No Wilful Disobedience: NCLT Kochi Dismisses Contempt Plea Against Former Managing Director of Bhagyodayam Company
Pranav B Prem
The National Company Law Tribunal (NCLT), Kochi Bench has held that the failure of a former Managing Director to hand over company records to a court-appointed administrator does not, by itself, justify contempt proceedings unless there is clear evidence of wilful and deliberate intent to defy the tribunal’s directions. The Tribunal clarified that contempt powers cannot be invoked for every instance of non-compliance and must be exercised only in exceptional circumstances where the authority of the court is intentionally undermined.
A Bench comprising Judicial Member Vinay Goel and Technical Member Madhu Sinha was considering a contempt petition filed by Bhagyodayam Company alleging that its former Managing Director, Paul Joseph, had intentionally disobeyed the tribunal’s order dated 19 March 2024 directing him to hand over specific statutory records—including books of accounts and registers—to the Administrator appointed by the tribunal.
The company argued that despite repeated reminders from the Administrator and the newly elected Board, the documents were not handed over for nearly 11 months, thereby obstructing implementation of earlier orders requiring a detailed financial audit. The petitioner claimed that this amounted to deliberate and wilful disobedience. On the issue of maintainability, Paul Joseph contended that the contempt petition itself was not competent because the Board that authorised it had allegedly ceased to hold office under Section 164(2) of the Companies Act. The Tribunal rejected this defence after noting that no proof of such disqualification from the Registrar of Companies was produced, and that the Managing Director was duly authorised by a board resolution dated 23 August 2024.
On merits, the respondent submitted that all relevant documents were already handed over to the earlier Administrator during 2019 and relied on receipts issued by a company clerk. The Tribunal noted that there were conflicting versions regarding the custody of records. While the company insisted that the documents remained with the former Managing Director, the respondent maintained that the records had been submitted to the earlier Administrator, who in turn denied having received them. The Tribunal observed that such contradictions created doubt about the present possession of records, and therefore the key component of “wilful disobedience” was not proved.
Referring to judicial principles on contempt, the Tribunal reiterated that every disobedience or breach of a court order is not contempt and that the offence requires intentional, conscious disobedience designed to undermine judicial authority. It stressed that contempt jurisdiction should be exercised sparingly, with a standard of proof akin to criminal proceedings. It further held that where two interpretations of conduct are possible, contempt cannot be invoked merely because an order has not been complied with.
The Tribunal noted that although the respondent had not furnished the records pursuant to the 19 March 2024 order, such conduct may invite civil consequences and other remedies available under the Companies Act, including proceedings under Sections 339, 340 and 447. However, such non-submission, in the absence of clear proof of intent, did not meet the threshold to initiate contempt. It also observed that issuing contempt in the circumstances would not serve the purpose of facilitating the financial audit earlier directed by the tribunal.
Accordingly, the NCLT dismissed the contempt petition, concluding that the material on record did not conclusively establish deliberate and wilful disobedience of the tribunal’s directions.
Appearance
For Petitioner: Advocate Karthika KJ
For Respondent: Advocate Aditya B Shenoy
Cause Title: Bhagyodayam Company vs Paul Joseph
Case No: Contempt Petition (C/Act)/02/KOB/2025
Coram: Judicial Member Vinay Goel, Technical Member Madhu Sinha
