Courts Cannot Touch Merits In Contempt Proceedings: Calcutta High Court Sets Aside NCLT Interim Order

The Calcutta High Court has recently reiterated that a court exercising contempt jurisdiction cannot travel beyond the four corners of the order alleged to have been violated or venture into the merits of the underlying dispute while setting aside part of a National Company Law Tribunal order that had allowed a liquidator to complete the sale of a company's assets.

Justice Om Narayan Rai held that while exercising contempt jurisdiction, “the Court must confine itself to the four corners of the order in question.” He added that it is “not open to the Court to touch upon the merits of the matter, much less to make observations that amount to setting aside the very interim order of which contempt is alleged.”

The ruling came in a petition filed by Medimex Tradecom Pvt Ltd challenging an NCLT Kolkata Bench order passed while dealing with contempt applications arising out of the liquidation of Amrit Hatcheries Pvt Ltd.

Medimex had approached the NCLT in 2024 alleging that the liquidator had interfered with its possession over certain plots of land. It had also challenged an e-auction notice issued on June 4, 2024 for sale of the corporate debtor's assets.

On July 3, 2024, the NCLT allowed the auction process to proceed but restrained finalisation of the sale until further hearing.

After the first auction failed for want of bids, fresh auctions were conducted in 2025. These resulted in successful bids and issuance of letters of intent to auction purchasers.

In December 2025, Medimex filed a contempt application alleging that the interim restraint order had been violated.

However, on March 10, 2026, while dismissing three contempt applications, the NCLT also directed that there should be no impediment for the liquidator to conclude the sale process. It also allowed execution of sale certificates in favour of the successful auction purchasers.

Medimex challenged this before the High Court. It argued that the tribunal had effectively nullified its own interim protection while acting in contempt jurisdiction, which was limited to examining whether its earlier order had been wilfully violated.

The liquidator opposed the petition, contending that Medimex had an appellate remedy before the National Company Law Appellate Tribunal. It was argued that the High Court should therefore not exercise jurisdiction.

The liquidator also submitted that sale certificates had already been issued on March 12, 2026. Possession had also been handed over to the successful auction purchaser.

The High Court rejected the objection on maintainability. It held that the existence of an alternate remedy does not bar intervention where a tribunal acts without jurisdiction or in excess of it.

Justice Rai observed that the NCLT's March 10 order had been passed solely while considering contempt applications and not the pending interlocutory application challenging the liquidator's actions.

“It is evident from the order dated March 10, 2026, that the same has been passed by the NCLT upon considering the three applications for contempt only and not the interlocutory application. Consequently, it cannot be doubted that while passing the said order, the NCLT was exercising contempt jurisdiction and not the substantive jurisdiction over the interlocutory application,” the Court observed.

Relying on Supreme Court rulings in Jhareswar Prasad Paul v. Tarak Nath Ganguly, Special Deputy Collector v. N. Vasudeva Rao, and Sudhir Vasudeva v. M. George Ravishekaran, the High Court reiterated that contempt jurisdiction cannot be used to decide substantive disputes or grant relief that effectively alters the original order.

The Court held that by directing completion of the sale process, the NCLT had exceeded the limits of its contempt jurisdiction.

Accordingly, the High Court set aside paragraph 12 of the NCLT's March 10 order.

However, the Court declined to restore status quo ante. It noted that the sale certificate had already been issued and possession handed over to a third-party auction purchaser.

Applying the doctrine of actus curiae neminem gravabit, the Court clarified that the sale certificate and all subsequent actions would remain subject to the outcome of Medimex's pending interlocutory application before the NCLT.

The Court also directed the NCLT to decide that application independently, uninfluenced by observations in the impugned order. It clarified that it had expressed no opinion on the merits of the underlying dispute.