NCLAT dismissed a contempt appeal, holding no wilful disobedience occurred and affirming that an order dropping contempt proceedings is not appealable.
NCLAT Clarifies Appealability of Dropped Contempt Proceedings
The National Company Law Appellate Tribunal (NCLAT) dismissed a contempt appeal, finding no evidence of wilful disobedience of a prior order. The appeal challenged the NCLT’s decision to drop contempt proceedings, which NCLAT held was not an appealable order under Section 61 of the Insolvency and Bankruptcy Code, 2016.
The appellant alleged non-compliance with an asset preservation direction, including unauthorised bank withdrawals. However, NCLAT noted no documentary proof of withdrawal or disposal of assets and accepted the respondent's explanation of compliance.
An order declining to initiate or dropping contempt proceedings is not a 'decision' under Section 61 and does not carry the necessary finality for appeal.
This ruling clarifies procedural limits on challenging administrative decisions in contempt matters. Practitioners must ensure that contempt applications contain prima facie evidence of disobedience and consider filing fresh applications rather than appealing dropped ones.
Citations
- Insolvency and Bankruptcy Code, 2016, Section 61
