The New Delhi bench of the National Company Law Appellate Tribunal( NCLAT ) held that Resolution Professional(RP) proof beyond doubt that disobedience or breach was wilful necessary to constitute contempt of the Tribunal’s orders.
A bunch of complaints was filed alleging wilful breach of orders of the Appellate Tribunal. The Complainants are 50% shareholders in C. Krishniah Chetty & Sons Pvt. Ltd. (CKC & Sons) and similarly, the Contemnors are also 50% shareholders of the said company.
It was submitted that the Complainants belong to the Hayagriv family, whereas, the Contemnors belong to the Narayan family. They all belong to the same clan/family of the founder Sri Cotha Krishniah Chetty who started a jewellery business under the name C. Krishniah Chetty & Sons way back in the year around 1869.
There have been several disputes between both parties for many years and have been seeking legal remedies in the Erstwhile Company Law Board, High Court and National Company Law Tribunal (‘the Tribunal’).
The Appellate Tribunal had passed the orders containing directions to both parties not to precipitate the matter and not to take any coercive actions. Complainants further submitted that during the hearing the Appellate Tribunal recorded in an order dated 25.11.2021 that “at this stage, we are not inclined to pass any order on I.A. No. 1075 – 1076 of 2021” but gave direction to Respondent No. 9 in I.A. No. 1075 of 2021 i.e. Shri Ganesh Narayan, who is Contemnor No. 1 in the present Contempt Case.
It was alleged that Contemnors have been trying to start a competing jewellery business using deceptively similar names to take benefit of the trade mark and goodwill of CKC & Sons. Due to noncompliance by the Contemnors of this Tribunal’s orders dated 08.07.2021, 25.11.2021 & 24.02.2022, the Complainants are finding it difficult to protect the legal rights of the CKC & Sons which may impact the survival of the CKC & Sons itself.
It is a well-settled principle of law that if two interpretations are possible, and if the action is not contumacious, a contempt proceeding would not be maintainable. The effect and purport of the order is to be taken into consideration and the same must be read in its entirety. Therefore, the element of willingness is an indispensable requirement to bring home the charge within the meaning of the Act
A two-member bench comprising Justice Rakesh Kumar Jain, Member (Judicial) and Naresh Salecha, Member (Technical) observed that the respondent has made out a formidable case that it did not cause any damage, much less permanent damage to the structure in the suit property. Whereas, the petitioner was relying on photographs concerning the debris on the site left behind at the time of vacating the suit property.
The debris cannot cause damage and it is certainly not a case of defacement of the suit property. That position is reinforced by the fact that the water park in the suit premises was started and became fully functional within 2-3 months.
The Tribunal set aside the order passed by the High Court on 23-10-2009 in Assam Roller Flour Mills Assn. v. As already observed in previous paragraphs the three orders cited by the complainants were in different contexts and not for alleged violation or breach as made out in Contempt Case No. 13 of 2023. Therefore, the Contempt Case has not been made out.
The NCLT couldn’t find any alleged contempt and the contempt case devoid of any merit(s) is dismissed.
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