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2023 (10) TMI 603 - AT - Insolvency and BankruptcyContempt petition - decision in personam - admission of application and initiation of CIRP - case of the Petitioner is that the Respondent No. 1 (RP) has violated the order by appointing a project monitoring consultancy during the subsistence of the order i.e. in the month of June, 2020. HELD THAT - It is well settled that the contempt is a serious matter because it causes both physical and fiscal punishment specially when the contempt has been alleged against a professional (RP). The Petitioner has to make out a full proof case about the wilful violation of the order passed by the Tribunal for the purpose of seeking attention to issue an order of contempt and punish accordingly. In the present case, the petition has been filed after the expiry of limitation of one year as the order was passed on 24.01.2020 and the petition has been filed on 12.08.2023 and is clearly barred by limitation because the Petitioner was very well aware of the appointment of the PMC which was duly ratified in the second meeting of CoC held on 21.08.2020 and the Petitioner attended 3rd and 4th CoC meeting held on 10.09.2020 and 16.09.2020 subsequently. The case of the Petitioner is that he came to know about the appointment of the PMC somewhere in April, 2023 when the alleged promoters/directors of the PMC challenged the FIR registered against them before the Patna High Court and were not successful cannot be believed. Locus Standi - HELD THAT - The decision in the case of Girish Mittal 2019 (4) TMI 1630 - SUPREME COURT is also of no help because in that case it was an order passed in rem which could have affected a person in the street, therefore, the contempt was filed because of the direction issued by the Hon ble Supreme Court were not followed but here is the case in which the direction issued was between the parties, therefore, it was a decision in personam. There is no contempt made out in this case because the order which was passed on 24.01.2020 was only to the extent that the CoC shall not be constituted if it is not yet constituted and the RP has to ensure that the company remains a going concern which is also the spirit of Section 20(1) of the Code and further the RP was directed to take assistance of the suspended board of director which is again the spirit of Section 19 of the Code. Petition dismissed.
Issues Involved:
1. Alleged violation of the order dated 24.01.2020. 2. Maintainability of the contempt petition by a third party. 3. Limitation period for filing the contempt petition. 4. Locus standi of the petitioner. 5. Merits of the contempt allegation. Summary: 1. Alleged violation of the order dated 24.01.2020: The contempt petition was filed by AJR Infra and Tolling Ltd. against the Resolution Professional (RP) of Patna Highway Projects Ltd. and another individual for allegedly violating the order dated 24.01.2020. The order had directed the Interim Resolution Professional to ensure the company remains a going concern and to take assistance from the suspended Board of Directors. 2. Maintainability of the contempt petition by a third party: The Respondent raised objections regarding the maintainability of the petition by a third party and argued that the petition is barred by limitation. The Petitioner relied on the Supreme Court decision in Pallav Sheth Vs. Custodian and Ors. to argue that the petition is within the limitation period due to alleged fraudulent concealment of facts by the Respondents. 3. Limitation period for filing the contempt petition: The Tribunal noted that the petition was filed after the expiry of the one-year limitation period stipulated under Section 20 of the Contempt of Courts Act, 1971. The Petitioner was aware of the PMC's appointment, which was ratified in the second CoC meeting on 21.08.2020, and attended subsequent CoC meetings. The Tribunal found the petition to be highly belated and not maintainable. 4. Locus standi of the petitioner: The Petitioner argued that an aggrieved third party could initiate contempt proceedings, relying on Girish Mittal Vs. Parvati V. Sundaram & Anr. However, the Tribunal distinguished this case, noting that the order in question was in personam, not in rem, and thus the Petitioner did not have the locus standi to file the petition. 5. Merits of the contempt allegation: The Tribunal found no contempt as the RP had followed the order by ensuring the company remained a going concern and taking assistance from the suspended Board of Directors, as required under Sections 19 and 20(1) of the Insolvency and Bankruptcy Code, 2016. The Tribunal concluded that the petition was filed with ulterior motives and dismissed it with exemplary costs of five lakhs to be deposited in the Prime Minister Relief Funds within one month. Failure to comply would result in contempt proceedings against the Petitioner. Conclusion: The Tribunal dismissed the contempt petition as it was filed beyond the limitation period, lacked locus standi, and had no merit. The Petitioner was ordered to pay exemplary costs for filing a frivolous petition.
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