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TMI Blog2024 (5) TMI 941X X X X Extracts X X X X X X X X Extracts X X X X ..... se of N Venkata Swamy Naidu [ 2007 (9) TMI 403 - HIGH COURT OF ANDHRA PRADESH] in which it has been held that the High Court under Section 10 of the Contempt of Courts Act has the power to punish for contempt of a subordinate court, coextensive and congruent with its power to punish for contempt of itself. Thus, it is clear that the CLB had no jurisdiction of issuing order of contempt because the power to punish for contempt has to be specifically provided for and conferred under the Act. Power to punish for the contempt of the order passed by the CLB - application under Section 425 of the Act has been filed - HELD THAT:- Reference made to the provisions of Section 425 of the Act in which the legislature has categorically used the words Contempt of themselves which means that it can issue the rule for contempt of its own order like that of the High Court but it does not have the power to issue rule for the alleged contempt of the order of CLB. Jurisdiction or power of CLB to issue contempt notice on the alleged disobedience of its order - HELD THAT:- Section 434(1)(a) of the Act categorically provides that all matters, proceedings or cases pending before the CLB, immediately before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ms. Aarohi Bhalla and Mr. Sagar Ghogre , Advocates For the Respondents : Mr. Rajeev K. Panday and Mr. Rajeev M. Roy , Advocates JUDGMENT Per : Justice Rakesh Kumar Jain : This order shall dispose of three appeals bearing CA (AT) No. 115 of 2022 titled as Devang Hemant Vyas 5 Ors. Vs. 3A Capital Pvt. Ltd. Anr. , CA (AT) No. 116 of 2022 titled as Prag Bosimi Synthetics Ltd. Vs. 3A Capital Pvt. Ltd. 6 Ors. and CA (AT) No. 133 of 2022 titled as 3A Capital Pvt. Ltd. Vs. Prag Bosimi Synthetics Limited 8 Ors. , because all have been filed under Section 421 of the Companies Act, 2013 (in short Act ) against the order dated 12.05.2022 passed by the National Company Law Tribunal, Guwahati Bench, Guwahati (in short the Tribunal ) on a contempt petition no. 3 of 2018 filed in CP No. 89 of 2021. 2. The Contempt Application No. 3 of 2018 was filed by 3A Capital against Prag Bosimi Synthetics Limited (Company) and Respondent No. 1 to 9 (arrayed as such in that contempt application). Hemant Bhanushankar Vyas was impleaded as Respondent No. 2 in the contempt application as the managing director but since he has expired, therefore, his name was dropped from the array of parties. The Respondent No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e heard in details from both the sides and we don't find any point leftover in the matter to be heard further. If the above amount is not paid by the Respondent within the above stipulated period for any reason, liberty is given to the Petitioner to file an application before this bench, after that stipulated period, so that a special officer may be appointed by this bench for a short period to ensure the payment of the above amount by the Respondent Company to the Petitioner. 28. On the other hand, if the Petitioner Company does not accept the above amount for any reason, the Respondent Company is at liberty to file a petition before this bench so that the Respondent Company shall be advised to deposit the said amount in an account to be decided by the Tribunal for the discharge of all the Respondents from the case. 29. The Respondent Company shall file an affidavit with the Registry within 15 days from the date of payments of the above amount and thereafter all the Respondents (R1, R3, R4, R 6 to R9) shall be discharged automatically from the matter. 30. Hence, the Contempt Application No. 03 of 2018 in C.P. No. 89 of2011 stands disposed of with above Observations and Directi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal be pleased to allow Contempt Application 03 of 2018 and pass an order holding that the Respondents have committed the contempt of Court for willful refusal to obey the order dated 27.05.2016 passed by the Hon'ble Company Law Board, Kolkata bench in Company petition No.89/2011; c. Be pleased to direct and order the Respondents to register and transfer the 30,00,000 preference shares plus unpaid dividend on the said 30,00,000 preference shares, of Respondent No.1, from the date of default of paying unpaid dividend, till date; d. Pending the hearing and final disposal of the present Appeal, be pleased to direct the Respondents to disclose on oath their respective personal properties （movable/immovable) and upon such disclosure, attach the same and thereafter sell the same in satisfaction of the claim of the Appellant, valued at 30,00,00,000/- （Rs. Thirty Crores Only) towards face value of preference shares plus unpaid dividend on the said 30,00,000 preference shares from the date of default of paying unpaid dividend, till date. e. Pending the hearing and final disposal of the above Appeal, the Respondents and their servants, agents and assignees be restrained by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conversion of over dues of interest accrued between April 1, 1995 and March 31, 1996 aggregating to Rs. 2058 Lacs into 19.5% RCCPS. The loan was payable in 28 instalments commencing from October 15, 1998 till July 15, 2003. 12. The Company in its meeting passed a resolution of availing financial assistance from the ICICI in the form of subscription by them of 19.5% RCCPS of the aggregate face value of Rs. 867 Lac. and 19.5% Redeemable Cumulative value of Rs. 867 Lac., 19.5% RCCPS of the aggregate face value of Rs. 2058 Lac. and 19.5% Secured Redeemable Non-Convertiable Debentures of Rs. 100 each of the aggregate value of Rs. 2973 Lac. by private placement. 13. The company, by its letter dated 08.04.1996, accepted the offer of the ICICI and allotted 10,00,000 numbers of 19.5% RCCPS of Rs. 100 each aggregate face of Rs. 1000 Lac. to the ICICI and the company in its board meeting held on 07.12.1996 decided that as per the subscription agreement signed by the Company, ICICI, IDBI signed on 08.04.1997 and 17.04.1996 for the reliefs, assistance granted by the Company it was necessary to allot 19.5% RCCPS for which share certificate was issued by the Appellant on 07.12.1996 and allotted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the SCB. 18. As per the CDR Letter dated 06.08.2009, the Company contended that the total principal claim of Rs. 69.90 Cr. of the SCB is settled, therefore, the ICICI has no right to the said RCCPS/CCPS much less to sell to Respondent (3A Capital and Ors.) 19. The Company in its AGM held on 16.12.2010 passed special resolution under Section 100 of the Companies Act, 1956 (in short Act, 1956 ) for the cancellation of total 81,46,250 RCCPS and CCPS including 30 Lac. shares issued to the ICICI and to file Company Petition No. 7 of 2011 before the Guwahati High Court for approval of cancellation/reduction of capital in relation to all the aforesaid 81,46,250 RCCPS. The Petition was allowed by Guwahati High Court on 18.12.2012. In these proceedings, 3A Capital filed an application to intervene by filing an impleadment application but it was dismissed on 17.08.2012 because its name was not appearing in the list of the shareholders of the Company and as such it had no right to intervene. 20. The order dated 17.08.2012 was challenged by 3A Capital before the Hon ble Supreme Court by way of SLP No. 28115 of 2012 in which no stay was granted against the further proceedings in the petition f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er holding the Respondents/Contemnors in alleged contempt of court for wilful refusal to obey the Order of the Hon'ble Company Law Board, Kolkata Bench in this matter abovementioned, particulars in the contempt of order dated 27th May,2016 in Company petition No. 89/2011 and for an order punishing them with imprisonment and/or fine in accordance with law, b) Direct the Respondents to disclose on oath the properties（Immovable/Movables) and upon such disclosure attach the same and thereafter sell the same in satisfaction of the claim of the Applicant, which the Applicant valued to Rs. 30,00,00,000/-（Rupees Thirty Crores only) towards face value of preference shares plus unpaid dividend on 30,00,000 preference shares from the date of default of paying unpaid, till date.; c) Pending the hearing and final disposal of the present Application, pass an Order of injunction of this Hon'ble tribunal inter-alia restraining them, their servants, agents and assigns from creating any third party rights of the said preferential shares; d) Pending the hearing and final disposal of the present application, the Respondents, their servants, agents and relatives be restrained from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o objection from all the financial institutions and the banks/secured creditors confirming the CDR decision. Furthermore, majority of the unsecured creditors who are promoters and directors of the company collectively approached the CDR forum and accepted the final settlement. Though there are unsecured creditors aggregating to Rs. 237.44 lakhs but the total assets of the company as may be noticed from paragraph 20 of the company petition being Rs. 2,50,39,75,112/-, it is sufficient to take care the interest of such unsecured creditors. 14. Having heard the petitioner and also having considered the materials placed on records, this court is satisfied that the petitioner company has been able to make out a case for invoking Section 100 of the Act to confirm the proposed reduction of the share capital of the petitioner company. It is ordered accordingly. 29. The order dated 18.12.2012 was challenged by 3A Capital by way of SLP No. 7459 of 2013 in which notice was issued. 30. After the order dated 18.12.2012 of reduction of share capital, a petition no. 89 of 2011, filed under Section 111A of the Act, 1956 by 3A Capital before the CLB was allowed vide its order dated 27.05.2016. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orders and not the orders passed by the CLB. In this regard, he has referred to Section 425 of the Act which read as under:- Section 425: Power to punish for contempt. *425. The Tribunal and the Appellate Tribunal shall have the same jurisdiction, powers and authority in respect of contempt of themselves as the High Court has and may exercise, for this purpose, the powers under the provisions of the Contempt of Courts Act, 1971, which shall have the effect subject to modifications that (a) the reference therein to a High Court shall be construed as including a reference to the Tribunal and the Appellate Tribunal; and (b) the reference to Advocate-General in section 15 of the said Act shall be construed as a reference to such Law Officers as the Central Government may, specify in this behalf. 33. It is contended that the Tribunal and the Appellate Tribunal has been given the jurisdiction, power and authority in respect of a contempt of themselves which means that it pertains to the order passed by the Tribunal or Appellate Tribunal and not the order passed by the CLB. In this regard, he has also referred to a decision of the Andhra Pradesh High Court given in the case of Venkata Sw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders for allowing or otherwise such proceedings; or (ii) the proceedings relating to winding up of companies which have not been transferred from the High Courts; shall be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959.] 4[Provided also that proceedings relating to cases of voluntary winding up of a company where notice of the resolution by advertisement has been given under subsection (1) of section 485 of the Companies Act, 1956 but the company has not been dissolved before the 1st April, 2017 shall continue to be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959.] (2) The Central Government may make rules consistent with the provisions of this Act to ensure timely transfer of all matters, proceedings or cases pending before the Company Law Board or the courts, to the Tribunal under this section. ] 35. It is further submitted that even the order dated 27.05.2016 passed by the CLB which has been upheld by the Hon ble High Court of Guwahati vide its order dated 12.07.2017, had merged in the order of the High Court, therefore, it was the order of the High Court dated 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issuance of notice in contempt application on 05.03.2019 and has also noticed in Para 15.2 that the order has become incapable of execution because subject matter has ceased to exist which has been accepted by the Tribunal that the company cannot be directed to revive / issue those shares which have already been cancelled nine years back and the said contention has been found to be genuine, appropriate, justified and tenable but still in para 16 of the impugned order it held that the company is liable to pay the money in lieu of those shares and then issued the impugned direction out of which some of the directions have been issued which were not even prayed for, like the award of Rs. 20 Lac. towards legal expenses and award of Rs. 5 Lac. which has been ordered to be paid to the MCA. 40. Counsel arguing CA No. 115 of 2016, filed at the instance of the directors, has submitted that the Appellant No. 1 was nonexecutive director and was not involved in the day to day activities of the Company. The Appellant No. 2 and Appellant No. 6 were independent director non-executive directors and were not involved in the day-to-day activities of the Company. The Appellant No. 3 was independent n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchased the RCCPS from the ICICI and when the said share were not transferred, filed a petition before the CLB which was allowed on 27.05.2016, the appeal filed against the order dated 27.05.2016 has been dismissed on 12.07.2017 and the order dated 12.07.2017 challenged before the Hon ble Supreme Court which has been upheld because the appeal has been dismissed on 02.02.2018 and hence, the order dated 27.05.2016 has attained finality. He has submitted that in petition no. 7 of 2011, filed by the Company under Section 100 of the Act of 1956 for reduction of share capital, an application was filed by 3A Capital for the purpose of impleadment but the said application was dismissed on the ground that his right over the shares in question has not been crystallised at this stage. The rights was ultimately crystallised in the order passed on 27.05.2016, therefore, instead of compensation, the share should have been transferred. 42. In reply to the other appeals no. 115 and 116 of 2022, it is submitted that if the appeal no. 133 of 2022 is dismissed, there is no error in the direction issued in the impugned order for compensating 3A Capital in regard to the shares which have already been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the said 30,00,000 RCCP and CCP shares are not in existence as they have been extinguished/cancelled in accordance with the order dated 18.12.2012 passed by the Hon'ble Guahati in Company Petition No.7 of 2011. The Order dated 18.12.2012 passed by the Guwahati High Court of reducing paid-up share capital of Respondent No. 1 Company acquired finality, it would lead to anomalous position if Applicant is to claim title to or property in the said 30,00,000 RCCP and CCP share. e) By reason of the transfer, it would be alleged that the share capital of the Company stands increased which is contrary to the provisions of the Company Law and the Order passed by the High Court. Moreover, such an increase would also be without any infusion or subscription to the share capital. It is humbly submitted that in contempt jurisdiction no court or tribunal will seek to implement an order which is legally impermissible /impossible or pertains to nonexistent subject matter or which will violate or circumvent existing provisions of laws. On this ground alone the present proceedings are liable to be dismissed. 47. Rejoinder to the reply was filed by 3A Capital on 20.05.2019. 48. However, the prel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment that can the High Court exercise its jurisdiction under Section 10 of the Contempt of Courts Act even in the absence of a reference to it by the CLB?. In which it has been held that the High Court under Section 10 of the Contempt of Courts Act has the power to punish for contempt of a subordinate court, coextensive and congruent with its power to punish for contempt of itself. Thus, it is clear that the CLB had no jurisdiction of issuing order of contempt because the power to punish for contempt has to be specifically provided for and conferred under the Act. 52. The second argument raised by the Appellant is that even if the application under Section 425 of the Act has been filed, it does not have the power to punish for the contempt of the order passed by the CLB. 53. In this regard, he has referred to the provisions of Section 425 of the Act in which the legislature has categorically used the words Contempt of themselves which means that it can issue the rule for contempt of its own order like that of the High Court but it does not have the power to issue rule for the alleged contempt of the order of CLB. 54. The next arguments of the Appellant is that Section 434 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the issue of merger, the Appellant has relied upon two decisions of the Supreme Court in the cases of Shanthi (Supra) and Chandi Pd. (Supra) in which it has been held that when a higher forum entertains an appeal and passes an order of merit, the doctrine of merger would apply. The doctrine of merger is based on the principles of the propriety in the hierarchy of the justice delivery system. The doctrine of merger does not make a distinction between an order of reversal, modification or an order of confirmation passed by the Appellate Authority. The said doctrine postulates that there cannot be more than one operative decree governing the same subject matter at a given point of time. 60. In the matter of contempt, the Hon ble Supreme Court has also held in the case of Dineshan K.K. Vs. R.K. Singh Another, (2014) 16 SCC 88 that if the order of the High Court had merged in the order of the Apex Court then the contempt petition has to be filed on the order passed by the Appellate Court. However, in this case, the Hon ble Supreme Court while exercising its power under Article 129, 136 and 142 of the Constitution of India, directed to the complainant to approach the High Court for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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