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2016 DIGILAW 215 (KAR)

C. Valli Narayan, W/o Late Mr. C. v. Narayan VS C. Vinod Hayagriv, S/o Mr. C. V. Hayagriv

2016-02-29

ARAVIND KUMAR, N.KUMAR

body2016
ORDER : Mr. N. Kumar, J. This contempt petition is filed complaining of disobedience of orders dated 23.09.2014 and 18.11.2014 passed by Company Law Board in Co.P. No. 54/2014. 2. By an order dated 23.09.2014 the Company Law Board granted an ad interim relief. The said order was continued until further orders by an order dated 18.11.2014. However, the relevant order for our purpose reads as under: "The Respondents are hereby restrained from diverting the business if any of the respondent No. 1 company either directly or indirectly to respondent No. 10 or any other Company until 19.11.2014." Complaining disobedience of this order, this petition is filed invoking the provisions of Contempt of Courts Act, 1971. 3. We have heard learned Counsel for the parties regarding maintainability of a contempt petition. 4. Learned Counsel for complainant contends in the Companies Act, 1956 there is no specific provision for proceeding against a person who had disobeyed the orders of the Board. However, Section 634A which provides for enforcement of orders of Company Law Board deals only with final orders. More over by the Companies (Second Amendment) Act 2002, said proviso has been made inapplicable. On the contrary Regulation 47 of the Company Law Board Regulations, 1991 declares that a Bench shall be deemed to be a Court. or lawful authority for the purpose of prosecution or punishment of a person who wilfully disobeyed any direction or order of such Bench and therefore he submits that this petition filed before this Court under the provisions of Contempt of Courts Act, 1971 is maintainable. 5. Per contra, learned Counsel appearing for respondents submitted the complainant has filed C.A. No. 1 and C.A. No. 7 before the Company Law Board for taking action against respondent for disobeying the Court order. Therefore as the complainant has a remedy before the Tribunal itself, this Court entertaining contempt petition would not arise. Learned Counsel for appellant in support of his contention has relied upon several Judgments. One of such Judgment is the Judgment of Apex Court in the case of E. Bapanaiah v. K.S. Raju and Others reported in (2015) 1 SCC 451 where the Apex Court has held as under: "28. The present case relates to a civil contempt wherein an undertaking given to the Company Law Board is breached. One of such Judgment is the Judgment of Apex Court in the case of E. Bapanaiah v. K.S. Raju and Others reported in (2015) 1 SCC 451 where the Apex Court has held as under: "28. The present case relates to a civil contempt wherein an undertaking given to the Company Law Board is breached. Normally, the general provisions made under the Contempt of Courts Act are not invoked by the High Courts for forcing a party to obey orders passed by its subordinate Courts for the simple reason that there are provisions contained in the Code of Civil Procedure, 1908 to get executed its orders and decrees. It is settled principle of law that where there are special law and general law, the provisions of special law would prevail over general law. As such, in normal circumstances a decree-holder cannot take recourse of the Contempt of Courts Act else it is sure to throw open a floodgate of litigation under contempt jurisdiction. It is not the object of the Contempt of Courts Act to make decree-holders rush to the High Courts simply for the reason that the decree passed by the subordinate Court is not obeyed. However, there is no such procedure prescribed to execute order of CLB particularly after proviso is added to Section 634-A of the Companies Act, 1956, vide Companies (Second Amendment) Act, 2002." 6. However, exercising power conferred on the Supreme Court under Article 136 read with Article 142 of the Constitution of India they granted the relief. 7. From the aforesaid Judgment of Supreme Court it is clear if the order passed by an authority which is sub-ordinate to the High Court has the power to take action for disobedience of orders passed by it, even if the High Court has jurisdiction to take such action under the provisions of Contempt of Courts Act, the High Court should not entertain such petitions, as otherwise flood gate of litigation under the contempt jurisdiction would disrupt the working of High Court. In the aforesaid Judgment a reference is also made to Section 634A. Learned Counsel for complainant submits though Companies (Second Amendment) Act, 2002 was inserted by Act No. 11 of 2003 the said Amendment Act has not come into force. If it is so Section 634A applies. 8. It was contended Section 634A is attracted only for final orders. In the aforesaid Judgment a reference is also made to Section 634A. Learned Counsel for complainant submits though Companies (Second Amendment) Act, 2002 was inserted by Act No. 11 of 2003 the said Amendment Act has not come into force. If it is so Section 634A applies. 8. It was contended Section 634A is attracted only for final orders. It is not applicable for interim orders. We do not find any substance in the said contention. If the Company Law Board has been conferred a right to enforce the orders passed by it as if it were a decree made by a Court, implicit in the said provision, the Company Law Board can enforce the orders passed in the proceeding by way of interim orders also. Therefore it is open to the Company Law Board to enforce the interim order passed in a pending proceeding before it. 9. Learned Counsel for complainant also relies upon the Judgment of Madras High Court in the case of New Bridge Holdings B.V. v. TTK-LIG Limited reported in 2012 (3) CTC 524 and Judgment of Andhra Pradesh High Court in the case of N. Venkata Swamy Naidu v. M/s. Sri Surya Teja Constructions Pvt. Ltd., Gandhinagar and others reported in (2007) 140 Company Cases 412 to contend that the High Court has jurisdiction to punish for disobedience of an order passed by Tribunal. 10. A reading of the aforesaid Judgments would go to show the test is whether against an order passed by sub-ordinate Court, an appeal lies to High Court. If an appeal lies to High Court, then said authority is deemed to be a Court and orders passed by such authorities if disobeyed the provisions of Section 10 of Contempt of Courts Act is attracted. We are not disputing the said legal position. The question even if this Court has jurisdiction to entertain a contempt petition, is it desirable to entertain the same if the person has an alternative and efficacious remedy to enforce the orders of such authorities passed by Tribunal. As stated above the Supreme Court in categorical terms has held prior to insertion of proviso to Section 634A where efficacious remedy was available under the Companies Act the High Court should not entertain such petitions. 11. In fact Regulation 47 in our view runs counter to judgment rendered in the aforesaid cases. It reads as under: "47. As stated above the Supreme Court in categorical terms has held prior to insertion of proviso to Section 634A where efficacious remedy was available under the Companies Act the High Court should not entertain such petitions. 11. In fact Regulation 47 in our view runs counter to judgment rendered in the aforesaid cases. It reads as under: "47. Bench to be deemed to be a Court for certain purposes. - A Bench shall be deemed to be a Court or lawful authority for the purpose of prosecution or punishment of a person who wilfully disobeys any direction or order of such Bench." 12. If by providing a remedy by way of appeal to High Court, the authority against whose orders an appeal is provided was deemed to be a Court there was no necessity for this regulation. On the contrary this regulation clarifies that the Board shall be deemed to be a Court for the purpose of prosecution or punishment of a person who wilfully disobeyed any order of such Bench. In other words the board becomes a Bench after the order is passed only for execution of the same. 13. Regulation 44 confers inherent power on the Board. It reads as under: "44. Saving of inherent power of the Bench.- Nothing in these rules shall be deemed to limit or otherwise affect the inherent power of the Bench to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Bench." This provision confers inherent power on the Board to take action against a person who has disobeyed the orders passed by the Board, if it would be in the ends of justice. Therefore we are of the considered view that the Company Law Board has the power to enforce its orders as well as to take action against a party who has wilfully disobeyed the orders passed by it whether interim or final. It would be appropriate for the parties to approach the Company Law Board and seek for necessary reliefs. In fact it is submitted that already such an application is filed and in fact arguments are also addressed. Therefore it would be appropriate for the Company Law Board to consider said application and pass appropriate orders. With the above observation CCC stands disposed of. CCC Stands disposed of.