The Central Administrative Tribunal has dismissed a contempt petition against Resolution Professional for being time-barred.
Brief Facts:
AJR Infra and Tolling Ltd. (formerly Gammon Infrastructure Projects Ltd.) filed a contempt petition against Sutanu Sinha, the Resolution Professional (RP) of Patna Highway Projects Ltd., and Ajay Walimbe. The contempt petition alleged a violation of an order dated 24.01.2020, which was issued in the matter of Phoenix ARC Pvt. Ltd. vs. Patna Highway Projects Ltd. & Anr. The order from 24.01.2020 directed the Interim Resolution Professional (IRP) to ensure that the company (Corporate Debtor) remains a going concern and to take assistance from the suspended board of directors.
The case originated from an application filed by Corporation Bank under Section 7 of the Insolvency and Bankruptcy Code, 2016, seeking the initiation of the Corporate Insolvency Resolution Process (CIRP) against Patna Highway Projects Ltd. The Petitioner alleged that the RP violated the order by appointing a project monitoring consultancy (PMC) during the subsistence of the order, leading to the filing of the contempt petition. The Petitioner withdrew the appeal related to the contempt petition on 20.07.2020, and the court dismissed the appeal as withdrawn, vacating the interim directions. Disputes arose regarding the maintainability of the contempt petition, its limitation, and the Petitioner's awareness of the PMC's appointment. The RP argued that the order's directions were followed, and the PMC's appointment was ratified by the Committee of Creditors (CoC).
Crucial law points:
Contempt of Court: The case primarily deals with a contempt petition filed by the Petitioner against the Resolution Professional (RP) and another party for an alleged violation of a court order. The judgment discusses the concept of contempt of court and the requirement to prove willful violation of a court's directions.
Limitation: The court addresses the issue of the petition's limitation. It refers to Section 20 of the Contempt of Courts Act, 1971, which imposes a one-year limitation period for initiating contempt proceedings. The court found the contempt petition to be time-barred as it was filed after the expiration of the one-year limitation period.
Locus Standi: The judgment touches upon the legal concept of locus standi, which refers to the right or standing to bring a legal action. The court distinguishes between cases where an order is in rem (affecting the public at large) and in personam (affecting specific individuals or parties). The court ruled that the present case involved an order in personam and, therefore, questioned the Petitioner's locus standi.
Compliance with Court Orders: The judgment emphasizes the importance of compliance with court orders. It discusses the RP's adherence to the spirit of the court's order and relevant sections of the Insolvency and Bankruptcy Code, which is a significant legal aspect in the context of insolvency and corporate resolution proceedings.
Exemplary Costs: The court has the authority to impose exemplary costs in cases of frivolous or malicious litigation. In this judgment, the court ordered the Petitioner to pay exemplary costs and directed that the costs should be deposited in the Prime Minister Relief Funds.
Observation of the court:
The contempt petition was filed by AJR Infra and Tolling Ltd. against Sutanu Sinha, the Resolution Professional (RP) of Patna Highway Projects Ltd., and Ajay Walimbe for the alleged violation of a court order dated 24.01.2020. The court noted that the order from 24.01.2020 directed the Interim Resolution Professional (IRP) to ensure that the company (Corporate Debtor) remained a going concern and to take assistance from the suspended board of directors. The case had its origins in an application filed by Corporation Bank under Section 7 of the Insolvency and Bankruptcy Code, 2016, for the initiation of the Corporate Insolvency Resolution Process (CIRP) against Patna Highway Projects Ltd. The Petitioner alleged that the RP had violated the order by appointing a project monitoring consultancy (PMC) during the subsistence of the order, leading to the filing of the contempt petition.
The court highlighted that the Petitioner withdrew the appeal related to the contempt petition on 20.07.2020, and the court dismissed the appeal as withdrawn, vacating the interim directions mentioned in the order. Disputes arose regarding the maintainability of the contempt petition, its limitation, and the Petitioner's awareness of the PMC's appointment. The RP argued that the order's directions were followed, and the PMC's appointment was ratified by the Committee of Creditors (CoC). The court ultimately found that the contempt petition was time-barred, as it was filed after one year from the date of the alleged violation. The court questioned the Petitioner's claim that they were unaware of the PMC's appointment, given that they had attended CoC meetings. On the issue of locus standi (the right to bring the contempt petition), the court distinguished this case from a previous judgment and emphasized that the order in question was in personam, not in rem.
The decision of the court:
The court's observations centered on the limitations of the contempt petition, the awareness of the Petitioner regarding the PMC's appointment, and whether the RP had violated the court's order. The court found the petition time-barred and ruled in favor of the Respondents, concluding that no contempt had been committed.
Case Title: Phoenix ARC Pvt. Ltd. Vs. Patna Highway Projects Ltd. & Anr.
Case NO: Contempt Case (AT) No. 28 of 2023 in Comp. App. (AT) (Ins) No. 131 of 2020
Coram: Justice Rakesh Kumar Jain] Member (Judicial) [Mr. Naresh Salecha] Member (Technical)
Advocate for Appellant : Mr. Sachit Kumar Sahijipal, Mr. Amarinder Singh, Mr. Saurabh S. Sinha, Mr. Rishbha, Advocates for Respondents : Mr. Ramji Srinivasan, Sr. Adv. With Mr. Abhijeet Sinha, Mr. Samar Bansal, Mr. Kaustubh Chaturvedi, Ms. Namrata Saraogi, Vedant, Karti K Pandey, Advocates for CoC Mr. Krishnendu Datta, Sr. Adv. with Ms. Pooja, Ms. Mahima, Mr. Karan, Mr. Rahul,
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