Gav Developers Pvt Ltd vs Shubh Advisor Private Limited

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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.

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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

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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