2020 (12) TMI 704 - Tri - Insolvency and Bankruptcy

Oppression and Mismanagement - Contempt proceeding - alleged contemnor for willfully and deliberately disobeying the order - partition of the shareholding in the R1 company - maintenance of status quo of the shareholdings and fixed assets of R1 company - HELD THAT - The respondents are directed to file the up-to-date status of the affairs of the company as has been prepared by the respondents, and continue doing so on monthly basis which would include accounts, till the partition proceedings are initiated and completed. Since these directions to the respondents to file the same with the Tribunal were left out from being mentioned in the order, the respondents cannot be made liable under contempt, particularly in view of the fact that they are stated to have been preparing the same regularly. Since the order dated 11th February 2020 required certain clarification, it is made clear in this order and may be read accordingly by all concerned. Since there is no violation of the orders of this Tribunal, the present application filed by the applicant is dismissed.

Summary

Issues:
Contempt proceeding for disobedience of tribunal's order.

Analysis:
The unnumbered application was filed to initiate contempt proceedings against the alleged contemnor for willfully disobeying the tribunal's order dated February 11, 2020, directing disclosure of company's accounts. The main company petition challenged acts of oppression and mismanagement by respondent nos. 2 to 9. Despite reminders, respondents failed to comply with the order, showing disregard for tribunal's directions. The tribunal had directed preparation of monthly status of company's affairs till partition proceedings, maintaining status quo of shareholdings and fixed assets. Parties were to complete pleadings within 3 weeks each.

The tribunal noted that the respondents claimed compliance with the order and argued against contempt. Respondents maintained that they were preparing the required status regularly, and there was no direction to file it with the tribunal. They argued that the application was not maintainable and cited relevant judgments. Petitioner's counsel argued that the cited judgments were not applicable as no civil suit was pending, and any party could file a partition suit.

After hearing both parties, the tribunal left it to the parties to decide who would file the suit for partition. It directed respondents to continue filing monthly status of company's affairs till partition proceedings. Since the original order lacked mention of filing with the tribunal, respondents were not liable for contempt. The tribunal clarified the order and directed filing of reply affidavit within two weeks by respondents and rejoinder by the petitioner. As there was no violation of tribunal's orders, the contempt application was dismissed with no costs imposed. The registry was directed to send copies of the order to all parties and counsel via email.