2025 (11) TMI 1805 - AT - IBC

Appeal Rejected: No Condonation for Delay Where Contempt Petitions Dismissed Without Punishment Under Sections 19 and 12

Mr. Srinivas Kalluri, Mrs. Rajani Kalluri and Ms. Gorinka Pratyusha Versus Mr. Birendra Kumar Agarwal, Monitoring Committee of M/s. Manjeera Retail Holdings Private Limited and M/s. Lulu International Shopping Malls Private Limited, Kochi

The NCLAT dismissed the company appeals, refusing to condone a 16-day delay where the impugned orders arose from dismissal of contempt petitions linked to ... Condonation of 16 days of delay in preferring appeal - delay in getting the certified copy - scope of contempt petition - whether at all for any act of non-compliance of an order passed in any proceedings, which are carried under the provisions of I & B Code, whether the contempt proceedings, itself could be drawn, when under the I & B Code, itself the attraction of the provision of the Contempt of Courts Act, 1971, to be read with Section 425 of the Companies Act, 2013, has not been made either as a legislation by way of reference or by incorporation? - HELD THAT:- As per Section 19 of the Contempt of Courts Act, 1971, it only prescribes for that, appeal would lie from any order or decision of the Hon’ble High Court in the exercise of its jurisdiction “to punish for contempt”. At this juncture, we feel it apt to clarify that the order or decision under challenge has to be independently read. The impugned order would be an Interlocutory Order too, that was passed during the pendency of the main proceedings, and a decision would be a final adjudication of a lis. In the instant case, since it is a contempt emanating from the order that, was passed on an Interlocutory Application, it will be treated as to be an order for the purposes of Section 19 of the Contempt of Courts Act, 1971, but even for the purposes of sustaining an appeal under Section 19 of the Contempt of Courts Act, the appellate provision contemplated therein as extracted above, that it only prescribes for an appeal either against an order or against a decision, where a decision falls to be a decision within an ambit of Section 12 of the Contempt of Courts Act, 1971, that is, an order of punishment. If the appeal is filed as against the order simpliciter dismissing the of law of prescribing for an appeal, which is a creation of a statute, only as against an order of punishment, and no other exception has been safeguarded by the provision contained under Section 19 of the Contempt of Courts Act, 1971. The exclusively limited from the point that since impugned order happens to be a dismissal of a contempt and particularly the ratios as it has been laid down in Midnapore Peoples’ Cooperative Bank Ltd., & Ors. Vs Chunilal Nanda & Ors. [2024 (12) TMI 1660 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, CHENNAI] in Ajay Kumar Bhalla Vs Prakash Kumar Dixit [2025 (11) TMI 1427 - SUPREME COURT (LB)] matter has considered by the Hon’ble Apex Court in the light of the Judgment which we had an occasion to deal with in the matters of Pankaj Dhanuka Vs Lanco Kondapalli Power Limited [2006 (5) TMI 537 - SUPREME COURT], it is held that, as against the order of dismissal of a contempt petition, the Appeal as prescribed under Section 19 of the Contempt of Courts Act, 1971, would not be maintainable. The Company Appeals are dismissed, holding that the orders under the challenge are not appealable orders under Section 19 of the Contempt of Courts Act, 1971. ISSUES PRESENTED AND CONSIDERED 1. Whether the delay in preferring the Company Appeals should be condoned in view of the date of receipt of certified copy and proviso to Section 61(2) of the I & B Code. 2. Whether directions contained in interlocutory orders directing inclusion of liabilities in the Information Memorandum can form the basis of civil contempt under Section 425 of the Companies Act read with the Contempt of Courts Act, 1971. 3. Whether incomplete or insufficient disclosure (as opposed to total non-disclosure) of information ordered to be included in an Information Memorandum constitutes deliberate and intentional non-compliance amounting to civil contempt. 4. Whether proceedings under the I & B Code attract Section 425 of the Companies Act and the Contempt of Courts Act by incorporation or reference, i.e., whether statutory contempt powers under the Companies Act/Contempt Act are available to enforce orders passed in I & B Code proceedings. 5. Whether an appeal lies under Section 19 of the Contempt of Courts Act against an order dismissing a contempt petition (i.e., an order that is not an order of punishment under Section 12 of the Contempt Act). 6. The legal status/role of the applicant who moves a contempt petition and the consequences of that status for maintainability of an appeal against dismissal of contempt. ISSUE-WISE DETAILED ANALYSIS Issue 1: Condonation of delay in filing appeals Legal framework: Proviso to Section 61(2) of the I & B Code allows time limits for filing appeals; Courts permit condonation of delay on satisfactory explanation. Interpretation and reasoning: Delay of 16 days was explained by date of filing for certified copy and date of receipt, and e-filing within statutory upper limit under the proviso was shown. The Tribunal accepted the explanation as satisfactory. Ratio vs. Obiter: Ratio (limited): delay condoned where certified copy receipt and e-filing dates substantiate cause. Conclusion: Condone Delay Applications allowed; appeals admitted for hearing on merits. Issue 2 & 3 (Grouped): Contempt for interlocutory directions to include liabilities in Information Memorandum; sufficiency of disclosure vs deliberate non-compliance Legal framework: Section 425 Companies Act provides for contempt by incorporation of Contempt of Courts Act, 1971; civil contempt requires proof of deliberate and intentional disobedience; Contempt of Courts Act prescribes procedure and punishment (Section 12) for civil contempt. Precedent treatment: The Tribunal relied on authorities establishing that contempt proceedings are between the court and alleged contemnor and that contempt requires deliberate disobedience; prior Tribunal and Supreme Court observations (Midnapore People's Coop. Bank Ltd. and subsequent authority) were followed to delineate ambit of Section 19 appeals (see Issue 5 analysis). These precedents were followed, not distinguished or overruled. Interpretation and reasoning: The orders under challenge directed inclusion of liabilities in the Information Memorandum or to inform the applicant if already included. The respondents had disclosed liabilities in the Trial Balance under 'Advances from Customers' and the Successful Resolution Applicant admitted liability in that report. The Tribunal found disclosure broadly complied with the direction and that any marginal insufficiency did not establish deliberate, intentional violation necessary for civil contempt. Partial or incomplete disclosure, absent clear proof of intentional non-compliance, does not amount to contempt warranting punishment under the Contempt Act. Ratio vs. Obiter: Ratio: Interlocutory directive to include liabilities in an Information Memorandum will attract contempt only if deliberate and intentional non-compliance is established beyond doubt; mere insufficiency or partial disclosure is not civil contempt. Obiter: Observations on adequacy of particular disclosures are fact-specific dicta relevant to the record. Conclusion: Contempt petitions dismissed correctly because appellants failed to prove deliberate and intentional violation; insufficient disclosure alone does not constitute civil contempt. Issue 4: Applicability of Section 425 Companies Act / Contempt Act to I & B Code proceedings Legal framework: Section 425 (Companies Act) operates by attracting provisions of the Contempt of Courts Act; applicability to other statutes depends on explicit incorporation or reference. I & B Code contains no express incorporation or reference to Section 425/Contempt Act. Interpretation and reasoning: The Tribunal observed that Section 425 is not self-contained and operates by 'legislation by incorporation' of the Contempt Act. Since the I & B Code is silent on incorporation or reference to Section 425/Contempt Act, the question whether contempt proceedings can be initiated for orders passed under I & B Code remains open. The Court confined its decision to the narrow question presented: dismissal for lack of deliberate contempt; it did not decide the broader question of applicability of contempt provisions to I & B Code proceedings, reserving that issue for a connected batch of matters. Ratio vs. Obiter: Obiter (expressly reserved): The Tribunal did not conclusively hold that Section 425/Contempt Act cannot apply to I & B Code; it noted the absence of express incorporation and deferred final adjudication on that larger question. Conclusion: Issue left open for separate adjudication; for present appeals the Tribunal decided on absence of deliberate contempt without addressing full applicability of Section 425/Contempt Act to I & B Code. Issue 5: Maintainability of appeal under Section 19 of the Contempt of Courts Act against dismissal of contempt petition Legal framework: Section 19 Contempt Act permits appeal 'from any order or decision of High Court in the exercise of its jurisdiction to punish for contempt'; jurisprudence holds appeals lie only from orders imposing punishment for contempt and not from orders refusing to initiate/pursue contempt proceedings. Precedent treatment: The Tribunal followed settled Supreme Court authority (Midnapore People's Coop. Bank Ltd. and later decisions) and other Supreme Court precedent (State of Maharashtra v. Mahboob Allibhoy) establishing that an order dismissing or refusing to initiate contempt proceedings does not fall within Section 19 appealable orders unless an order of punishment is involved. These authorities were followed to hold the appeal non-maintainable. Interpretation and reasoning: The impugned orders are interlocutory dismissals of contempt petitions and not punitive orders under Section 12 of the Contempt Act. Section 19's appellate remedy is statute-bound and limited to appeals from orders imposing punishment for contempt. The Tribunal further explained the conceptual posture of contempt proceedings - primarily between court and alleged contemnor with the informer/applicant playing a passive role - reinforcing that a complainant/applicant lacks a statutory right to appeal under Section 19 against mere dismissal of contempt absent a punishment order. Ratio vs. Obiter: Ratio: Appeal under Section 19 of the Contempt Act is not maintainable against an order dismissing a contempt petition that is not an order of punishment; dismissal of contempt does not attract Section 19 appellate jurisdiction. This is the decisive holding of the Tribunal in these appeals. Conclusion: Company Appeals dismissed as not being appealable under Section 19 of the Contempt of Courts Act, 1971. Issue 6: Role of applicant/informer in contempt proceedings and consequences for appealability Legal framework & precedent treatment: Contempt proceedings are characterised as primarily between the court/tribunal and the alleged contemnor; the informer merely initiates awareness. Supreme Court authority confirms informers are not prosecutors and that the court exercises its own jurisdiction to punish or discharge. Interpretation and reasoning: Given that a contempt proceeding is essentially the court acting to vindicate its own authority, an applicant's role is to inform only; therefore a dismissal of contempt for want of proof of deliberate violation is a decision refusing to exercise jurisdiction to punish. Such a refusal is not appealable under Section 19. This reasoning reinforces the finding on maintainability in Issue 5. Ratio vs. Obiter: Ratio (supporting): Because the applicant is an informer only, dismissal of contempt cannot be converted into an appealable order under Section 19 unless it results in an order of punishment; thus the appellants lack a statutory right to appeal the dismissals in the present form. Conclusion: Applicant status and nature of contempt proceedings underpin the non-maintainability of appeals against dismissal of contempt petitions under Section 19.