High Court asserts its supervisory power under Article 227, setting aside NCLT's overreach in contempt proceedings.
In a significant ruling, the Calcutta High Court has set aside an order by the National Company Law Tribunal (NCLT), Kolkata Bench, emphasizing the importance of jurisdictional limits within contempt proceedings. The judgment, delivered by Justice Om Narayan Rai, addressed the procedural and jurisdictional errors committed by the NCLT when it attempted to modify interim orders in the context of contempt applications.
The case stemmed from a revisional application filed by Medimex Tradecom Private Limited challenging the NCLT's decision to dismiss several contempt applications, which were linked to an ongoing dispute involving the liquidation process of Amrit Hatcheries Private Limited. The central issue was the NCLT's directive allowing the liquidator to proceed with the sale despite an existing interim order restraining the finalization of such sales.
The High Court's judgment underscored that contempt jurisdiction is strictly confined to assessing whether there has been willful disobedience of court orders and does not extend to modifying substantive orders or addressing the merits of ongoing applications. Justice Rai cited various precedents, including the Supreme Court's ruling in "Embassy Property Developments Private Limited v. State of Karnataka," to substantiate the High Court's supervisory role under Article 227 of the Constitution, especially when a tribunal exceeds its jurisdiction.
In her arguments, Senior Advocate Manju Bhuteria, representing the opposite party, contended that the petitioner bypassed the statutory appellate remedy by approaching the High Court. However, the Court held that the NCLT’s actions warranted intervention given the jurisdictional overreach, thus justifying the use of Article 227 despite available alternatives.
Justice Rai's ruling highlighted that while the NCLT's order was appealable, its directives during contempt proceedings were made without proper jurisdiction, as such proceedings are not meant to address the merits of the case. The High Court's decision ensures that any actions taken, including the issuance of a sale certificate to a third-party purchaser, remain subject to the pending interlocutory application before the NCLT.
The judgment reaffirms the principle of "actus curiae neminem gravabit," stating that actions taken based on the NCLT's overreaching order should not adversely affect parties. The High Court has directed the NCLT to resolve the pending interlocutory application without being influenced by its prior directions, ensuring due process and fair adjudication.
This ruling underscores the critical role of higher courts in maintaining jurisdictional boundaries and ensures that tribunals operate within their legal constraints. The decision is a reminder of the judiciary's commitment to uphold procedural fairness and the rule of law.
Bottom line:-
Contempt jurisdiction of NCLT does not extend to modifying or setting aside interim orders passed on interlocutory applications. High Court under Article 227 can set aside directions issued by NCLT that exceed its jurisdiction while exercising contempt powers.
Statutory provision(s):
Constitution of India, 1950 - Article 227; Contempt of Courts Act, 1971; Companies Act, 2013 - Section 425
Medimex Tradecom Private Limited v. Bijay Murmuria, (Calcutta) : Law Finder Doc id # 2897121
