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Judgment
27.01.2026 Heard Learned Counsel for the Appellant and Learned Counsel for the Respondent perused the record.
Instant appeal has been filed by the Appellant against the order passed by the Learned Tribunal with regard to the I.A. No. 1997 of 2022 moved by the Appellant in CP (IB)/725(MB)2017 which has been disposed of by the Learned Adjudicating Authority by observing that the Learned Adjudicating Authority is not having any power of execution of its orders like a Civil Court, and therefore initiated the proceedings pertaining to the Contempt of Courts Act, 1972 against the Respondent.
Learned Counsel for the Appellant, while drawing our attention towards Section 424 of the Companies Act, 2013, submits that under sub-section (3) of Section 424 of the Companies Act, 2013, specific provision has been made pertaining to the powers of the Tribunal as well as of the Appellate Tribunal for enforcement of their orders, and the same, having regard to the provisions contained in sub-section (3) of Section 424, may be executed like a decree of the Civil Court.
It is further submitted that, by observing that the Learned Adjudicating Authority does not have the power to execute its own orders, the Learned Adjudicating Authority has overlooked the specific provision contained in sub-section (3) of Section 424 of the Companies Act, 2013.
Learned Counsel for the Respondent fairly agrees with the above legal preposition and submits that there is indeed a power vested in the Learned Adjudicating Authority to execute its own order in the manner provided under sub-section (3) of Section 424 of the Companies Act, 2013.
However, he further submits that although an undertaking was given before the Learned Adjudicating Authority by Respondent at the time of disposal of the I. A. No. 1997 of 2022 pertaining to the payment of CIRP costs, but subsequently, due to the proceedings initiated by the Income-Tax Department, the Respondent has not remained in a position to honour the undertaking given at the time of disposal of I.A. No. 1997 of 2022, which undertaking has duly recorded in the order dated 31st August 2023 passed by the Learned Adjudicating Authority.
We have considered the submissions made by the Learned Counsel for the Parties and find that the only question that arises for our consideration in this appeal is whether the Learned Adjudicating Authority has the power to execute its own orders. It is to be recalled that, while disposing of I.A. No. 1997 of 2022, the Learned Adjudicating Authority has categorically recorded in paragraph no. 5, 6 & 7 as under;
(5)This Bench is of the considered opinion that it is not a Civil Court having power of execution. The defiance of the order dt. 28.05.2021 is apparent on the face accordingly, this Bench consider it appropriate to issue a Notice in terms of Section 425 of the Companies Act, 2013 r/w Rule 11 of the NCLT. Rules and section 12 of Contempt of Court Act, 1972.
(6)Stand over to 08.01.2024, for further consideration and hearing.
(7)A copy of this order alongwith Show Cause Notice be served by the Registry as well as by the Applicant to the Respondent.
Perusal of the aforesaid observations made by the Learned Adjudicating Authority reveals that it has been categorically recorded that the Learned Adjudicating Authority is not a Civil Court and does not have the power of execution of its own orders.
Section 424 of the Companies Act, 2013 is relevant at this stage and the same is reproduced hereunder.
Procedure before Tribunal and Appellate Tribunal.
(1)The Tribunal and the Appellate Tribunal shall not, while disposing of any proceeding before it or, as the case may be, an appeal before it, be bound by the procedure laid down in the Code of Civil Procedure, 1908 (5 of 1908), but shall be guided by the principles of natural justice, and, subject to the other provisions of this Act 1[or of the Insolvency and Bankruptcy Code, 2016 (31 of 2016)] and of any rules made hereunder, the Tribunal and the Appellate Tribunal shall have power to regulate their own procedure.
(2)The Tribunal and the Appellate Tribunal shall have, for the purposes of discharging their functions under this Act 1[or under the Insolvency and Bankruptcy Code, 2016 (31 of 2016)], the same powers as are vested in a civil court under the Code of Civil Procedure, 1908 (5 of 1908) while trying a suit in respect of the following matters, namely:--
(a)summoning and enforcing the attendance of any person and examining him on oath;
(b)requiring the discovery and production of documents;
(c)receiving evidence on affidavits;
(d)subject to the provisions of sections 123 and 124 of the Indian Evidence Act,1872 (1 of 1872), requisitioning any public record or document or a copy of such record or document from any office;
(e)issuing commissions for the examination of witnesses or documents;
(f)dismissing a representation for default or deciding it ex parte;
(g)setting aside any order of dismissal of any representation for default or any order passed by it ex parte; and
(h)any other matter which may be prescribed.
(3)Any order made by the Tribunal or the Appellate Tribunal may be enforced by that Tribunal in the same manner as if it were a decree made by a court in a suit pending therein, and it shall be lawful for the Tribunal or the Appellate Tribunal to send for execution of its orders to the court within the local limits of whose jurisdiction,--
(a)in the case of an order against a company, the registered office of the company is situate; or
(b)in the case of an order against any other person, the person concerned voluntarily resides or carries on business or personally works for gain.
(4)All proceedings before the Tribunal or the Appellate Tribunal shall be deemed to be judicial proceedings within the meaning of sections 193 and 228, and for the purposes of section 196 of the Indian Penal Code (45 of 1860), and the Tribunal and the Appellate Tribunal shall be deemed to be civil court for the purposes of section 195 and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974).
Sub-Section (3) of Section 424 clearly reveals that the Tribunal or the Appellate Tribunal may enforce its orders in the same manner as if such orders were decrees passed by the Civil Court in a suit pending therein. It appears that the Learned Adjudicating Authority has overlooked this specific provision.
Thus, in the view of specific provision contained in sub-section (3) of Section 424 of the Companies Act, 2013, we consider it appropriate to allow the appeal and remand the matter to Learned Adjudicating Authority for a decision as fresh.
Keeping in view all the facts and circumstance of the case and the specific provision containing under Section 424 (3) of the Companies Act, 2013, pertaining to the powers vested in the Tribunal as well as in the Appellate Tribunal to execute its orders as Civil Court, the appeal is allowed and is remanded the matter back to the Learned Adjudicating Authority to dispose of the same on its own merits after providing an opportunity of hearing to the parties.
We clarify that the Respondent shall be free to raise and argue any factual aspect of the matter in his defence before the Learned Adjudicating Authority. The I.A. No. 1997 of 2022 is revived before the Learned. Adjudicating Authority.
There shall be no order as to costs. The pending I.A., if any, shall also stand closed.