NCLAT dismissed a contempt appeal, ruling no wilful disobedience was shown and affirming that an order dropping contempt proceedings isn’t separately appealable. The decision clarifies procedural limits in IBC enforcement.
NCLAT Dismisses Contempt Appeal, Upholds Dropping of Proceeding
The National Company Law Appellate Tribunal (NCLAT) has dismissed an appeal filed against the NCLT’s order dropping contempt proceedings initiated under Regulation 14 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016. The appellant alleged wilful default and unsanctioned fund withdrawals post-resolution plan approval.
The NCLAT found no evidence of wilful disobedience of orders, particularly no unauthorised bank withdrawals or breaches traceable to the management. It further ruled that an order declining to proceed with contempt is not a ‘final order’ under Section 61 of the IBC and is not independently appealable.
"No appeal lies merely on the ground that contempt was not pursued,"the tribunal held, stressing the necessity of demonstrating actual defiance of adjudicatory directions.
The judgment clarifies the threshold for initiating and appealing contempt actions under IBC. Practitioners must carefully assess evidentiary strength before filing contempt applications and note the limited appealability of procedural dismissals.
Citations
- In re: Contempt Appeal under IBC (2026) NCLAT
