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TMI Blog2025 (5) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... paying CIRP costs and fees whether approved or unapproved thus erasing the protection granted by the Order dated 13/01/21 protecting the CIRP costs and fees of the Petitioner which the actions of the Respondents are in Contempt of the Order dated 13/01/2021 of this Hon'ble Court, even to the knowledge of the Respondents as the value of the assets of the present Project are assessed merely at Rs.55 Lakhs by the present R-1 which are much less than the even the approved CIRP fees only, of the Petitioner of Rs.1.48Cr. + interest @12%pa, hence is this Contempt Petition as such an action and other such action are in Contempt of Order dated 13/01/21 of this Hon'ble Tribunal and thus frustrate the order dated 13/01/2021 of this Hon'ble Tribunal. Annexure A1 is the C.C. of the Order dated 13/01/2021 of this Hon'ble Tribunal." 2. We need to notice facts giving rise to this Contempt Application: i. The NCLT, Bengaluru Bench vide order dated 20.08.2019 commenced Corporate Insolvency Resolution Process ("CIRP") against the Corporate Debtor ("CD") Dreamz Infra India Ltd. on an Application filed by three Homebuyers of the Dreamz Infra India Ltd. of Sumadhur Project of the CD. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Application. The Applicant also filed written submission dated 18.04.2025. 4. Applicant submits that this Tribunal vide order dated 13.01.2021 has protected the CIRP and fee of the Applicant as RP and filing of Application by the present RP for withdrawal of CIRP without obtaining a Bank Guarantee for fee and expenses is contemptuous of the order of this Tribunal dated 13.01.2021 and the action of the RP to file an Application for withdrawal of the CIRP without payment of fee and expenses of Applicant, violates the protection granted by order dated 13.01.2021 and the contempt proceedings be initiated against both the Respondents. It is submitted that action of the Respondents is fully covered by the civil contempt as defined in Section 2(d) of the Contempt of Courts Act, 1971. Respondent No.1 is carrying on the CIRP of the CD fraudulently to harm the interest of the Applicant. IA No.546 of 2024 filed by Respondent No.1 is full of illegalities. Applicant has referred to paragraph 21, 22 and 25 of the Application and Form-FA and states that CoC has rejected the CIRP cost as it is unable to pay, which does not stand the test of law, where CoC whimsically conveyed to continue to tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ga. (B) The Adjudicating Authority shall in compliance of Section 22(4) forward the name of Mr. Konduru Prasanth Raju to the IBBI and follow the procedure as laid down in Section 22(4) and (5) of IBC. (C) In the meanwhile, the charge of IRP will remain with the Respondent No.1 - Ashok Kriplani who will be treated as IRP till the Adjudicating Authority does compliance of Section 22(4) and (5) of IBC. (D) Legality of the actions taken by the Respondents 1 and 2 in the period between passing of the Impugned Orders dated 17th December, 2019 till now, shall not be called into question on the basis of present Orders which we are passing. The steps taken by them pursuant to Impugned Orders shall be treated as acts done in regular course. The steps taken by them in CIRP and fees paid/payable in terms of Impugned Orders, shall be protected. 7. The above order, thus, inspite of setting aside order dated 17.12.2019, action taken by the Applicant as the Authorized Representative was directed not be called in to question. The direction in paragraph 12(D) is to the effect that "The steps taken by them in CIRP and fees paid/ payable in terms of Impugned Orders, shall be protected". The App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g costs 100% 0% 0% 22. A review of the Minutes of the 11th CoC meeting indicates that the CoC members unanimously rejected the approval of CIRP expenses incurred by the former Resolution Professional, as well as the expenses incurred by the current Resolution Professional, including upfront payments and pending costs. The CoC voted against the approval of both sets of expenses, demonstrating that a CoC members have failed to exercise their commercial wisdom and take appropriate decisions regarding the CIRP expenses, despite the clear need to address these financial matters. A copy of minutes of the meeting is produced herewith as Annexure - F." 9. The above clearly indicate that CoC with 100% vote share has disapproved the payment of CIRP expenditure to the Applicant as well as to the present RP - Mr. Raju. After the aforesaid decision, the RP left with no remedy and filed an IA No.426 of 2023 praying for liquidation under Section 33(1)(a) of the IBC, which Application remained pending consideration. During the course of proceedings, the Homebuyers suggested that feasibility of the Project may be re-assessed. The RP called the CoC Meeting, where feasibility Report was dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter studying the feasibility report, do you want the RP to file withdrawal of the CPIB No.84/BB/2019 filed under Section 7 of IBC? Answer Results Yes, I want RP to file for withdrawal of application filed under sec 7 of IBC Abstain No, I do not want RP to file for withdrawal of application filed under sec 7 of IBC Voting Platform 94.00% 3% 3% E-mail 00.066% 0% 0% Total 94.06% 3% 3% 100% Question No.6 Do you want to continue action initiated against the company's directors and/ or landlord in the National Consumer Dispute Redressal Commission or any other forums? Answer Results Yes, I want to continue legal actions at other forums Abstain No, I do not want to continue legal actions at other forums Voting Platform 95.00% 5% 0% E-mail 00.08% 0% 0% Total 95.08% 5% 0% 100% *Note: 57 voters have not voted during the e-voting *7 Voters have sent votes by E-mail A copy of e-voting results is produced herewith as Annexure- J." 10. In answer to Question No.1, the CoC with 94.08% vote share decided not to continue with the CIRP. With regard to Question No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) towards estimated expenses incurred for purposes of clauses (aa), (ab), (c) and (d) of regulation 31, till the date of filing of the application under clause (b) of sub-regulation (1). 34. It is humbly submitted that this applicant, in line with the mandate under Regulation 30(2) of the CIRP Regulations read with the duties of this RP under section 25 of the Code, the RP appraised the CoC members of the requirement of Bank guarantee to be provided in terms of Regulation 30A of the CIRP Regulations. 35. However, the CoC in the present case consists of individual persons, who belong to modest financial backgrounds. Having already incurred huge losses at their end at the hands of the CD, they have expressed a view that they are unable to foot any expenses in the CIRP. Therefore, the CoC has rejected all the costs incurred by the former and current RP as it is unable to meet such expenses. Further, a majority of the CoC members are scattered, thereby making the requirement of obtaining a bank guarantee all the more cumbersome. In light of the same, the CoC has humbly requested that this Hon'ble Tribunal may be pleased to waive the requirement of a bank guarantee in the prese ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n under clause (b) of sub- regulation (1). (3) Where an application for withdrawal is under clause (a) of sub-regulation (1), the interim resolution professional shall submit the application to the Adjudicating Authority on behalf of the applicant, within three days of its receipt. (4) Where an application for withdrawal is under clause (b) of sub-regulation (1), the committee shall consider the application, within seven days of its receipt. (5) Where the application referred to in sub-regulation (4) is approved by the committee with ninety percent voting share, the resolution professional shall submit such application along with the approval of the committee, to the Adjudicating Authority on behalf of the applicant, within three days of such approval. (6) The Adjudicating Authority may, by order, approve the application submitted under sub-regulation (3) or (5). (7) Where the application is approved under sub-regulation (6), the applicant shall deposit an amount, towards the actual expenses incurred for the purposes referred to in clause (a) or clause (b) of sub-regulation (2) till the date of approval by the Adjudicating Authority, as determined by the interim resolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of knowledge. When two views are possible, the element of wilfulness vanishes as it involves a mental element. It is a deliberate, conscious and intentional act. What is required is a proof beyond reasonable doubt since the proceedings are quasi-criminal in nature. Similarly, when a distinct mechanism is provided and that too, in the same judgment alleged to have been violated, a party has to exhaust the same before approaching the court in exercise of its jurisdiction under the Contempt of Courts Act, 1971. It is well open to the said party to contend that the benefit of the order passed has not been actually given, through separate proceedings while seeking appropriate relief but certainly not by way of a contempt proceeding. While dealing with a contempt petition, the Court is not expected to conduct a roving inquiry and go beyond the very judgment which was allegedly violated. The said principle has to be applied with more vigour when disputed questions of facts are involved and they were raised earlier but consciously not dealt with by creating a specific forum to decide the original proceedings. 9. We do not wish to reiterate the aforesaid settled principle of law except ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Tuncay Alankus [National Fertilizers Ltd. v. Tuncay Alankus, (2013) 9 SCC 600 : (2013) 4 SCC (Civ) 481 : (2014) 1 SCC (Cri) 172] .) 12. Thus, in order to punish a contemnor, it has to be established that disobedience of the order is "wilful". The word "wilful" introduces a mental element and hence, requires looking into the mind of a person/contemnor by gauging his actions, which is an indication of one's state of mind. "Wilful" means knowingly intentional, conscious, calculated and deliberate with full knowledge of consequences flowing therefrom. It excludes casual, accidental, bona fide or unintentional acts or genuine inability. Wilful acts does not encompass involuntarily or negligent actions. The act has to be done with a "bad purpose or without justifiable excuse or stubbornly, obstinately or perversely". Wilful act is to be distinguished from an act done carelessly, thoughtlessly, heedlessly or inadvertently. It does not include any act done negligently or involuntarily. The deliberate conduct of a person means that he knows what he is doing and intends to do the same. Therefore, there has to be a calculated action with evil motive on his part. Even if there is a dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter pending and has ordered that it should be heard along with the first appeal. But, at the same time, it is to be noticed that under the coercion of contempt proceeding, the appellants cannot be directed to pay the compensation amount which they are disputing by asserting that claimants were not the owners of the property in question and that decree was obtained by suppressing the material fact and by fraud. Even presuming that the claimants are entitled to recover the amount of compensation as awarded by the trial court as no stay order is granted by the High Court, at the most they are entitled to recover the same by executing the said award wherein the State can or may contend that the award is a nullity. In such a situation, as there was no wilful or deliberate disobedience of the order, the initiation of contempt proceedings was wholly unjustified.' * * * 25. Pertinently, the special leave petitions were filed by the respondent against the order dated 28-1-2019 [Sagu Dreamland (P) Ltd. v. Jingal Bell Amusement Park (P) Ltd., 2019 SCC OnLine Del 6720], which as aforesaid, did not deal with the question regarding the monthly rent payable by the respondent but explici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, as observed [Sagu Dreamland (P) Ltd. v. Jingal Bell Amusement Park (P) Ltd., 2019 SCC OnLine Del 6720] by the High Court, these aspects could be answered by the executing court if the parties pursue their claim(s) before it in that regard. Suffice it to observe that it is not a case of intentional violation or wilful disobedience of the order passed by this Court to initiate contempt action against the respondent. Instead, we hold that it would be open to the parties to pursue their claim(s) in execution proceedings or any other proceedings, as may be permissible in law in respect of the issue(s) under consideration. In such proceedings, all aspects can be considered by the forum/court concerned on merits in accordance with law. We say no more. 27. Reverting to the allegation about damage caused to the suit property by the respondent at the time of vacating the same, in our opinion, the respondent has made out a formidable case that it did not cause any damage, much less permanent damage to the structure in the suit property. Whereas, the petitioner was relying on photographs concerning the debris on the site left behind at the time of vacating the suit property. The debris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt to contempt. This is because such actions strike at the heart of the judicial process, undermining its authority and obstructing its ability to deliver justice effectively. The authority of courts must be respected not only in the letter of their orders but also in the broader spirit of the proceedings before them. 200. Any contumacious conduct of the parties to bypass or nullify the decision of the court or render it ineffective, or to frustrate the proceedings of the court, or to enure any undue advantage therefrom would amount to contempt. Attempts to sidestep the court's jurisdiction or manipulate the course of litigation through dishonest or obstructive conduct or malign or distort the decision of the courts would inevitably tantamount to contempt sans any prohibitory order or direction to such effect. 201. Thus, the mere conduct of parties aimed at frustrating the court proceedings or circumventing its decisions, even without an explicit prohibitory order, constitutes contempt. Such actions interfere with the administration of justice, undermine the respect and authority of the judiciary, and threaten the rule of law." 19. The Hon'ble Supreme Court laid down that con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal dated 13.01.2021 as noticed above, only protected the fee and expenses of the Applicant, who was erstwhile RP, who was replaced by Respondent No.1. When the CoC, who is to make the payment of the CIRP fee and expenses is unable to bear the fee and expenses and they have decided to withdraw the CIRP by the Minutes of the Meeting held on 18.06.2024, we are of the view that filing of the Application by RP for withdrawal, cannot amount to contempt of order of this Tribunal dated 13.01.2021. 21. We may notice the next judgment relied by the Application, i.e. State Bank of India & Ors. vs. The Consortium of Mr. Murari Lal Jalan and Mr. Florian Fritisch & Anr. in Civil Appeal Nos.5023- 5024 of 2024 decided on 07.11.2024. The Applicant has referred to paragraph-183, where certain observations were made by the Hon'ble Supreme Court. The observation made in paragraph-183, on which reliance has been placed by the Applicant, were made in context of the case before the Hon'ble Supreme Court, which has no applicability in the facts of the present case. 22. The Applicant has also relied on judgment of the Hon'ble Supreme Court in Civil Appeal No.4065 of 2020 in Alok Kaushik vs. M/s Bhu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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