Contempt proceedings require proof of wilful disobedience; mere failure to comply does not constitute contempt.

O R D E R

1. This Contempt Petition is filed under Section 425 of the Companies Act, 2013 , read with Sections 11 and 12 of the Contempt of Courts Act, 1971 , and Rule 11 of the NCLT Rules, 2016, by the Financial Creditor, State Bank of India, against the suspended directors of the Corporate Debtor Company, M/s Tenny Jose Limited (hereinafter referred to as “the Corporate Debtor”), for their wilful and deliberate violation of the order dated 25.01.2023 passed by this Adjudicating Authority in IA(IBC)/207/KOB/2022. Brief facts of the case: -

2. The petitioner submitted that this Adjudicating Authority vide order dated 21.12.2021 in CP(IBC)/25/KOB/2021 admitted the petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 (the Code) against the Corporate Debtor, and appointed an Interim Resolution Professional, who was later replaced by the Resolution Professional on 14.03.2022. It is further submitted that during CIRP, certain transactions were identified as extortionate credit transactions, and accordingly, IA(IBC)/207/KOB/2022 was filed under Section 50 of the Code. This Adjudicating Authority vide order dated 25.01.2023 allowed the application and directed the Respondent to repay Rs. 15,74,755/- within one month. Aggrieved by the said order, the Respondent preferred an appeal before the Hon’ble NCLAT in Company Appeal (AT) (CH) (INS) No. 97 of 2023, which was dismissed on 12.04.2023. Subsequently, the Corporate Debtor was dissolved vide order dated 31.10.2023 in IA(IBC)/372/KOB/2023, directing the designated managers of State Bank of India and South Indian Bank to pursue the PUFE transactions. However, despite the dismissal of the appeal, the Respondents have failed to comply with the order dated 25.01.2023 and have not paid the amount as directed by this Tribunal.

3. The Respondent, in his reply affidavit, submitted that the present contempt application is not maintainable. It is stated that the Respondent, being the promoter and personal guarantor of the Corporate Debtor, is presently undergoing a personal guarantor insolvency resolution process before this Adjudicating Authority in CP(IB)/51/KOB/2023, which was admitted on 08.02.2024. It is contended that an interim moratorium under Section 96 of the Code commenced from 03.09.2023, and therefore, initiation of the present proceedings in respect of the alleged debt is barred. The Respondent further submitted that the non-payment of the amount directed by the order dated 25.01.2023 was not wilful but due to severe financial distress, as all assets have been mortgaged to creditors and insolvency proceedings are pending against him, and hence no case of wilful disobedience is made out under the Contempt of Courts Act, 1971 .

4. The Petitioner, in rejoinder, submitted that the contention of the Respondent regarding the applicability of the interim moratorium under Sections 96 and 101 of the Code is misconceived. It is contended that the present proceedings are not for recovery of any debt but for initiating contempt for wilful non-compliance with the order dated 25.01.2023 passed by this Adjudicating Authority in IA(IBC)/207/KOB/2022, directing the Respondent to repay Rs.15,74,755/-. The Petitioner further submitted that the said amount represents proceeds of fraudulent/extortionate transactions identified during the forensic audit and directed to be returned to the Corporate Debtor, and therefore, the Respondent cannot seek protection under the moratorium provisions of the Code. Accordingly, it is submitted that the Respondent is liable for contempt for wilful disobedience of the order of this Adjudicating Authority.

Findings:

5. This Adjudicating Authority has heard the learned Counsel appearing for the parties and has perused the documents placed on record, the written submissions filed, and the judgments relied upon by both sides.

6. T