NCLT Mumbai Dismisses Contempt Plea Against Lenders, Advocates In Ornate Spaces Insolvency

The National Company Law Tribunal (NCLT) at Mumbai has dismissed a contempt plea filed by UTI Employees Sai Samruddhi Co-Operative Housing Society Ltd in the Ornate Spaces insolvency case, saying the applicant was attempting to misuse the judicial process to put undue pressure on lenders and their counsel.

“Thus, we do not find sufficient initial evidence for interference with the due course of the judicial proceeding. We feel that the Applicant is attempting to misuse the judicial forum by filing this Application in order to put undue pressure on the alleged condemners, and their counsel for lawfully discharging their professional duty as advocates," the tribunal observed.

Technical Member Anil Raj Chellan and Judicial Member K. R. Saji Kumar were dealing with an application seeking invocation of the tribunal's contempt jurisdiction under Section 425 of the Companies Act, 2013 against PNB Housing Finance Ltd, Assets Care & Reconstruction Enterprises Ltd., their advocate on record, and counsel.

The housing society alleged that the lenders had suppressed the pendency of appeals before the National Company Law Appellate Tribunal (NCLAT) while seeking enforcement and implementation of a resolution plan for Ornate Spaces that had been approved by the NCLT on October 6, 2023.

According to the applicant, appeals challenging both the approval of the resolution plan and rejection of its objections were already pending before the appellate tribunal, and non-disclosure of those proceedings amounted to interference with the administration of justice.

The tribunal, however, found that no stay had been granted by the NCLAT against implementation of the approved resolution plan.

“It is also noted that, although an interim application seeking to stay the Resolution Plan was filed, no order of stay has been granted by the Hon'ble NCLAT against the implementation of the Resolution Plan approved by this Tribunal,” the bench said.

The tribunal also noted that the housing society, which is a respondent in the lenders' pending interlocutory application seeking implementation of the resolution plan, had already been given an opportunity to place all relevant facts on record by filing a reply.

“Moreover, the special jurisdiction under Section 425 of the Companies Act, 2013, cannot be invoked in a routine or casual manner when the Applicant has the opportunity to disclose any pertinent facts or circumstances that they consider material,” the tribunal said.

The bench also rejected allegations against the lenders' advocates, who had been accused by the applicant of playing fraud on the court and committing contempt.

It held that the judgments cited by the applicant were not relevant to the present case and that the tribunal could not consider contempt proceedings relating to matters already being agitated before the appellate tribunal.

Concluding that no prima facie case of wilful suppression or obstruction to the administration of justice had been made out, the tribunal summarily dismissed the contempt application as not maintainable.