Tribunal Upholds Judicial Authority as Government Official Faces Contempt Charges for Ignoring Refund Order During Insolvency Moratorium
In a significant move reinforcing judicial authority and compliance with insolvency regulations, the National Company Law Tribunal (NCLT) Indore Bench has initiated contempt proceedings against the Superintendent of Central Goods and Services Tax (CGST) & CEX. The tribunal acted upon the deliberate non-compliance by the respondent in refunding amounts recovered during the moratorium period, as mandated by an earlier adjudication order.
The case, titled "Amit Chopra v. Superintendent CGST & CEX," involves Amit Chopra, the liquidator of Bhagwan Motors Pvt. Ltd., as the applicant. The NCLT had previously directed the CGST department to refund Rs. 49,15,286, which was unlawfully recovered during the moratorium period under the Insolvency and Bankruptcy Code, 2016. Despite multiple notifications and reminders by the liquidator, the respondent failed to adhere to the tribunal's directions, prompting the initiation of contempt proceedings.
Presiding over the matter, Mr. Brajendra Mani Tripathi, Member (Judicial), and Mr. Man Mohan Gupta, Member (Technical), underscored the importance of compliance with judicial orders in maintaining the integrity of the insolvency process. They emphasized that the respondent's actions constituted wilful disobedience and civil contempt under the Contempt of Courts Act, 1971, undermining both the legislative intent of the Insolvency and Bankruptcy Code and the judicial process.
The tribunal's decision is grounded in Sections 14 and 33(2) of the Insolvency and Bankruptcy Code, 2016, which impose a moratorium prohibiting any recovery or adjustment during the Corporate Insolvency Resolution Process (CIRP). Furthermore, Section 425 of the Companies Act, 2013 empowers the tribunal to exercise contempt jurisdiction akin to that of the High Court, ensuring adherence to its orders.
This case is not an isolated incident, as similar judgments have been passed by the Supreme Court and National Company Law Appellate Tribunal (NCLAT) in Sundaresh Bhatt v. CBIT and Shailendra Singh v. Nisha Malpani, affirming the necessity of contempt proceedings to uphold judicial authority and maintain the sanctity of insolvency processes.
The tribunal's directive for contempt proceedings serves a dual purpose: upholding the majesty of the law by penalizing wilful disobedience and coercing the contemnor into compliance with judicial mandates. The tribunal has scheduled a hearing on February 10, 2026, to discuss the quantum of sentence, allowing the respondent an opportunity to present their case.
The case highlights the challenges faced in enforcing insolvency regulations, particularly when government departments are involved. It underscores the crucial role of judicial bodies in ensuring the effective implementation of insolvency laws, protecting the interests of all stakeholders, and maintaining the balance intended by the Insolvency and Bankruptcy Code, 2016.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Respondent's deliberate non-compliance with the Adjudicating Authority's order to refund the amount recovered during the moratorium period constitutes civil contempt under Contempt of Courts Act, 1971.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 - Sections 14, 33(2); Contempt of Courts Act, 1971 - Section 2(b); Companies Act, 2013 - Section 425
Amit Chopra v. Superintendent CGST & CEX, (NCLT)(Indore Bench) : Law Finder Doc Id # 2825969
