Appeal Against Dismissal Of Contempt Petition By NCLT Not Maintainable Under Contempt Of Courts Act: NCLAT Chennai
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench comprising Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member), has held that an appeal against the dismissal of a contempt petition by the National Company Law Tribunal (NCLT) is not maintainable before the Appellate Tribunal under Section 19 of the Contempt of Courts Act, 1971. The Bench clarified that the right to appeal under Section 19 is a statutory creation that extends only to cases where punishment for contempt has been imposed, and not to cases where the contempt petition has merely been dismissed.
Also Read: NCLAT: Suspended Directors Not Entitled To Access Valuation Reports Rejected By CoC
Background
The case arose from a dispute concerning buyers of immovable property in Manjeera Mall, Hyderabad, who had filed contempt petitions before the NCLT Hyderabad against the Resolution Professional and Monitoring Committee of Manjeera Retail Holdings Pvt. Ltd., as well as Lulu International Shopping Malls Pvt. Ltd., the company that had taken over the project. The petitioners alleged that the Resolution Professional and Monitoring Committee had failed to comply with the Tribunal’s earlier direction to include their property ownership details in the company’s Information Memorandum. They contended that such omission amounted to wilful disobedience of the Tribunal’s order.
The respondents, however, argued that all relevant information had already been disclosed in the financial statements forming part of the Information Memorandum. They submitted that the buyers’ names had been reflected under the head “Advance from Customers”, demonstrating that their payments had been duly recorded. Accepting the respondents’ explanation, the NCLT, by order dated July 19, 2024, held that there was no deliberate or intentional violation of its earlier directions and dismissed the contempt petitions.
Before the Appellate Tribunal
The aggrieved homebuyers filed an appeal before the NCLAT Chennai, challenging the dismissal order and contending that the NCLT had erred in disregarding their claims despite clear directions for inclusion. The Appellate Tribunal, before addressing the merits, considered whether such an appeal was maintainable under Section 19 of the Contempt of Courts Act, 1971.
Findings
The Bench observed that Section 19 of the Contempt of Courts Act, 1971, read with Section 425 of the Companies Act, 2013, provides a right of appeal only against an order imposing punishment for contempt. It does not cover appeals against orders merely refusing to entertain or dismissing contempt proceedings. The Tribunal noted: “If the appeal is filed against an order simpliciter dismissing the contempt petition, no appeal would lie because there being a specific intention of law prescribing appeal only as against an order of punishment, and no other exception has been safeguarded under Section 19 of the Contempt of Courts Act, 1971.”
The NCLAT also examined whether the Insolvency and Bankruptcy Code, 2016 (IBC) permits initiation of contempt proceedings under its framework. It observed that the IBC does not incorporate by reference or legislation the provisions of the Contempt of Courts Act, 1971 or Section 425 of the Companies Act, 2013. The Tribunal pointed out: “For reasons best known to the framers of law, the provisions contained under Section 425 of the Companies Act, 2013, conferring the power to initiate contempt, is not a power which has been prescribed to be given under the provisions of I & B Code.” Hence, the NCLT could not have exercised contempt jurisdiction under the IBC, and consequently, an appeal invoking Section 19 against dismissal of a contempt petition was also not maintainable.
Holding that an appeal under Section 19 lies only against an order punishing for contempt and not against an order dismissing such proceedings, the NCLAT dismissed the appeal filed by the buyers. “Since the order which has been challenged by invoking Section 19 of the Contempt of Courts Act, 1971, not being the order of punishment, appeal would not lie under Section 19 of the Contempt of Courts Act, 1971, which is to be read along with Section 425 of the Companies Act, 2013,” the Bench concluded. Accordingly, the appeals were dismissed as not maintainable.
Appearance
For Appellants: Mr. Arun C Mohan, Advocate
Cause Title: Srinivas Kalluri and Anr v Birendra Kumar Agarwal, RP of M/s. Manjeera Retail Holdings Private Limited and Ors
Case No: Company Appeal (AT) (CH) (Ins) No.378/2025
Coram: Justice Sharad Kumar Sharma (Judicial Member), Jatindranath Swain (Technical Member)
