NCLAT dismissed a contempt appeal, ruling no wilful disobedience occurred and reaffirming that no appeal lies against a tribunal's decision to drop contempt proceedings.
NCLAT Reinforces Finality of Contempt Dismissal by NCLT
The National Company Law Appellate Tribunal (NCLAT) dismissed an appeal challenging the NCLT’s decision to drop contempt proceedings, holding that no statutory appeal lies against such an order. The appellant had alleged wilful disobedience of an earlier resolution plan approval, but NCLAT found no evidence of non-compliance, particularly no unauthorised bank withdrawals or asset disposals.
The Tribunal reiterated that contempt is a discretionary remedy and its dismissal—whether on merits or procedural grounds—does not constitute a decree or order appealable as of right under Section 61 of the IBC. The jurisdiction to proceed lies solely with the tribunal exercising original jurisdiction, and appellate intervention is limited to cases of manifest illegality, which were absent here.
For litigation strategy, this decision underscores the need to exhaust all remedies within the original tribunal before seeking appellate scrutiny. Lawyers must ensure that applications for contempt contain precise allegations with documentary support, particularly proof of non-compliance and intent, to avoid being summarily dropped.
Citations
- Insolvency and Bankruptcy Code, 2016, Section 61
