India – ‘Contempt Proceedings’ Can Be Exercised By NCLT.

Order dated: 22 November 2021
 

Summary:
 

The appellant, an advocate appointed for the corporate debtor filed an application before the NCLT to recover his legal fees from the respondent being the resolution professional. The NCLT directed the respondent to pay the arrears of fees which the respondent failed to do so. Thus, a contempt application under the Act was filed initiating contempt proceedings against the respondent for wilful disobedience and for issuance of appropriate directions to clear the bills. The NCLT, in the contempt application held that the Act does not extend the contempt jurisdiction to the Code and dismissed the contempt application. The said order of the NCLT was appealed before the NCLAT
 

The NCLAT after making observations was of the view that ‘Contempt Proceedings’ can be exercised by NCLT being the ‘Adjudicating Authority’. A conjoined reading of Section 408 and 425 of the Act points out that the power to punish for ‘Contempt’ is vested with the ‘Tribunal’ adjudicating on any matter not only confined to the Act but also to matters relating to the Code. Further, the NCLAT was of the view that the ‘Tribunal’ has the power to regulate its own procedure in accordance with the rules of natural justice and equity, for the purpose of discharging its functions under the Act. A reasonable opportunity to represent his/her case before the bench or any other officer authorised in this behalf before passing an order or direction imposing penalty is to be given.
 

The NCLAT held in its order that the conclusions arrived at by the NCLT in the impugned order stating that the Code is devoid of contempt jurisdiction is clearly unsustainable. Thus, the NCLAT directed the NCLT to restore the contempt application to its file within 2 (two) weeks from the date of the receipt of the copy of the judgment and dispose of the same on merits.
 

 

For further information, please contact:  

Souvik Ganguly, Partner, Acuity Law