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2025 Supreme(Online)(NCLT) 6555
IN THE NATIONAL COMPANY LAW TRIBUNAL KOCHI BENCH
SHRI. VINAY GOEL, SMT. MADHU SINHA, JJ
M/s Bhagyodayam Company – Appellant
Versus
Mr Paul Joseph – Respondent
IA(C/Act)/137/KOB/2023 | TCP/21/KOB/2019
For the Appellants/Petitioners: Ms. Karthika K J
For the Respondents: Mr. Aditya B Shenoy
For civil contempt, it must be established that non-compliance was wilful and deliberate; mere non-compliance does not suffice without intent.
Headnote:(A) Companies Act, 2013 - Section 425 - Contempt of Court - Allegations of wilful non-compliance with tribunal directions regarding document production - Respondent failed to furnish required documents leading to audit delays; however, lack of clear possession indicated and insufficient evidence for contempt established. (Paras 1, 24-28)
(B) Civil Contempt - To establish civil contempt, clear evidence of wilful and deliberate disobedience is necessary. Mere non-compliance does not equate to contempt without intent. (Paras 12, 14)
Facts of the case:
The Petitioner filed for contempt against the Respondent for not producing documents required for an audit as per the tribunal's orders. The Respondent claimed to have handed over all pertinent records to a former administrator, leading to disputes regarding possession and compliance.
Findings of Court:
The court found no convincing evidence that the Respondent retained the required documents and ruled that the issues of document possession did not warrant contempt proceedings.
Issues: Whether the Respondent's failure to comply constituted contempt under the Companies Act and the extent of the responsibility for compliance.
Ratio Decidendi: The court highlighted the importance of proving wilful intent for contempt; doubts regarding document possession made the charge of contempt unsustainable. Non-compliance alone does not invite contempt.
Result: Contempt Petition dismissed with no order as to costs.
| Table of Content |
|---|
| 1. background of the case (Para 2) |
| 2. respondent's defense arguments (Para 3 , 4 , 5) |
| 3. court's interpretation of authority (Para 6 , 7 , 8 , 9 , 10) |
| 4. intent needed for contempt (Para 11 , 12 , 13) |
ORDER
Per Coram
1. This contempt petition has been filed under Section 425 of the Companies Act, 2013 , read with Rule 11 of NCLT Rules, 2016 , by the Petitioner Company represented by its Managing Director. The Civil Contempt Petition is filed seeking the following prayers: -
a. Initiate proceedings against the respondent for wilfully violating the order dated 19.3.2024 passed by this Hon'ble Tribunal and for committing Civil Contempt of Court and punish him in accordance with law;
b. Pass any other directions or orders as the Hon'ble Tribunal deems fit and proper in the facts and circumstances of this case.
2. The brief facts of the case as stated in the Petition
a) The Petitioner Company, incorporated on 16.01.1928 and now governed under Section 8 of the Companies Act, 2013 , was managed by Respondents 2 to 6 in TCP/21/KOB/2019 since December 2013. Following allegations under Sections 241 and 242, the NCLT, Chennai, appointed an Interim Administrator on 28.08.2018, with Mr. Justice K. Narayana Kurup assuming charge on 05.11.2018, succeeded by Mr. Jinan KR from 29.11.2021 to 07.04.2024. In compliance with the Tribunal’s directions, and subsequent confirmations by NCLAT and the Supreme Court, elections were conducted as per the AoA, and the newly elected Board took effective charge on 08.04.2024. The Administrator was discharged upon filing of the final report on 28.05.2024, and the Board appointed a Managing Director to represent the company.
b) At the time of the Administrator’s appointment on 28.08.2018, the NCLT, Chennai, directed a detailed audit to assess any losses from fund disbursements contrary to the AoA, holding Respondents 2 to 6 liable for compensation. The Administrator repeatedly requested relevant company documents from the then Managing Director, the Respondent, herein, but the same was not furnished, leading NCLAT on 24.05.2019 to direct their submission within seven days, which was ignored. Due to the unavailability of essential documents, the company’s financials could not be audited, prompting the Administrator to file IA/29/KOB/2020 seeking investigation by the RoC or other authorities and permission to appoint an Auditor. The application was allowed vide order dated 11.03.2020, directing SFIO, Chennai, to investigate non-compliance, prosecute offenders under Section 439 (2), submit a report within two months, and permitting the Administrator to appoint an Auditor.
c) Accordingly, Mr. Babu A. Kallivayalil was appointed as Auditor to conduct a detailed audit, but he resigned on 31.07.2021 after filing a preliminary report. Although financial statements for 2014-15 to 2016- 17 were filed with the RoC, the Administrator believed they were based on incomplete records, as vital documents, including several statutory registers, were not provided by the Respondent. Consequently, on 03.08.2023, this Tribunal appointed Chartered Accountant Sri P.K. Raju to conduct a fresh internal audit for 2014-15 to 2016-17 and submit a report within two months, but the Respondent failed to produce the necessary records despite repeated reminders. Consequently, on 03.08.2023, this Tribunal appointed Chartered Accountant Sri P.K. Raju to conduct a fresh internal audit for 2014-15 to 2016-17 and submit a report within two months, but the Respondent failed to produce the necessary records despite repeated reminders.
d) Consequently, the Administrator filed IA/137/KOB/2023 seeking directions for the production of Books of Account, Register of Directors, Register of Loans, Investments, and Guarantees, Register of Contracts with Related Parties, Register of Charges, and Register of Deposits, which this Tribunal allowed on 19.03.2024, directing the Respondent to furnish the documents within three weeks. Additionally, vide order dated
