Directorate Of Economic Offences vs Binay Kumar Singhania & Ors
- CitationCompany Appeal (AT) (Insolvency) No. 1361-1362 of 2019
Ratio decidendi
The rule this decision rests on
Where the contumacious conduct of an officer in failing to cooperate with a Resolution Professional, which may amount to contempt of the High Court's directions, is a matter that must be addressed through contempt proceedings and cannot be linked to or form the basis of an order of liquidation, there being no nexus between the two; the order of liquidation rests on its own considerations independent of such conduct. An Adjudicating Authority, while passing an order of liquidation, exceeds its jurisdiction if it imposes costs on a party as a penalty for alleged contumacious conduct, and such part of the order cannot be sustained.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
Directorate of Economics Offences ....Appellant
Vs.
Binay Kumar Singhania & Ors. ....Respondents
Present: Appellant: Mr. S. N. Mookherjee, Sr. Advocate with Mrs. Nandini Sen, Advocate. Respondents: Mr. Gaurav Mitra and Mr. Kanishk Khetan, Advocates for R-1 (Liquidator) Mr. Kamal Kant Jha, Sr. Panel Counsel with Mr. Prabhakar Thakur, Advocate for R-4 (MCA)
ORDER
05.02.2020: Heard learned Counsel for the parties. The limited issue raised
in these Appeals is with regard to slapping the Appellant - Directorate of
Economic Offences (DEO) with liability to pay Rs.5 Lakhs for not cooperating
with the Resolution Professional in compliance to directions of the Hon'ble High
Court.
2. After hearing learned Counsel for the parties, we are of the considered
opinion that the contumacious conduct attributed to the Appellant - Delinquent
Officer of the DEO for not extending cooperation to the Resolution Professional
in carrying forward the process of resolution may be violative of the directions of
the Hon'ble High Court rendering being hauled up for Contempt of Court, same
could not be linked with the order of liquidation, -2-
there being no nexus between the two. Order of liquidation, not assailed herein,
rests on its own considerations independent of conduct of Appellant.
3. Thus, we are of the opinion that while passing the order of liquidation, the
Adjudicating Authority exceeded its jurisdiction in slapping the Appellant with
liability of costs, which in fact was the penalty imposed for the alleged
contumacious conduct. In our opinion, this part of the order cannot be
supported. These Appeals are accordingly allowed to this extent.
[Justice Bansi Lal Bhat] Member (Judicial)
[V. P. Singh] Member (Technical)
[Shreesha Merla] Member (Technical) am/ha/nn
Company Appeal (AT) (Insolvency) No. 1361-1362 of 2019
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