AI Drafter 
TaxTMI 
TaxTMI 
2025 (5) TMI 657
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....ted 10/07/2014 on withdrawal of the CIRP without paying CIRP costs and fees whether approved or unapproved thus erasing the protection granted by the Order dated 13/01/21 protecting the CIRP costs and fees of the Petitioner which the actions of the Respondents are in Contempt of the Order dated 13/01/2021 of this Hon'ble Court, even to the knowledge of the Respondents as the value of the assets of the present Project are assessed merely at Rs.55 Lakhs by the present R-1 which are much less than the even the approved CIRP fees only, of the Petitioner of Rs.1.48Cr. + interest @12%pa, hence is this Contempt Petition as such an action and other such action are in Contempt of Order dated 13/01/21 of this Hon'ble Tribunal and thus frustrate the order dated 13/01/2021 of this Hon'ble Tribunal. Annexure A1 is the C.C. of the Order dated 13/01/2021 of this Hon'ble Tribunal." 2. We need to notice facts giving rise to this Contempt Application: i. The NCLT, Bengaluru Bench vide order dated 20.08.2019 commenced Corporate Insolvency Resolution Process ("CIRP") against the Corporate Debtor ("CD") Dreamz Infra India Ltd. on an Application filed by three Homebuyers of t....
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.... erstwhile RP. 3. We have heard Shri Ashok Kriplani, Applicant in person in support of the Contempt Application. The Applicant also filed written submission dated 18.04.2025. 4. Applicant submits that this Tribunal vide order dated 13.01.2021 has protected the CIRP and fee of the Applicant as RP and filing of Application by the present RP for withdrawal of CIRP without obtaining a Bank Guarantee for fee and expenses is contemptuous of the order of this Tribunal dated 13.01.2021 and the action of the RP to file an Application for withdrawal of the CIRP without payment of fee and expenses of Applicant, violates the protection granted by order dated 13.01.2021 and the contempt proceedings be initiated against both the Respondents. It is submitted that action of the Respondents is fully covered by the civil contempt as defined in Section 2(d) of the Contempt of Courts Act, 1971. Respondent No.1 is carrying on the CIRP of the CD fraudulently to harm the interest of the Applicant. IA No.546 of 2024 filed by Respondent No.1 is full of illegalities. Applicant has referred to paragraph 21, 22 and 25 of the Application and Form-FA and states that CoC has rejected the CIRP cost as it is....
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....(6-A)(b) of IBC. Charge, if any, required to be handed over by Respondent No.2 shall be handed over to Mr. Hari T. Devadiga. (B) The Adjudicating Authority shall in compliance of Section 22(4) forward the name of Mr. Konduru Prasanth Raju to the IBBI and follow the procedure as laid down in Section 22(4) and (5) of IBC. (C) In the meanwhile, the charge of IRP will remain with the Respondent No.1 - Ashok Kriplani who will be treated as IRP till the Adjudicating Authority does compliance of Section 22(4) and (5) of IBC. (D) Legality of the actions taken by the Respondents 1 and 2 in the period between passing of the Impugned Orders dated 17th December, 2019 till now, shall not be called into question on the basis of present Orders which we are passing. The steps taken by them pursuant to Impugned Orders shall be treated as acts done in regular course. The steps taken by them in CIRP and fees paid/payable in terms of Impugned Orders, shall be protected. 7. The above order, thus, inspite of setting aside order dated 17.12.2019, action taken by the Applicant as the Authorized Representative was directed not be called in to question. The direction in paragra....
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.... 2. Approval of certain expenses incurred by the present Resolution Professional, Mr. Konduru Prasanth Raju, including upfront payments requiring reimbursement and other pending costs 100% 0% 0% 22. A review of the Minutes of the 11th CoC meeting indicates that the CoC members unanimously rejected the approval of CIRP expenses incurred by the former Resolution Professional, as well as the expenses incurred by the current Resolution Professional, including upfront payments and pending costs. The CoC voted against the approval of both sets of expenses, demonstrating that a CoC members have failed to exercise their commercial wisdom and take appropriate decisions regarding the CIRP expenses, despite the clear need to address these financial matters. A copy of minutes of the meeting is produced herewith as Annexure - F." 9. The above clearly indicate that CoC with 100% vote share has disapproved the payment of CIRP expenditure to the Applicant as well as to the present RP - Mr. Raju. After the aforesaid decision, the RP left with no remedy and filed an IA No.426 of 2023 praying for liquidation under Section 33(1)(a) of the IBC, which Application remained pendi....
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....er Results Yes, I want to Abstain No, I do withdraw the CIRP Process not want to withdraw the CIRP Process Voting Platform 98.00% 2% 0% E-mail 00.08% 0% 0% Total 98.08% 2% 0% 100% Question No.5 In light of the discussions and conclusions arrived at in the 14th and 15th CoC meetings and after studying the feasibility report, do you want the RP to file withdrawal of the CPIB No.84/BB/2019 filed under Section 7 of IBC? Answer Results Yes, I want RP to file for withdrawal of application filed under sec 7 of IBC Abstain No, I do not want RP to file for withdrawal of application filed under sec 7 of IBC Voting Platform 94.00% 3% 3% E-mail 00.066% 0% 0% Total 94.06% 3% 3% 100% Question No.6 Do you want to continue action initiated against the company's directors and/ or landlord in the National Consumer Dispute Redressal Commission or any other forums? Answer Results Yes, I want to continue legal actions at other forums ....
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....rised Representative of the CoC dated 28.06.2024, with regard to Bank Guarantee, which was required to be submitted as per Regulation 30A. Following has been pleaded in paragraphs 33, 34 and 35 of the Application (IA 546 of 2024): "33. Regulation 30(2) of the CIRP Regulations stipulates that the application under sub-regulation (1) of Regulation 30 shall be made in Form - FA of Schedule - 1 accompanied by a bank guarantee towards (a) towards estimated expenses incurred on or by the interim resolution professional for purposes of regulation 33, till the date of filing of the application under clause (a) of sub- regulation (1); or (b) towards estimated expenses incurred for purposes of clauses (aa), (ab), (c) and (d) of regulation 31, till the date of filing of the application under clause (b) of sub-regulation (1). 34. It is humbly submitted that this applicant, in line with the mandate under Regulation 30(2) of the CIRP Regulations read with the duties of this RP under section 25 of the Code, the RP appraised the CoC members of the requirement of Bank guarantee to be provided in terms of Regulation 30A of the CIRP Regulations. 35. However, the CoC in the ....
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....ovided that where the application is made under clause (b) after the issue of invitation for expression of interest under regulation 36A, the applicant shall state the reasons justifying withdrawal after issue of such invitation. (2) The application under sub-regulation (1) shall be made in Form FA of the 3[Schedule-I] accompanied by a bank guarantee- (a) towards estimated expenses incurred on or by the interim resolution professional for purposes of regulation 33, till the date of filing of the application under clause (a) of sub-regulation (1); or (b) towards estimated expenses incurred for purposes of clauses (aa), (ab), (c) and (d) of regulation 31, till the date of filing of the application under clause (b) of sub- regulation (1). (3) Where an application for withdrawal is under clause (a) of sub-regulation (1), the interim resolution professional shall submit the application to the Adjudicating Authority on behalf of the applicant, within three days of its receipt. (4) Where an application for withdrawal is under clause (b) of sub-regulation (1), the committee shall consider the application, within seven days of its receipt. ....
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....d by Court can give cause for initiating contempt proceedings against the delinquent. The Hon'ble Supreme Court in Dr. U.N. Bora, Ex. Chief Executive Officer and Ors. vs. Assam Roller Flour Mills Association and Anr. - (2022) 1 SCC 101, has reviewed the entire law of civil contempt. In paragraphs 8 and 9, following was laid down: "8. We are dealing with a civil contempt. The Contempt of Courts Act, 1971 explains a civil contempt to mean a wilful disobedience of a decision of the Court. Therefore, what is relevant is the "wilful" disobedience. Knowledge acquires substantial importance qua a contempt order. Merely because a subordinate official acted in disregard of an order passed by the Court, a liability cannot be fastened on a higher official in the absence of knowledge. When two views are possible, the element of wilfulness vanishes as it involves a mental element. It is a deliberate, conscious and intentional act. What is required is a proof beyond reasonable doubt since the proceedings are quasi-criminal in nature. Similarly, when a distinct mechanism is provided and that too, in the same judgment alleged to have been violated, a party has to exhaust the same before a....
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....edings are quasi- criminal in nature, and therefore, standard of proof required in these proceedings is beyond all reasonable doubt. It would rather be hazardous to impose sentence for contempt on the authorities in exercise of the contempt jurisdiction on mere probabilities. (Vide V.G. Nigam v. Kedar Nath Gupta [V.G. Nigam v. Kedar Nath Gupta, (1992) 4 SCC 697 : 1993 SCC (L&S) 202], Chhotu Ram v. Urvashi Gulati [Chhotu Ram v. Urvashi Gulati, (2001) 7 SCC 530 : 2001 SCC (L&S) 1196], Anil Ratan Sarkar v. Hirak Ghosh [Anil Ratan Sarkar v. Hirak Ghosh, (2002) 4 SCC 21], Bank of Baroda v. Sadruddin Hasan Daya [Bank of Baroda v. Sadruddin Hasan Daya, (2004) 1 SCC 360], Sahdeo v. State of U.P. [Sahdeo v. State of U.P., (2010) 3 SCC 705 : (2010) 2 SCC (Cri) 451] and National Fertilizers Ltd. v. Tuncay Alankus [National Fertilizers Ltd. v. Tuncay Alankus, (2013) 9 SCC 600 : (2013) 4 SCC (Civ) 481 : (2014) 1 SCC (Cri) 172] .) 12. Thus, in order to punish a contemnor, it has to be established that disobedience of the order is "wilful". The word "wilful" introduces a mental element and hence, requires looking into the mind of a person/contemnor by gauging his actions, which is an ind....
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....ment (P) Ltd. v. CESC Ltd. [Three Cheers Entertainment (P) Ltd. v. CESC Ltd., (2008) 16 SCC 592] ] 21. Similarly, in R.N. Dey v. Bhagyabati Pramanik [R.N. Dey v. Bhagyabati Pramanik, (2000) 4 SCC 400], this Court expounded in para 7 as follows : (SCC p. 404) '7. We may reiterate that the weapon of contempt is not to be used in abundance or misused. Normally, it cannot be used for execution of the decree or implementation of an order for which alternative remedy in law is provided for. Discretion given to the court is to be exercised for maintenance of the court's dignity and majesty of law. Further, an aggrieved party has no right to insist that the court should exercise such jurisdiction as contempt is between a contemner and the court. It is true that in the present case, the High Court has kept the matter pending and has ordered that it should be heard along with the first appeal. But, at the same time, it is to be noticed that under the coercion of contempt proceeding, the appellants cannot be directed to pay the compensation amount which they are disputing by asserting that claimants were not the owners of the property in question and that decree was obta....
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....s which are sometimes levelled against the courts exercising contempt of court jurisdiction "that it has exceeded its powers in granting substantive relief and issuing a direction regarding the same without proper adjudication of the dispute" in its entirety can be avoided. This will also avoid multiplicity of proceedings because the party which is prejudicially affected by the judgment or order passed in the contempt proceeding and granting relief and issuing fresh directions is likely to challenge that order and that may give rise to another round of litigation arising from a proceeding which is intended to maintain the majesty and image of courts.' * * * 26. Thus understood, we find force in the explanation offered by the respondent that as per its bona fide understanding, there was no outstanding dues payable to the petitioner. Moreover, as observed [Sagu Dreamland (P) Ltd. v. Jingal Bell Amusement Park (P) Ltd., 2019 SCC OnLine Del 6720] by the High Court, these aspects could be answered by the executing court if the parties pursue their claim(s) before it in that regard. Suffice it to observe that it is not a case of intentional violation or wilful disobedie....
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....be noticed. The Applicant has relied on judgment of the Hon'ble Supreme Court dated 13.12.2024 in Contempt Petition (C) Nos.158-159 in Civil Appeal Nos.5542-5543 of 2023 in CELIR LLP vs. Mr. Sumati Prasad Bafna & Ors. The Applicant relied on paragraphs 199, 200 and 201 of the judgment, which lays down following "199. The contempt jurisdiction of this court cannot be construed by any formulaic or rigid approach. Merely because there is no prohibitory order or no specific direction issued the same would not mean that the parties cannot be held guilty of contempt. The Contempt jurisdiction of the court extends beyond the mere direct disobedience of explicit orders or prohibitory directions issued by the court. Even in the absence of such specific mandates, the deliberate conduct of parties aimed at frustrating court proceedings or circumventing its eventual decision may amount to contempt. This is because such actions strike at the heart of the judicial process, undermining its authority and obstructing its ability to deliver justice effectively. The authority of courts must be respected not only in the letter of their orders but also in the broader spirit of the proceedings ....
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.... by the RP that Homebuyers have expressed their inability to bear expenses of CIRP. Paragraph-35 of the Application is again reproduced: "35. However, the CoC in the present case consists of individual persons, who belong to modest financial backgrounds. Having already incurred huge losses at their end at the hands of the CD, they have expressed a view that they are unable to foot any expenses in the CIRP. Therefore, the CoC has rejected all the costs incurred by the former and current RP as it is unable to meet such expenses. Further, a majority of the CoC members are scattered, thereby making the requirement of obtaining a bank guarantee all the more cumbersome. In light of the same, the CoC has humbly requested that this Hon'ble Tribunal may be pleased to waive the requirement of a bank guarantee in the present case and allow the withdrawal of the CIRP as it is." 20. The order of this Tribunal dated 13.01.2021 as noticed above, only protected the fee and expenses of the Applicant, who was erstwhile RP, who was replaced by Respondent No.1. When the CoC, who is to make the payment of the CIRP fee and expenses is unable to bear the fee and expenses and they have dec....