National Company Law Appellate Tribunal
Gav Developers Pvt Ltd vs Shubh Advisor Private Limited on 4 August, 2022
1
NATIONAL COMPANY LAW APPELLAT TRIBUNAL
PRINCIPAL BENCH
NEW DELHI
COMPANY APPEAL (AT) NO.53 OF 2022
&
I.A. No.1415 of 2022
In the matter of:
GAV Developers Pvt Ltd Appellant
Vs
Shubh Advisors Pvt Ltd & Ors Respondent
For Appellant: Mr. Manish Kumar, Mr. Piyush Kaushik, Advocates.
For Respondent:Mr Rahul Malhotra, Advocate for R1 to R4.
ORDER
04.08.2022: Heard Mr. Manish Kumar, learned counsel for the Appellant and Mr. Rahul Malhotra, learned counsel for Respondent No.1 to 4.
The present Appeal has been filed under Section 421 of the Companies Act, 2013. The Appeal has been filed for the following reliefs:
i) Quash and set aside the final order and judgement dated 07.03.2022 as passed by the Hon'ble National Company Law Tribunal, Bench III at New Delhi, in Cont. A No.3/(ND)/2021 in CP No.224(ND)/2017
ii) Initiate Contempt of Court proceedings against the Respondent Nos 1 to 10 for wilful defiance/disobedience/breach of the judicial orders dated 15.09.2017 and 15.01.2019 as passed by the Hon'ble NCLT in CP No.224(ND)/2017 Company Appeal (AT) No.53 of 2022 2
iii) Pass any other further order as this Appellate Tribunal may deem appropriate in the facts and circumstances of the instant case.
Alongwith this Appeal, the Appellant had also filed I.A. No.976 of 2022 with a prayer to pass ad interim direction including stay of the impugned order dated 07.03.2022. However, on 08.04.2022 a Coordinate Bench of this Tribunal, after hearing the learned counsel for the appellant directed for issuance of Notice to the Respondents. The order dated 08.04.2022 reflects that neither the IA application was pressed nor it was referred. However, the learned counsel for the Appellant, while the Appeal was taken up informed the Tribunal that he has filed IA No. 1415/2022 vide Diary No.55179 dated 06.05.2022. In the IA No.1415/2022 the Appellant has enclosed an order passed by the Hon'ble Supreme Court of India in Civil Appeal No.2913 of 2022. Mr. Manish Kumar, learned counsel for the Appellant submits that since on 08.04.2022 while issuing notice, no interim relief was granted by this Tribunal, the Appellant had preferred an Appeal before the Hon'ble Supreme Court. The Hon'ble Supreme Court vide order dated 22.04.2022 permitted the learned counsel for the Appellant to withdraw the Appeal with liberty as prayed for. While making the prayer for withdrawal it appears that before the Hon'ble Supreme Court, learned counsel for the Appellant sought permission to withdraw the Appeal with liberty to move the National Company Law Appellate Tribunal, Principal Bench, New Delhi for appropriate interim/final order. The order of the Hon'ble Supreme Court dated 22.04.2022 is reproduced hereinbelow:-
Company Appeal (AT) No.53 of 2022 3 "Learned senior counsel for the appellant seeks permission to withdraw the present appeal with liberty to move the National Company Law Appellate Tribunal, Principal Bench, New Delhi for appropriate interim/final orders.
Permission is granted.
The appeal is accordingly dismissed as withdrawn with liberty as prayed for."
Since the Appeal itself was taken up for final hearing, the Court thought it appropriate not to pass any separate order in the said IA as the Tribunal is going to take the final decision in the present Appeal.
Learned Counsel for the Appellant while pressing the present Appeal has argued that the Learned National Company Law Tribunal (hereinafter refer to as 'NCLT') while rejecting the application filed by the Appellant which was filed under Section 425 of the Companies Act, 2013 miserably failed to adjudicate on the second prayer made in the petition filed before the NCLT in Contempt Application No.3/ND/2021.
When the Appeal was taken up, at the very outset, the Learned Counsel for the Appellant was asked to specify as to whether in a case of dropping of contempt proceeding the Appeal lie, Learned counsel for the Appellant replied that it was not only the case for initiating contempt against the Respondents before the NCLT in Contempt Application No.3/ND/2021, but the Appellant had also prayed for second relief which has not been considered. It is appropriate to note down what were the two reliefs sought for in the Contempt Company Appeal (AT) No.53 of 2022 4 petition. The said reliefs have been noted down in para 1 of the impugned order at page 32 of the Appeal Paper Book which is as under:-
"a, Initiate Contempt of Court proceedings against the Alleged Contemnors Nos 1 to 5 as well as Respondents No.2 to 4/Alleged Contemnors for wilful disobedience/breach of orders dated 15.09.2017 and 15.01.2019 as passed in CP No.224(ND)/2017.
b. Direct contemnors to cease and desist from carrying any construction activity on the subject land and also to furnish the details of the bookings made, name of the allotees, amount collected, details of bank accounts in which the amount has been deposited within 24 hours from receipt of the notice and also to furnish details of all agreements/arrangements arrived/entered into between the contemnors and respondents No.1 to 4/alleged contemnors."
Learned Counsel for the Appellant, of course, has agreed that in case of dropping of the contempt proceedings no appeal lie but he further argued that this Tribunal can exercise powers of the High Courts as incorporated under Article 215 of the Constitution of India. According to learned Counsel for Appellant this Tribunal can examine the correctness of the order passed by the NCLT whereby second relief was not entertained. In support of his contention regarding the examination of the second prayer, he has placed reliance on a judgement of a Coordinate Bench of this Tribunal in Company Appeal (AT) No.206 of 2020 in the matter of Mr Hemant Khandelwal Vs M/s Niho Construction Ltd & Ors decided on 5th March, 2021. On aforesaid Company Appeal (AT) No.53 of 2022 5 ground it has been argued by, Mr. Manish Kumar, learned counsel that this Tribunal may consider the second relief which was claimed before the NCLT.
Mr. Rahul Malhotra, learned Counsel for the Respondent No.1 to 4 tried to distinguish the above mentioned judgement i.e. Hemant Khandelwal (supra) on which reliance has been placed by the Learned counsel for the Appellant. He submits that even in the Hemant Khandelwal case this Tribunal has not acceded to the prayer made by the Appellant. The Appeal was dismissed. By way of referring to para 16 and 17 of the Hemant Khandelwal case he submits that in the said case there were two separate appllications and in that context it was considered that direction was required to be issued in the separate petition.
The Tribunal is of the opinion that for better appreciation it would be apt to reproduce para 16 and 17 of the Hemand Khandelwal case which are as follows:-
"16. We have perused the detailed order passed by learned NCLT on 12.10.2020 wherefrom it is evident that the Appellants have filed CA No. 396 of 2020 praying the following reliefs, inter alia;
a) Pass an order granting petitioners unhindered access to the Registered Office of the Respondent No. 1 Company in terms of the order dated 17.08.2020 passed by the Tribunal;
Company Appeal (AT) No.53 of 2022 6
b) Pass and order holding the Respondents specifically the Respondent No. 2 in contempt of the order dated 17.08.2020 passed by the Tribunal;
c) Pass an order for granting Police protection to the Petitioners for taking over the possession of the documents.
17. While so, the Appellants also filed C.A. No. 428 of 2020 before the learned NCLT praying the Tribunal to pass an order to appoint at least four Local Commissioners to authenticate the documents available at the Registered Office of the Respondent No. 1-Company and pass an order granting the petitioners unhindered access to the Registered Office of the Respondent No. 1-Company in terms of the orders dated 17.08.2020 & 21.08.2020 and pass order holding the 2nd Respondent in contempt of the Orders dated 17.08.2020 and 21.08.2020."
We are of the view that if at this juncture we donot consider the argument of Learned Counsel for the Appellant wherein he had referred to para 24 of the judgement it would not be justiciable. Accordingly para 24 of Hemant Khandelwal case is reproduced as follows:
"24. However, from the perusal of the order passed by learned NCLT in both the C.A.s that apart from seeking initiation of Contempt Proceeding against the Respondents, there are other directions/reliefs and learned NCLT passed a detailed order dealing with all the aspects as made in both the Applications. Accordingly, this Appeal cannot be said to have been filed only against dismissal of the Contempt Application."
Company Appeal (AT) No.53 of 2022 7 On the aforesaid ground Learned Counsel for the Respondent submits that there is no need to pass any favourable order and the appeal needs to be rejected.
Besides hearing learned counsel for the parties, we have minutely perused the entire material available on record. On examination of the impugned order dated 07.03.2022 it is clear that before the NCLT an application was filed under Section 425 of the Companies Act, 2013 for initiation of contempt proceeding. Of course, in the said petition prayer No.1 as has been noted above was considered in detail by the NCLT, but before passing final order the learned NCLT had noted down entire submissions of the parties. It would be beneficial to incorporate some of the paragraphs of the impugned order i.e. Paras 6 to 10 which are reproduced hereinbelow:-
"6. In order to establish that there is contempt by the respondents of the order of this tribunal. Following ingredients have to be fulfilled namely;- Firstly, whether there is any restraint order against any of the parties; Secondly, whether Respondents are aware of the order; Thirdly; whether the respondents are able to comply with the order; Lastly, whether there is disobedience of the order by the respondent.
7. In the instant case there are two orders of this Tribunal, the disobedience which has been alleged by the Applicant. These are the orders dated 15.09.2017 and dated 15.1.2019. The order dated 15.09.2017 reads as under:
Company Appeal (AT) No.53 of 2022 8 "....In the circumstances, status quo to be maintained in relation to the shareholding as of date and that "THE GLEN' is a part of the project of 'AURIEL TOWNE' is taken off.."
And the order dated 15.1.2019 ".......Learned counsel for the Petitioner (Applicant is present. None appears for the non-applicant. It is seen from the Order dated 11.01.2019 passed by this Tribunal that in CA No.214/C- III/BD/2018 Ld. Counsel for Respondents No.1 to 4 sought for some time to place on record relevant documents in relation to the immoveable property of the Respondent Company, being Plot No.31, Knowledge Park, Greater Noida, West being the subject matter of the said application.
Last opportunity was given for this purpose, but despite the time being granted no documents to this effect have been placed on record as seen from the record of this Tribunal. The said documents have not been made available to the (Petitioner No.1/Applicant). In the circumstances, let status quo may be maintained in relation to the said property situated at Plot No.31, Knowledge Park, Greater Noida (West) till the next date of hearing in the main Company petition which is posted on 06.02.2019..."
8. Admittedly, there is no allegation with regard to any change in shareholding of the Applicant having been effected by the Respondents/alleged contemnors. Therefore, no case is made out with respect to disobedience in relation to this part of the order. Company Appeal (AT) No.53 of 2022 9
9. Now, coming to the second part of the order, it is seen the Respondent No.1 is a company engaged in the real estate business. In defence of the allegation, it has been submitted that there no ownership rights have been created by the Respondents/alleged Contemnors in favour any third party and only a development agency has been engaged to continue with the housing project of the Respondent No.1 company. Carrying on of construction activity by Respondent No.1 even through third party under a valid agreement is not in violation of Orders dated 15.09.2017 and 15.1.2019 so long as the legal ownership of concerned project/asset remains with Respondent No.1. In the instant case the Applicant has not been able to establish with cogent evidence that ownership of the said project of Respondent No.1 has been transferred in favour any third party.
10. In view of the above, we are of the considered view that no case about contempt of this Tribunal's orders dated 15.9.2017 and 15.1.2019 has been made. Resultantly, the present contempt petition is dismissed as being devoid of merits with no orders as to costs."
On examination of the impugned order it is specifically clear that while making prayer for initiation of contempt proceeding in the same petition direction was also sought for. It is settled law on the point that in a contempt proceeding one can make a prayer for initiating contempt for non-compliance of the order for imposing punishment. It is also settled law that while exercising contempt jurisdiction no Court can pass fresh direction or grant any other relief save and except to punish for contempt. Company Appeal (AT) No.53 of 2022 10 Primarily the Court is of the opinion that the Appeal which has been preferred is mainly against dropping of the contempt proceeding, of course, in the petition which was filed under Section 425 of the Companies Act before the NCLT besides praying for initiation of contempt, another relief was also sought for. NCLT after examining all aspects passed final order. Issue regarding filing of appeal in a case of dropping contempt proceeding has already been set at rest by numerous judgements of Hon'ble Apex Court which has been discussed in AIR 1974 SC 2255 (Baradakanta Mishra Vs Justice Gatikrushna Misra), AIR 1978 SC 1014 (Purshotam Dass Goel V Justice B.S. Dhillon), AIR 1982 SC 691 (Union of India Vs Mario Cabral e Sa), 1988 SCC (Cri)546 (D.N. Taneja Vs Bhajan Lal), 1996 SCC (Cri)675 (State of Maharashtra Vs Mahboob S Allibhoy) and (1996) 6 SCC 291 (J.S. Parihar Vs Ganpat Duggar). At this stage it is appropriate to reproduce Section 19 of the Contempt of Courts Act, 1971:-
"Section 19 in the Contempt of Courts Act, 1971
19. Appeals.--
(1) An appeal shall lie as of right from any order or decision of 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.
(2) Pending any appeal, the appellate Court may order that--
(a) the execution of the punishment or order appealed against be suspended;
(b) if the appellant is in confinement, he be released on bail; and
(c) the appeal be heard notwithstanding that the appellant has not purged his contempt.
(3) Where any person aggrieved by any order against which an appeal may be filed satisfies the High Court that he intends to prefer an appeal, the High Court may also exercise all or any of the powers conferred by sub-section (2).
Company Appeal (AT) No.53 of 2022 11 (4) An appeal under sub-section (1) shall be filed--
(a) in the case of an appeal to a Bench of the High Court, within thirty days;
(b) in the case of an appeal to the Supreme Court, within sixty days, from the date of the order appealed against."
Section 19 reflects that an appeal shall lie as of right from any order or decisions, meaning thereby that if in a proceeding filed for initiation contempt proceeding no order is passed for punishing a contemnor, Section 19(2) does not come into play. Unless a court exercise powers for punishing a contemnor, other decision may not be treated as appealable. It is clear that against dropping of contempt proceeding no appeal lie. We may not do better than to reproduce some of the portion, para 3 and 4 of judgement of the Hon'ble Supreme Court in State of Maharashtra Vs Mahboob S Allibhoy (1996) 4 Supreme Court Cases 411 as under:-
"3.The preliminary question which has to be examined as to whether in the facts and circumstances of the case an appeal is maintainable against an order dropping the proceeding for contempt. It is well settled that an appeal is a creature of a statute. Unless a statute provides for an appeal and specifies the order against which an appeal can be filed, no appeal can be filed or entertained as a matter of right or course. Section 19 of the Act says:
Appeals - (1) An appeal shall lie as of right from any order or decision of 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. (2) Pending any appeal, the appellate Court may order that -
(a) the execution of the punishment or order appealed against be suspended;
(b) if the appellant is in
Company Appeal (AT) No.53 of 2022
12
confinement, he be released on
bail; and
(c) the appeal be heard
notwithstanding that the
appellant has not purged his
contempt.
(3) Where any person aggrieved by any order against which an appeal may be filed satisfies the High Court that he intends to prefer an appeal the High Court may also exercise all or any of the powers conferred by sub-section (2).
(4) An appeal under sub-section (1) shall be filed
(a) in the case of an appeal to a Bench of the High Court, within thirty days;
(b) in the case of an appeal to the Supreme Court, within sixty days, from the date of the order appealed against.
On a plain reading Section 19 provides that an appeal shall lie as of right from any order or decision of the High Court in exercise of its jurisdiction to punish for contempt. In other words, if the High Court passes an order in exercise of its jurisdiction to punish any person for contempt of court, then only an appeal shall be maintainable under sub- section (1) of Section 19 of the Act. As sub-section (1) of Section 19 provides that an appeal shall lie as of right from any order, an impression is created that an appeal has been provided under the said sub-section against any order passed by the High Court while exercising the jurisdiction of contempt proceedings. The words 'any order' has to be read with the expression 'decision' used in said sub-section which the High Court passes in exercise of its jurisdiction to punish for contempt. 'Any order' is not independent of the expression 'decision'. They have been put in an alternative form saying 'order' or 'decision'. In either case, it must be in the nature of punishment for contempt. If the expression 'any order' is read independently of the 'decision' then an appeal shall lie under sub- section (1) of Section 19 even against any interlocutory order passed in a proceeding for contempt by the High Court which shall lead to a ridiculous result.
4.It is well known that contempt proceeding is not a dispute between two parties, the proceeding is primarily between the court and the person who is alleged to have committed the contempt of court. The person who informs the court or brings to the notice of the court that anyone has committed the contempt of such court is not in the position of a prosecutor, he is simply assisting the court so that the dignity and the majesty of the court is maintained and upheld. It is for the court, which initiates the proceeding to decide whether the person against whom such proceeding has been initiated should be punished or discharged taking into consideration the facts and circumstances of the particular case. This Company Appeal (AT) No.53 of 2022 13 Court in the case of Baradakanta Mishra v. Mr. Justice Gatikrushna Misra C.J. of the Orissa H.C., AIR 1974 SC 2255 - 1975(1) SCR 524 said:
"...Where the Court rejects a motion or a reference and declines to initiate a proceeding for contempt, it refuses to assume or exercise jurisdiction to punish for contempt and such a decision cannot be regarded as a decision in the exercise of its jurisdiction to punish for contempt. Such a decision would not, therefore, fall within the opening words of Section 19, subsection (l) and no appeal would lie against it as of right under that provision."
Again in the case of D.N. Taneja V. Bhaian Lal, (1988) 3 SCC 26 it was said:
"The right of appeal will be available under sub-section (1) of Section 19 only against any decision or order of a High Court passed in the exercise of its jurisdiction to punish for contempt. In this connection, it is pertinent to refer to the provision of Article 215 of the Constitution which provides that every High Court shall be a court of record and shall have all the powers of such a court including the power to punish for contempt of itself. Article 215 confers on the high Court the power to punish for contempt of itself. In other words, the High Court derives its jurisdiction to punish for contempt from Article 215 of the Constitution. As has been noticed earlier, as appeal will lie under Section 19(1) of the Act only when the High Court makes an order or decision in exercise of its jurisdiction to punish for contempt. It s submitted on behalf of the respondent and, in our opinion rightly, that the High Court exercises its jurisdiction or power as conferred on it by Article 215 of the Constitution when it imposes a punishment for contempt. When the High Court does not impose any punishment on the alleged contemnor, the High Court does not exercise its jurisdiction or power to punish for contempt. The jurisdiction cf the High Court is to punish. When no punishment is imposed by the High Court, it is difficult to say that the High Court has exercised its jurisdiction or power as conferred on it by Article 215 of the Constitution."
No appeal is maintainable against an order dropping proceeding for contempt or refusing to initiate a proceeding for contempt is apparent not only from sub section (1) of Section 19 but also from sub-section (2) of Section 19 which provides that pending any appeal the appellate Court may order that
(a) the execution of the punishment or the order appealed against be suspended;
(b) if the appellant is in confinement, he be released on bail; and Company Appeal (AT) No.53 of 2022 14
(c) the appeal be heard notwithstanding that the appellant has not purged his contempt.
Sub-section (2) of Section 19 indicates that the reliefs provided under clauses (a) to (c) can be claimed at the instance of the person who has been proceeded against for contempt of court."
It is also necessary to clarify that in a contempt proceeding new relief may not be sought for. On perusal of the impugned order, it is evident that entire aspect was examined and thereafter finally contempt petition was disposed without initiating contempt. The present Appeal has been filed only against the order dated 07.03.2022 passed by NCLT which was filed under Section 425 of the Companies Act for initiation of contempt proceeding. In view of the non-availability of any ground for filing of appeal against dropping of contempt by the impugned order we feel difficulty in passing any favourable order. Further the judgement relied upon by the Learned counsel for the Appellant in the case of Hemant Khandelwal (Supra), is not applicable in the facts and circumstances of the present appeal. We find no merit in the Appeal. Accordingly the Appeal is dismissed without costs.
(Justice Rakesh Kumar) Member (Judicial) (Dr. Ashok Kumar Mishra) Member (Technical) Bm/gc Company Appeal (AT) No.53 of 2022