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TMI Blog2018 (1) TMI 1749X X X X Extracts X X X X X X X X Extracts X X X X ..... edings is the same standard of proof as required in criminal proceedings. Great circumspection is required to be exercised by the court or the forum conferred with power to punish for contempt. Such action cannot be undertaken merely based on conjectures or surmises. The proceedings of contempt of court are generally treated as sui generis. Though the procedure adopted both under the common law and the statute in this context has invariably been summary in nature and the provisions of the Code of Criminal Procedure or the Evidence Act do not strictly control the same, it is essential that the court or the forum follows the procedure that is fair and objective. Before issuing notice calling upon the alleged contemnor to answer the charge of contempt, the court or the forum must record satisfaction that there is a clear, unambiguous and unequivocal case made out showing willful and contumacious conduct by the respondent. Since the impugned orders have been passed only at the threshold scrutiny by NCLT and there is no order issued holding any of the petitioners or other parties arrayed as contemnors as being guilty, not the least punishing any person for contempt of court, the remedy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said to be without jurisdiction. There is no element of arbitrariness as necessitates the writ court s intervention. Thus, this court declines exercise of writ jurisdiction - On the above facts and in the circumstances, the NCLT being seized of the matter, it would not be proper for this court in proceedings at hand to make any observations either way on the merits of the allegations made in the contempt application, lest the same prejudices either side. This court is of the view that grievances raised by the petitioners are a result of unfounded apprehensions about NCLT having prejudged the issue and reflect paranoia rather than substance - The writ petitions are, thus, dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... present petition." 2. The writ petition came up before a division bench of this court led by Hon'ble the Acting Chief Justice on 13.10.2017 when the following order was passed :- "1. Right at the outset, Mr. Harish Salve, ld. Senior Counsel appearing on behalf of the petitioners, submits that he does not press prayers (a) and (b) of the writ petition. 2. Prayers (a) and (b) of the writ petition are dismissed as withdrawn. 3. So far as the remaining prayers are concerned, the same would be the subject of consideration by a ld. Single Judge of this court. 4. On request of the petitioners, let this petition be placed today itself before a ld. Single Judge of this court as per Roster." 3. The roster judge having recused, the petition came up before this court against the above backdrop on 13.10.2017 and was taken up for hearing w.e.f. 16.10.2017. 4. On 26.10.2017, the second above-captioned writ petition came to be filed, it being almost a verbatim copy of the first said writ petition, the prayers made therein also being identically worded. Upon reference being made to the fact that the first writ petition had been pending before this court after withdrawal of the praye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent. On 29.11.2013, MIPL initiated arbitration proceedings in London, U.K., in respect of the claims arising consequent to termination of the joint venture agreement. On 21.06.2017, MIPL issued notice to CPRL alleging material breaches in terms of para 18(d) of the franchise agreement and demanding payment of royalty for the period October 2015 to May 2017. The company petition [no.110(ND)/2013] which had been instituted on 09.09.2013, before the erstwhile Company Law Board by the second and third respondents herein came up before the National Company Law Tribunal (NCLT) which had taken it over, it being the appropriate authority under the Companies Act, 2013. The said company petition [no.110(ND)/2013] was allowed by NCLT on 13.07.2017, the operative part whereof (as appearing at internal page 133 of the said judgment) reads as under :- "41. As a sequel to the above discussion this petition succeeds. We consider it just and equitable to provide as under:- (i) The proceedings of the meeting of the Board of Directions held on 06.08.2013 relating to re-election of Mr. Vikram Bakshi as Managing Director of the Company are set aside and declared illegal, unjust and malafide. Conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2017 proposing to hold a meeting on 21.08.2017, inter alia, requesting information to be given as to the issues to be discussed in addition to the subject of re- election of the second respondent to the board of CPRL. 11. At this stage, it may be mentioned that Ms. Aysel Melbye and Mr. Robert Dale Larson (first and second petitioners respectively in the second above-mentioned writ petition) were party to the proceedings arising out of company petition no.110(ND)/2013, they having been impleaded as fourth and third respondents respectively in the said matter. They, it appears from the material on record, were nominees of MIPL on the board of the directors of CPRL since August and April 2008 respectively. The pleadings indicate that on 09.08.2017, both of them informed the Administrator appointed by NCLT that they would send their response to the communication proposing the meeting after consulting each other on 10.08.2017. The Administrator, in turn, asked them on 09.08.2017 to respond by 5.00 p.m. on 10.08.2017 failing which he intended to issue notice convening the meeting on 21.08.2017. On 10.08.2017, the first petitioner in the second above-captioned petition on her own behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 397, 402 and 403 of the Companies Act, 1956, the prayer made therein being as under :- (a). Declare the subsequent acts of the Respondents as illegal, void and non-est including that of the Notice of Termination dated 21.08.2017 annexed herein as Annexure A-2 to this application; (b). Set aside the Notice of Termination dated 21.08.2017 and declare each of the Operational Licence Agreements/franchisee Agreements in respect of the 145 restaurants as per Annexure-1 of the Notice of Termination dated 21.08.2017 to be valid and subsisting; (c). Direct the Respondents 2 to 5 to execute Operational License Agreement/ Franchisee Agreements in respect to the 20 restaurants as per Annexure-2 of the Notice of Termination dated 21.08.2017 immediately; (d). Restrain the Respondents and its officers, agents, employees or any representatives of respondents from taking any steps in pursuance of Notice of Termination dated 21.08.2017 of the Franchise Agreements; (e). Restrain the Respondents 2 to 5 and its officers, agents, employees or any representatives of Respondents from parting with the franchise rights to any third party; (f). Direct the Respondents No.1 to 11 to comply w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice of termination dated 21.0.2017. Some other prayers have also been made. On advance notice of the application Mr. Chagla, learned Senior Counsel has appeared and opposed the prayers made. We have heard learned counsel for the parties at a considerable length and are of the view that this application at this stage would not be maintainable because both the applications as well as non applicant-Respondent No.1 have filed their respective appeals which are pending before the Learned National Company Law Appellate Tribunal. A copy of the appeal filed by the applicant has been placed before us and the factum of notice for termination dated 21.08.2017 has been mentioned in support of the prayer that Connaught Plaza Restaurants Pvt. Ltd. should be put to buy out or sell out mode. There is thus no dispute that the present issue in question pertaining to notice of termination dated 21.08.2017 has already been placed before Hon'ble NCLAT in the pending appeal. We further feel that at this stage it would be unnecessary because Hon'ble Justice G.S. Singhvi, the administrator appointed by us by order dated 13.07.2017 granted applicant leave to file application for interim relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceedings on 05.09.2017 on the contempt application in the following manner :- "We have heard learned counsel for the parties. It has been urged that on account on filing an appeal before the Hon'ble NCLAT, notice in the present application for contempt may not be issued. However, we are unable to accept the submission. Notice to show cause to the respondent returnable on 20.09.2017 be issued as to why proceeding under Section 425 of the Companies Act, 2013 read with Contempt of Courts Act, 1971 be not initiated. List for further consideration on 20.09.2017." 22. It has been stated that the matter was not taken up for hearing by NCLT on 20.09.2017 as had been fixed. It eventually came up for effective proceedings on 26.09.2017. The copy of the proceedings dated 26.09.2017 (page 108 of the paper book of the first writ petition) would show that MIPL, the first petitioner in the first above-captioned writ petition and both the petitioners of the second above-captioned writ petition were duly represented besides some other parties shown in the array as respondent-contemnors. It may be added that the second petitioner in the first captioned writ petition was reflected in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the doing of any act which, inter alia, "tends to lower the authority of any court", or "prejudices… any judicial proceedings" or one that "obstructs or tends to obstruct the administration of justice." It confers jurisdiction, inter alia, on the High Courts to take cognizance of the contempt of court and to deal with the contemnors in accordance with its provisions. Section 12 generally deals with the subject of punishment for contempt of court that includes civil or criminal contempt. Section 14 relates to the procedure to be followed where the contempt is committed in the face of the Supreme Court or the High Court. Section 15 lays down the procedure for taking of cognizance of criminal contempt in other cases. It clarifies that action may be initiated by the High Court "on its own motion" or "on a motion made by the Advocate-General" or "any other person with the consent in writing to the Advocate- General". Section 10, it may be added, confers on the High Court the power to punish for contempt of the courts subordinate to it. Section 17 provides broadly for the procedure to be followed "after cognizance". 25. For the benefit of the discussion that is to follow, the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though clarifying that the same be "not inconsistent with the provisions of the Contempt of Courts Act, 1971". 27. Some enactments creating adjudicatory bodies or tribunals have extended the provisions of Contempt of Courts Act, 1971 to such forums, illustration thereof including the administrative tribunals established under the Administrative Tribunals Act, 1985 (see Section 17). The Companies Act, 2013, by Section 425, confers the power on NCLT and NCLAT to "punish for contempt" in accordance with the provisions of the Contempt of Courts Act, 1971 thus :- "425. Power to punish for contempt - 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 Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice issued by the Tribunal is served by the party himself by hand delivery, he shall file with the Registrar or such other person duly authorised by the Registrar in this behalf, the acknowledgment together with an affidavit of service and in case of service by registered post or by speed post, file with the Registrar, or such other person duly authorised by the Registrar in this behalf, an affidavit of service of notice alongwith the proof of delivery. (4) Notwithstanding anything contained in sub-rules (1) and (2), the Tribunal may after taking into account the number of respondents and their place of residence or work or service could not be effected in any manner and other circumstances, direct that notice of the petition or application shall be served upon the respondents in any other manner, including any manner of substituted service, as it appears to the Tribunal just and convenient. (5) A notice or process may also be served on an authorised representative of the applicant or the respondent, as the case may be, in any proceeding or on any person authorised to accept a notice or a process, and such service on the authorised representative shall be deemed to be a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for submission of the explanation in writing within the period stipulated in the notice. (3) The Bench shall, on receipt of the explanation, and after oral hearing if granted, proceed to decide the matter of imposition of penalty on the facts and circumstances of the case." (emphasis supplied) 30. It is an admitted case on both sides that no separate rules have been framed either by the Central Government in exercise of powers conferred upon it under Section 469 of the Companies Act, 2013 or by NCLT or NCLAT in terms of the provision contained in Section 23 of the Contempt of Courts Act, 1971 on the specific subject of the procedure relating to the exercise of powers to punish for contempt as conferred upon such forum by Section 425 of the Companies Act, 2013. 31. As noted at the outset, the prime contention with which these writ petitions were presented, as reflected by prayer clauses (a) and (b) quoted above was that the power to punish for contempt conferred upon NCLT by Section 425 of Companies Act, 2013 cannot be exercised till rules relating to the procedure therefor are framed by NCLT or NCLAT and further that the issuance of the notification on 01.06.2016 by the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in breach of not only the NCLT rules but also of the principles of natural justice. It was submitted that NCLT did not issue any formal notices through its Registry on the contempt application and instead proceeded to act on the affidavit of service of the notices submitted by the counsel for the applicants (i.e. the second and third respondents) who, per the submissions, most improperly had issued an unauthorized communication on the subject to the petitioners and others referring to the proceedings taken out on 05.09.2017 by NCLT. 34. The core argument of the petitioners in these proceedings is that the procedure followed by NCLT is flawed in as much as it has not recorded till date its satisfaction that a prima facie case of contempt is made out, nor communicated the "charge", nor indicated in any other manner the gravamen of the case of contempt which the petitioners are called upon to answer. It was submitted that a summary procedure has been adopted wherein show cause notice has been arbitrarily issued and some of the respondents have been proceeded ex parte without it even being examined as to whether they had been served or not with the notices on the contempt applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey, (2004) 5 SCC 26; R.K. Anand Vs. Registrar, Delhi High Court, (2009) 8 SCC 106; and Sahdeo Alias Sahdeo Singh Vs. State of Uttar Pradesh & Ors., 2010(3) SCC 705]. 36. The first objection of the second and third respondents herein is to the maintainability of the writ petitions before this court against the impugned orders of NCLT on the ground that the appropriate remedy for the aggrieved party is to approach the appropriate appellate court in terms of the provisions contained in the Contempt of Courts Act, 1971 and the Companies Act, 2013. This objection, however, cannot be accepted in view of the law that is well settled. Reference may be made to just three decisions of the Supreme Court reported as T. Sudhakar Prasad Vs. Govt. of A.P. and Ors., (2001) 1 SCC 516; Midnapore Peoples' Coop. Bank Ltd. and Ors. Vs. Chunilal Nanda and Ors. (2006) 5 SCC 399 and Sujitendra Nath Singh Roy Vs. State of West Bengal and Ors., (2015) 12 SCC 514. In Midnapore Peoples' Coop. Bank Ltd. (supra), the question was examined at length with reference to a series of previous rulings of the Supreme Court holding that appeal under Section 19 of the Contempt of Courts Act was maintainable only in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ropriety, the constitutional scheme, some settled rules of self-restraint or its peculiar facts." 38. Since the impugned orders have been passed only at the threshold scrutiny by NCLT and there is no order issued holding any of the petitioners or other parties arrayed as contemnors as being guilty, not the least punishing any person for contempt of court, the remedy of appeal may not be even available. Be that as it may, the judicial review, if called for in the facts and circumstances of the case, can neither be grudged nor denied. 39. The petitioners have relied on the decisions in State of J. & K. Vs. Mohd. Yaqoob Khan and Ors., 1992 (4) SCC 167 and Modern Food Industries (India) Ltd. and Anr. vs. Sachidanand Dass and Anr., 1995 Supp (4) SCC 465 to argue that NCLT has committed impropriety by not awaiting the decision of the NCLAT in the two appeals, which had been taken out by both sides against the judgment dated 13.07.2017 of the NCLT and which are still pending before the said superior appellate forum. It is submitted that while the prayer in the Company Appl. 301(PB)/2017 under Section 242 of the Companies Act, 2013 on these very grounds was accepted on 05.09.2017, NCLT t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prayer made in the company application under Section 242 of the Companies Act, 2013 moved on 31.08.2017 was essentially to have the notice of termination dated 21.08.2017 declared illegal, void and rendered non- est with additional prayer for further restraint order to be issued to the opposite party (i.e. the petitioners herein and others who were impleaded in the company petition in the first place). The NCLT, while declining to entertain the said application made it clear that the parties were already before NCLAT in appeals and, therefore, it was appropriate that they make all the prayers in view of the subsequent developments for "interim relief" before NCLAT only, particular reference being made to the fact that the Administrator appointed by NCLT by order dated 13.07.2017 had already granted leave for such application for interim relief to be presented before NCLAT. The applicants having already secured leave of the Administrator to approach the NCLAT for interim relief, could not have conceivably been entertained by NCLT at the same time when the superior forum was expected to be in seisin of similar prayer. The NCLT made it clear in last para of its order on application un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r a case of contempt has actually been made out or not for the necessary process to follow. The language employed in the order dated 05.09.2017 clearly shows that the proceedings under the Contempt of Courts Act, 1971 in exercise of powers conferred on NCLT by Section 425 of Companies Act, 1923 are yet not initiated. This is why the forum has only issued a notice to the respondent in the application for contempt to "show cause… as to why (such) proceedings...be not initiated". This limited purport and objective of the proceedings of NCLT is reinforced by the subsequent order dated 26.09.2017 whereby it has insisted on "reply to the contempt petitions (to) be filed" by the parties who are shown as the contemnors. Clearly, the NCLT is at the stage of threshold scrutiny of the matter. It is still gathering facts. Such proceedings are nothing but in the nature of a preliminary inquiry wherein response has been sought in the wake of which it hopes and expects to collect not only the necessary facts but also requisite material in support of the contentions of either side. The decision as to whether the alleged acts constituting contempt have actually been committed or not will und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is made out and thereby taking formal cognizance and summoning the parties in question to stand trial. 49. The NCLT, rather than acting in hurry or undue haste, as is alleged, has taken the neutral course of treating the application seeking initiation of contempt proceedings or for the parties in question to be asked to purge, merely as an application filed in the wake of its order dated 13.07.2017. The decision as to whether or not a prima facie case of willful disobedience, defiance or commission of any act constituting contempt is made out, would undoubtedly be taken by the NCLT after it has secured the replies and considered the contentions having heard the parties in question. The argument that NCLT has acted arbitrarily, or with bias, is without basis. By giving opportunity to show cause, it has instead acted in most fair manner, following the spirit of the rules. [Rule 59]. 50. As regards the grievance that some of the parties shown in the list of contemnors were not even properly served and yet proceeded ex parte, all that needs to be said is that, if such were the facts, it is a matter of irregularity of the proceedings. This court is confident that if any such lapse has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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