High Court rules that NCLT holds exclusive contempt powers under Companies Act, 2013, dismisses petition as not maintainable
In a significant judgment, the Bombay High Court, presided over by Justice Milind N. Jadhav, has dismissed a contempt petition filed by S.G. Mittal Enterprises Private Limited against Satara Sahakari Bank Ltd. The petition was filed for alleged breach of consent terms, which were part of a settlement between the parties under proceedings initiated in the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC). The High Court clarified that it does not hold parallel contempt jurisdiction over orders passed by the NCLT, as the Tribunal itself is empowered under Section 425 of the Companies Act, 2013 to exercise such powers.
The case arose when S.G. Mittal Enterprises sought a "No Dues Certificate" from Satara Sahakari Bank after allegedly fulfilling all financial obligations as per consent terms agreed upon in the NCLT. The bank, however, demanded an additional payment, leading to the filing of the contempt petition.
Justice Jadhav emphasized that the NCLT and its appellate body, the National Company Law Appellate Tribunal (NCLAT), possess plenary and self-contained contempt jurisdiction under the Companies Act. This authority is not fragmented and applies to all proceedings before the Tribunal, whether under the Companies Act or the IBC.
The court referenced Section 425 of the Companies Act, which provides the NCLT and NCLAT with the same jurisdiction over contempt as a High Court, making it clear that these powers extend to proceedings under the IBC. The judgment also highlighted the doctrine of effectiveness, stating that statutory provisions must be interpreted to give them meaningful effect and ensure the enforceability of Tribunal orders.
The ruling reaffirms that High Court intervention is limited to supervisory control under Articles 226 and 227 of the Constitution of India and cannot extend to exercising parallel contempt jurisdiction where the Tribunal is expressly empowered by statute. The court's decision underscores the legislative intent to vest comprehensive authority in the NCLT over matters connected with insolvency proceedings, thereby streamlining the adjudicatory process.
The dismissal of the contempt petition is a pivotal moment in clarifying the jurisdictional boundaries between the High Court and the NCLT, reinforcing the latter's role as a singular adjudicatory institution with the authority to ensure compliance and enforce its orders.
Bottom Line:
Contempt jurisdiction of High Court in relation to orders passed by the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC) is not maintainable when the NCLT itself is empowered under Section 425 of the Companies Act, 2013 to exercise contempt jurisdiction.
Statutory provision(s):
Contempt of Courts Act, 1971, Section 10
Companies Act, 2013, Section 425
Insolvency and Bankruptcy Code, 2016
Articles 226 and 227 of the Constitution of India
