, if any, in accordance with provisions of IBC and regulations thereunder, subject to permissibility - the Contempt Case is closed. Issues Involved:1. Alleged criminal contempt by the Supervisory Committee of Deccan Chronicle Holdings Limited (DCHL).2. Obstruction of administration of justice by filing multiple applications.3. Implementation of the Resolution Plan.4. Limitation for taking cognizance of contempt.5. Compliance with procedural requirements under the Contempt of Courts Act, 1971.Detailed Analysis:1. Alleged Criminal Contempt by the Supervisory Committee of Deccan Chronicle Holdings Limited (DCHL):A Financial Creditor, IDBI Bank, filed a contempt case under Section 425 of the Companies Act, 2013, read with Article 215 of the Constitution of India and Section 15 of the Contempt of Court Act, 1971, against the Supervisory Committee of DCHL. The contempt was alleged on the grounds of lowering the authority of the Appellate Tribunal, interfering with its proceedings, and obstructing the administration of justice.2. Obstruction of Administration of Justice by Filing Multiple Applications:The contemnors were accused of approaching the adjudicating authority for a stay on the direction passed by the Appellate Tribunal, thereby obstructing the administration of justice. The Tribunal had directed that any decision by the Adjudicating Authority for the implementation of the Resolution Plan would be subject to the decision of the appeal. Despite this, the contemnors filed multiple applications, including I.A. No. 1351 of 2020 for the withdrawal of the approved Resolution Plan, which was heard and reserved for orders. Subsequently, another application for withdrawal was filed on the date fixed for pronouncement of the order. This act was deemed as interference with the administration of justice.3. Implementation of the Resolution Plan:The Tribunal noted that despite several directions, the Resolution Plan was not implemented in full. While the contemnors infused Rs. 60 Crores on 15.06.2021, the balance of Rs. 348.06 Crores as agreed in the Resolution Plan was not infused. The Tribunal had previously directed the Resolution Applicant to go ahead and implement the plan, make payments, and take other actions as approved by the Adjudicating Authority. The failure to implement the plan in totality was considered contemptuous.4. Limitation for Taking Cognizance of Contempt:Section 20 of the Contempt of Courts Act, 1971, prescribes a one-year limitation period for taking cognizance of contempt. The contempt case was filed on 14th September 2021, meaning the alleged acts of contempt must have occurred within one year preceding this date. Acts prior to 14th September 2020 were deemed non-cognizable. The Tribunal found that the alleged acts up to the withdrawal of I.A. No. 1351 of 2020 on 6th August 2020 fell outside this limitation period and could not be considered for determining contempt.5. Compliance with Procedural Requirements under the Contempt of Courts Act, 1971:The Tribunal emphasized that the procedure under Section 15 of the Contempt of Courts Act, 1971, for taking cognizance of criminal contempt was not complied with. This section requires that criminal contempt, other than contempt in the face of the Supreme Court or High Court, be taken on its own motion or on a motion made by the Advocate General or any other person with the consent of the Advocate General. The failure to comply with this procedural requirement rendered the contempt case liable to be closed.Conclusion:The Tribunal concluded that there were no grounds to punish the contemnors (Nos. 1 and 4). The acts of the Supervisory Committee members did not amount to willful or intentional interference with the administration of justice. The Tribunal also noted that the major part of the alleged acts of contempt were barred by the limitation period prescribed under Section 20 of the Contempt of Courts Act, 1971. Consequently, the contempt case was closed, but the creditors were given the liberty to take action in accordance with the provisions of the Insolvency and Bankruptcy Code (IBC) and its regulations.