K.K. Agarwal And Ors. vs Soni Infratech Pvt. Ltd. And Ors

B.S.V. Prakash Kumar, J

C.A. No. 2376(PB)/2019

It is an Application filed u/s 425 of Companies Act, 2013 r/w Section 10 and 12 of Contempt of Courts Act, 1971 against the Corporate Debtor including its Promoter and Directors namely Mr. K.N. Shukla, Mr. Praveen Kumar Shukla and Mr. Anurag Pandey seeking reliefs as follows:

Action may be taken under Section 12 of Contempt of Courts Act, 1971 against the Corporate Debtor including its Promoter Mr. K N Shukla R/o C- 35, Sector 30, Noida 201301 along with its director Mr. Praveen Kumar Shukla, R/o House No 257, Budh Bazar, Jangal Dumari No. 1, Gorakhpur (UP) 273306 and Mr. Anurag Pandey, R/o Bargo, P.O. Box Byash, Bakhira P.S., District Sant Kabir Nagar (UP) 200000 being the Directors of the Corporate Debtor for willful disobedience of order dated 29.05.2018.

The Corporate Debtor including its officials should be directed to honour the commitment in accordance with Settlement Agreement dated 25.05.2018.

A further penalty of Rs. 5,00,000/- may be imposed on account of harassment suffered by the Applicant herein for non-compliance of the Settlement Agreement dated 25.05.2018 and further fine may also be imposed on account of willfully disobeying the order passed by this Hon'ble Tribunal dated 29.05.2018. Further interest from 15th Feb 19 since when payment was stopped onwards till last payment and legal charges as per settlement Agreement are also to be paid.

The ground for filing this application u/s 425 of the Companies Act, 2013 r/w Section 10 and 12 of Contempt of Courts Act, 1971 is, since this Corporate Debtor failed to honor the settlement arrangement recorded by this Bench in the order dated 29.05.2018 while disposing IB No. 448(PB)/2018, construing such failing on the part of the corporate debtor paying off the amount arrived at in the settlement with the Applicant as amounting to contempt against the court, this Applicant has sought directions under Section 425 of the Companies Act 2013.

As to non compliance of the settlement arrived between the parties, notwithstanding whether inability to comply with the order amounts to contempt or not, at first blush, it has to be examined as to whether Section 425 of the Companies Act 2013 is applicable to the proceedings falling under IBC or not.

This power is extraordinary power, basically vested with Constitutional Courts, of course this power is conferred upon NCLT u/s 425 of the Companies Act 2013. Upon the advent of IBC, NCLT is authorized to act as Adjudicating Authority to deal with IBC jurisdiction to the extent that is specified under the said enactment. Even in IBC also, it is not that Adjudicating Authority has power to deal with all the Sections of IBC.

As to applicability of Companies Act 2013 to IBC, whichever Companies Act 2013 Section is required to be applied to IBC, Parliament has amended each of the respective sections of Companies Act specifying which section is applicable to IBC as well. It has not been legislated anywhere in the Companies Act 2013 that Companies Act jurisdiction in toto is extended to IBC as well.

As to Section 425 of the Companies Act jurisdiction, since it has not been extended to be exercisable to the cases falling under IBC, this jurisdiction cannot be construed as applicable to the cases falling under IBC.

It is trite law that jurisdiction comes to Tribunals upon conferment, as to courts under section 9 of CPC, jurisdiction vests with courts unless courts are barred from exercising jurisdiction. Moreover, courts also, as to contempt jurisdiction, it cannot be exercised unless it is specifically conferred.

Adjudicating Authority under IBC, it has its own powers and limitations, merely by NCLT being asked to act as Adjudicating Authority, it cannot be seen as the Adjudicating Authority under IBC can exercise what all powers given to NCLT under Companies Act 2013.

In view thereof, we are of the considered opinion that section 425 of the Companies Act is not applicable to IBC, therefore this application is hereby dismissed as misconceived.