AI Structured Summary
Not yet generated for this judgment
Judgment
Ashok Bhushan, J.
This Appeal has been filed challenging the order dated 18.08.2025 passed by the Adjudicating Authority (National Company Law Tribunal) Cuttack Bench, Court No.1 dismissing Cont. Appl.(IB) No. 1/CB/2025 in limine. The Appellant- Suspended Director of the Corporate Debtor aggrieved by the order has come up in the Appeal.
Brief facts of the case necessary to be noticed for deciding the Appeal are:-
The Corporate Debtor- M/s. Neelkantham System Pvt. Ltd. was put to Corporate Insolvency Resolution Process (CIRP) by order dated 30.01.2025 of the Adjudicating Authority. The CIRP commenced against the Corporate Debtor on an application under Section 9 filed by Virendra Prakash Gupta proprietor of Virendra Textiles. The Corporate Debtor had obtained financial facilities from ICICI Bank for securing the facilities from ICICI Bank. Personal guarantor of the Corporate Debtor has given guarantee by mortgaging the assets. Appellant was one of the mortgagor of its immovable property to the ICICI Bank. ICICI Bank issued a notice under Section 13(2) of the SARFAESI Act to the Corporate Debtor, the borrower as well as guarantors including the Appellant. In pursuance of the notice under Section 13(2) dated 15.01.2025, possession notice under Section 13(4) dated 29.05.2025 was issued by the ICICI Bank and possession of mortgaged assets were taken. The Appellant, the Suspended Director of the Corporate Debtor filed Contempt Application (IB) No. 1/CB/2025 against the officials of the ICICI Bank which application came to be heard and dismissed in limine by order dated 18.08.2025. Appellant aggrieved by the said order has filed the Appeal.
Counsel for the Appellant challenging the order submits that the CIRP having commenced on 30.01.2025 against the Corporate Debtor taking possession of the assets on 29.05.2025 is in violation of the Moratorium order under Section 14 and there was clear contempt committed by officials of the ICICI Bank.
Counsel for the Respondent refuting the submission of the Appellant submits that the present Appeal filed by the Suspended Director is not maintainable since by the impugned order Adjudicating Authority dismissed Contempt Application in limine. When Contempt Application was dismissed in limine, Appeal under Section 19 of the Contempt of Courts Act read with Section 425 of the Companies Act, 2013 is not maintainable.
Counsel for the parties in support of their respective submissions has placed reliance on various judgments which shall be referred hereinafter.
The Contempt Application was filed by the Appellant- Suspended Director alleging violation of Moratorium dated 30.01.2025. From the facts on the record, it does appear that notice under Section 13(2) was issued both to borrower i.e. Corporate Debtor as well as the personal guarantor. Appellant was one of the personal guarantor and mortgagor which is reflected from the materials under Section 13(4) brought on the record. The Appellant was also referred in the notice as mortgagor. Adjudicating Authority in the impugned order held that the Moratorium under Section 14 does not protect the property of the personal guarantor, hence, the declaration of Moratorium under Section 14 does not bar initiation of proceeding under the SARFAESI Act. The above view of the Adjudicating Authority is clearly in accordance with law and fully supported by judgment of the Hon’ble Supreme Court in “State Bank of India vs. V. Ramakrishnan- (2018) 17 SCC 394”.
Shri Joy Saha, Learned Senior Counsel for the Respondent has raised preliminary objection with regard to maintainability of the Appeal. Submission is that the Appeal is not maintainable since Contempt Application has been dismissed which order cannot be said to be an order in exercise of contempt jurisdiction. Submission of the Respondent is refuted by the Appellant. Counsel for the Appellant submitted that the Appeal is fully maintainable.
Counsel for the Appellant in support of his submission has relied on judgment of the Allahabad High Court in “Tasneem Fatima vs. Sri Amit Mohan Mishra- AHC-LKO:11415”. Judgment of the Allahabad High Court relied by Counsel for the Appellant was a case where Special Appeal was filed against the order of Single Judge. In the above case, High Court has referred to the judgment of the Hon’ble Supreme Court in “Midnapore Peoples’ Co-operative Bank Ltd. & Ors. vs. Chunilal Nanda & Ors.- (2006) 5 SCC 399”. The Hon’ble Supreme Court in “Midnapore Peoples’ Co-operative Bank Ltd. & Ors.” (supra) had occasion to consider the maintainability of an Appeal under Section 19 of the Contempt of Courts Act against an order passed in Contempt of Courts Act. In paragraph 11 of the judgment after considering all cases have laid down following:-
“11.The position emerging from these decisions, in regard to appeals against orders in contempt proceedings may be summarised thus:
I. An appeal under Section 19 is maintainable only against an order or decision of the High Court passed in exercise of its jurisdiction to punish for contempt, that is, an order imposing punishment for contempt.
II. Neither an order declining to initiate proceedings for contempt, nor an order initiating proceedings for contempt nor an order dropping the proceedings for contempt nor an order acquitting or exonerating the contemnor, is appealable under Section 19 of the CC Act. In special circumstances, they may be open to challenge under Article 136 of the Constitution.
III. In a proceeding for contempt, the High Court can decide whether any contempt of court has been committed, and if so, what should be the punishment and matters incidental thereto. In such a proceeding, it is not appropriate to adjudicate or decide any issue relating to the merits of the dispute between the parties.
IV. Any direction issued or decision made by the High Court on the merits of a dispute between the parties, will not be in the exercise of “jurisdiction to punish for contempt” and, therefore, not appealable under Section 19 of the CC Act. The only exception is where such direction or decision is incidental to or inextricably connected with the order punishing for contempt, in which event the appeal under Section 19 of the Act, can also encompass the incidental or inextricably connected directions.
V. If the High Court, for whatsoever reason, decides an issue or makes any direction, relating to the merits of the dispute between the parties, in a contempt proceedings, the aggrieved person is not without remedy. Such an order is open to challenge in an intra-court appeal (if the order was of a learned Single Judge and there is a provision for an intra-court appeal), or by seeking special leave to appeal under Article 136 of the Constitution of India (in other cases).
The first point is answered accordingly.”
The Hon’ble Supreme Court framed one of the questions for consideration is as to whether the Appeal was maintainable and in the above context, law was clarified in paragraph 11. The above judgment clearly lays down that the Appeal under Section 19 is maintainable only against an order or decision of the High Court passed in exercise of its jurisdiction to punish for contempt, that is, an order imposing punishment for contempt. When Contempt Application has been rejected in limine, Appeal under Section 19 was held not maintainable.
The judgment of the Allahabad High Court on which reliance was placed by Counsel for the Appellant was a case where order passed by a Learned Single Judge dated 22.01.2025 was challenged in Special Appeal. Allahabad High Court held that question of maintainability of Special Appeal under Chapter VIII Rule 5 of the Allahabad High Court Rules was not in consideration of the Hon’ble Supreme Court in “Midnapore Peoples’ Co-operative Bank Ltd. & Ors.” (supra). In paragraph 9 of the judgment, Allahabad High Court observed as follows:-
“9.The question of maintainability of Special Appeal under Chapter VIII Rule 5 of the Allahabad High Court Rules was not in consideration of the Hon'ble Supreme Court in case of Midnapore Peoples' Coop. Bank Ltd. (supra). It is settled law that a precedent is to be applied in light of the law laid down in that case in view of the factual background and in view of the points involved in the case. Since Chapter VIII Rule 5 of the Allahabad High Court Rules was not in issue before the Hon'ble Supreme Court in the case of Midnapore Peoples' Coop. Bank Ltd. (Supra), this judgment is not relevant for deciding the maintainability of the present special appeal filed under Chapter VIII Rule 5 of the Allahabad High Court Rules against an order dismissing a contempt petition.”
In the facts of that case, Allahabad High Court held that the order of Single Judge was not correct and Appeal was maintainable. The judgment relied by Counsel for the Appellant does not support the submission of the Appellant. The above was the case where the High Court was considering the maintainability of Special Appeal not an Appeal under Section 19 of the Contempt of Courts Act. It is relevant to notice that High Court itself has relied the judgment of the Hon’ble Supreme Court in “Midnapore Peoples’ Co-operative Bank Ltd. & Ors.” (supra) and distinguish the same.
Learned Counsel for the Respondent has also relied on several judgments of the Hon’ble Supreme Court to support his submission that no Appeal lie against an order which is not passed in exercise of jurisdiction under Contempt of Courts Act to punish. It was held that the order passed by the High Court to punish for contempt is appealable under Section 19. Reliance has been placed on judgment of the Hon’ble Supreme Court in “Barada Kanta Mishra vs. Orissa High Court- 1977 (3) SCC 345” and further the judgment of the Hon’ble Supreme Court in “Purshotam Das Goel vs. B.S. Dhillon- (1978) 2 SCC 370” wherein paragraph 3, following was laid down:-
“3.In our opinion, the preliminary objection raised on behalf of the respondents is well-founded and must be accepted as correct. Section 19(1) says :
“An appeal shall lie as of right from any order or decision of the High Court in the exercise of its jurisdiction to punish for contempt—
(a)where the order or decision is that of a Single Judge, to a Bench of not less than two Judges of the Court;
(b)where the order or decision is that of a Bench, to the Supreme Court :
Provided that where the order or decision is that of the Court of the Judicial Commissioner in any Union territory, such appeal shall lie to the Supreme Court.”
It would appear from a plain reading of the section that an appeal shall lie to this Court as a matter of right from any order or decision of a Bench of the High Court if the order has been made in the exercise of its jurisdiction to punish for contempt. No appeal can lie as a matter of right from any kind of order made by the High Court in the proceeding for contempt. The proceeding is initiated under Section 17 by issuance of a notice. Thereafter, there may be many interlocutory orders passed in the said proceeding by the High Court. It could not be the intention of the legislature to provide for an appeal to this Court as a matter of right from each and every such order made by the High Court. The order or the decision must be such that it decides some bone of contention raised before the High Court affecting the right of the party aggrieved. Mere initiation of a proceeding for contempt by the issuance of the notice on the prima facie view that the case is a fit one for drawing up the proceeding, does not decide any question. This Court, for the first time, cannot be asked in such an appeal to decide whether the person proceeded against has committed contempt of the High Court or not. The matter has to be decided either finally or, may be, even at an earlier stage an order is made, which does decide a contention raised by the alleged contemner asking the High Court to drop the proceeding. It is neither possible, nor advisable, to make an exhaustive list of the type of orders which may be appealable to this Court under Section 19. A final order, surely, will be appealable. Our attention was drawn by Mr Mohan Behari Lal, to Section 20 of the Act which provides :
“No court shall initiate any proceedings for contempt, either on its own motion or otherwise, after the expiry of a period of one year from the date on which the contempt is alleged to have been committed.”
He submitted that initiation of the proceeding by the High Court will be without jurisdiction if it is in violation of Section 20. It may be so. If the alleged contemner in response to the notice appears before the High Court and asks it to drop the proceeding on the ground of its being barred under Section 20 of the Act but the High Court holds that the proceeding is not barred, it may well be that an appeal would lie to this Court under Section 19 from such an order although the proceeding has remained pending in the High Court. We are not called upon to express our final opinion in regard to such an order, but we merely mention this type of order by way of an example to show that even orders made at some intermediate stage in the proceeding may be appealable under Section 19. In our considered judgement, an order merely initiating the proceeding without anything further, does not decide anything against the alleged contemner and cannot be appealed against as a matter of right under Section 19. In a given case special leave may be granted under Article 136 of the Constitution from an order initiating the proceeding. But that is entirely a different matter. What we are deciding in this case is that the present appeal filed under Section 19(1) of the Act does not lie and is incompetent.”
In the present case, Contempt Application has been dismissed in limine, hence, the said order cannot be said to have been issued in exercise of jurisdiction to punish for contempt and we are of the view that the Appeal filed by the Appellant is not maintainable and objection raised by the Respondent deserves to be accepted. We hold the Appeal not maintainable and consequently, the Appeal is dismissed.