Contempt Of NCLT Orders Cannot Be Filed Directly In High Court: Bombay HC

Mumbai, Jan 8 (KNN) The Bombay High Court has ruled that contempt petitions alleging violations of orders passed by the National Company Law Tribunal (NCLT) cannot be filed directly before the High Court, holding that such matters must be pursued before the forum specifically empowered by statute.

The judgement Strengthens the Authority and Finality of NCLT Orders and provides certainty and predictability in Insolvency related matters.

No Parallel Contempt Jurisdiction

A single-judge bench of Justice Milind N. Jadhav held that once contempt powers are vested in the NCLT under law, the High Court should not exercise parallel jurisdiction under the Contempt of Courts Act, 1971. 

The court observed that allowing direct contempt petitions before the High Court would enable parties to bypass the statutory mechanism.

“Once such contempt jurisdiction is vested in the tribunal, this court ought not to exercise parallel contempt jurisdiction under Section 10 of the Contempt of Courts Act, 1971,” the bench said, adding that entertaining such pleas would undermine the forum expressly empowered by law.

Case Background

The ruling came in a petition filed by S G Mittal Enterprises Pvt. Ltd. against Satara Sahakari Bank Ltd. The bank had extended a cash credit facility to the company in July 2015 and later approached the NCLT’s Mumbai bench in August 2023, alleging default.

During the insolvency proceedings, the parties entered into a settlement and executed consent terms in October 2024 for a one-time settlement of Rs 5.71 crore. The NCLT recorded the settlement and closed the insolvency proceedings on April 18, 2024.

Allegations of Breach

S G Mittal Enterprises claimed it had paid the full settlement amount and sought a no-dues certificate. However, it alleged that the bank subsequently raised an additional demand of Rs 18.57 lakh and reported outstanding dues to credit rating agencies. On this basis, the company approached the High Court, alleging contempt of the NCLT’s order.

Petition Dismissed as Not Maintainable

Dismissing the plea, the High Court clarified that its role in relation to tribunal orders is limited to supervisory jurisdiction under Articles 226 and 227 of the Constitution, which is distinct from contempt jurisdiction.

“Supervisory jurisdiction cannot be invoked by filing a Contempt Petition,” the court said, holding that the petition was not maintainable at the threshold.

(KNN Bureau)