Facts
The Appellants purchased a commercial unit in "Manjeera Mall" from the Corporate Debtor (CD) in 2014, paying full consideration
Source reference: p. 5-6Following the initiation of Corporate Insolvency Resolution Process (CIRP) against the CD in 2023, the Appellants filed IA No. 314/2024 seeking a direction to the Resolution Professional (RP) to include their ownership and registration rights in the Information Memorandum (IM)
Source reference: p. 7-8On 17.09.2024, the NCLT directed the RP to include these liabilities in the IM and inform the Appellants within 15 days
Source reference: p. 9Alleging non-compliance, the Appellants filed Contempt Petition No. 7/2025 under Section 425 of the Companies Act, 2013
Source reference: p. 10The NCLT dismissed the contempt petition on 26.03.2025
Source reference: p. 10The Appellants then preferred this appeal under Section 61 of the I&B Code (IBC), 2016
Source reference: p. 18Issues
1. Whether an appeal under Section 61 of the IBC is maintainable against an order dismissing a contempt petition, in light of Section 425 of the Companies Act, 2013 and Section 19 of the Contempt of Courts Act, 1971?
Source reference: p. 11 / para. 142. Whether the appellate power under Section 425 of the Companies Act is limited strictly to orders that "punish" for contempt?
Source reference: p. 11 / para. 14Law Applied
The court primarily applied Section 425 of the Companies Act, 2013, which grants the Tribunal and Appellate Tribunal the same jurisdiction as High Courts to punish for contempt, subject to the Contempt of Courts Act, 1971
Source reference: p. 11-12It relied on Section 19(1) of the Contempt of Courts Act, 1971, which stipulates that an appeal lies as of right only from an order or decision "in the exercise of its jurisdiction to punish for contempt"
Source reference: p. 12Furthermore, the court applied the principle established in Midnapore Peoples Cooperative Bank Limited v. Chunilal Nanda & Ors. (2006), which holds that orders declining to initiate, dropping, or acquitting a contemnor in contempt proceedings are not appealable under Section 19
Source reference: p. 16-17Reasoning
The Appellate Tribunal reasoned that Section 425 of the Companies Act must be read in conjunction with the Contempt of Courts Act, particularly the restrictive appellate provisions of Section 19
Source reference: p. 11-12The court observed that the legislature specifically used the word "punishment" in Section 19(1), indicating that only orders imposing a penalty—and not those dismissing a petition or dropping proceedings—are appealable
Source reference: p. 13, 15The court further clarified the nature of contempt proceedings, noting that the petitioner acts merely as an "informer" or "messenger" to the court
Source reference: p. 13-14Once the court is seized of the matter, the proceeding is not in persona but between the court and the contemnor; thus, the decision to drop proceedings is an exclusive prerogative of the court whose order was allegedly flouted
Source reference: p. 15, 18Consequently, as the impugned order dated 26.03.2025 resulted in the rejection of the contempt petition rather than a punishment, it falls outside the ambit of appealable orders
Source reference: p. 18Holding
The Appellate Tribunal held that the appeal is not maintainable.
It ruled that under Section 19 of the Contempt of Courts Act (read with Section 425 of the Companies Act and Section 61 of the IBC), an appeal lies only against an order of punishment and not against the dismissal of a contempt petition
Source reference: p. 18-19The Company Appeal was dismissed, and all connected interlocutory applications were closed
Source reference: p. 19Original Court PDF
Uday Kumar Sahu & Ors.vsBirendra Kumar Aggarwal (Resolution Professional Of M/S. Manjeera Retail Holdings Private Limited) & Ors.
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