The Chennai Bench of National Company Law Appellate Tribunal ( NCLAT ) ruled that a contempt appeal against a juristic entity is not maintainable under Section 61 of the Insolvency and Bankruptcy Code (IBC), 2016.
Pankaj Dhanuka, appellant-applicant, invoked Section 60 (5) of the I & B Code, 2016, and Section 425 of the Companies Act, 2013, to file a contempt petition against the respondent, alleging non-compliance with a judgment dated 02.08.2023. He sought contempt proceedings, but the Adjudicating Authority dismissed the petition in its judgment dated 04.10.2024, stating no apparent contempt had been established.
The appellant argued that the respondent failed to comply with the order and that an appeal against the dismissal of the contempt petition was maintainable under Section 61 of the I & B Code, read with Section 19 of the Contempt of Courts Act, 1971. He contended that Section 60(5) allowed the tribunal to address all issues arising during insolvency proceedings, including contempt. Additionally, he claimed the dismissal stemmed from an incorrect interpretation of the order dated 02.08.2023.
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The respondent opposed the appeal, asserting that the contempt petition was not maintainable as it targeted a juristic entity, M/s. MCM Pacific Pte Limited, which could not be punished under the Contempt of Courts Act. The respondent further argued that Section 60(5) was a savings clause and could not override specific provisions regarding contempt, such as Section 425 of the Companies Act and Sections 12/14 of the Contempt of Courts Act. They contended that no deliberate contempt or willful non-compliance had occurred.
The tribunal rejected the appellant’s arguments, clarifying that Section 60(5) of the I & B Code is a savings clause and should only be invoked in cases of procedural gaps where no specific remedy exists. It stated that Section 60(5) could not be applied to override existing provisions regarding contempt proceedings, specifically Section 425 of the Companies Act and Sections 12/14 of the Contempt of Courts Act.
Additionally, it also noted that contempt could only be imposed on individuals, not juristic entities like M/s. MCM Pacific Pte Limited, which the contempt petition had targeted.
The NCLAT also explained that under Section 19 of the Contempt of Courts Act, appeals were only maintainable against orders imposing punishment for contempt, as established in Midnapore Peoples’ Coop. Bank Ltd. v. Chunilal Nanda. It referred to the Supreme Court’s ruling in Ajay Kumar Bhalla v. Prakash Kumar Dixit (29.07.2024), which further affirmed that appeals in contempt matters could only be filed if a punishment had been imposed.
The two member bench comprising Justice Sharad Kumar Sharma (Judicial Member) and Indevar Pandey(Technical Member) after reviewing the case, concluded that no deliberate contempt had occurred. It determined that the appeal was not maintainable because it did not involve an order imposing punishment for contempt. Accordingly, the appeal was dismissed as lacking merit.
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