The National Company Law Appellate Tribunal has ruled that no appeal lies under Section 19 of the Contempt of Courts Act, 1971 against an order dismissing a contempt petition, as the provision only contemplates appeals against orders of punishment. The Tribunal affirmed the NCLT's finding that no deliberate contempt was established where alleged contemnor's cheques were not encashed and no funds were withdrawn after the restraint order.
Background & Facts
The Dispute
The appellant, Ghanshyam Tayal, filed a Company Petition (CP No.213 of 2023) on 24.11.2023 challenging an Extraordinary General Meeting (EOGM) held on 29.11.2023 where Respondent No.3, Romesh Tayal, was appointed as a director of Cemcon Engineering Company India Pvt. Ltd. The parties are closely related family members: Romesh Tayal is the father of Respondent No.2, Ankit Tayal, and husband of Respondent No.4, Savi Tayal. The appellant alleged the EOGM was conducted without due process.
Key Facts
- 24.11.2023: Company Petition (CP No.213/2023) filed before NCLT, New Delhi challenging EOGM
- 29.11.2023: EOGM held appointing Romesh Tayal (Respondent No.3) as director
- 05.12.2023: Punjab & Sind Bank (Respondent No.6) informed appellant of Respondent No.3's application to alter online banking facilities
- 05.01.2024: NCLT passed interim order restraining Respondent No.3 from operating bank accounts along with Respondent No.2; directed accounts be operated by appellant and Respondent No.2 as before EOGM
- 08.04.2024: Cheque Nos. 001320 and 001321 dated 08.04.2024 for Rs.10,74,308/- drawn in favor of 'yourself' allegedly signed by Respondent No.3
- 20.05.2024, 27.05.2024, 08.06.2024: Additional cheques allegedly signed by Respondent No.3 as authorised representative
- 14.05.2024: Contempt Petition No.12/2024 filed under Section 425 Companies Act read with Sections 12 and 14 of Contempt of Courts Act, 1971
- 25.07.2024: Respondent No.3 filed reply denying signing any cheques after 05.01.2024; claimed 'yourself' cheques are for RTGS transfers
- 14.10.2025: NCLT dismissed contempt petition finding no deliberate contempt, no encashment/withdrawal after 05.01.2024, and appellant acted maliciously by presenting post-dated cheques
- 29.10.2026: NCLAT pronounced judgment dismissing Company Appeal (AT) No.05 of 2026
Procedural History
- 24.11.2023: CP No.213/2023 filed before NCLT, New Delhi
- 05.01.2024: NCLT interim order restraining Respondent No.3 from operating bank accounts
- 14.05.2024: Contempt Petition No.12/2024 filed
- 25.07.2024: Respondent No.3 filed reply to contempt petition
- 14.10.2025: NCLT dismissed contempt petition (impugned order)
- 2026: Company Appeal (AT) No.05 of 2026 filed before NCLAT
- 29.10.2026: NCLAT dismissed appeal
Relief Sought
The appellant sought punishment of Respondents No.2, 3 and 6 for willful disobedience of the 05.01.2024 order, including summoning them in person and initiating contempt proceedings under Section 12 read with Section 14 of the Contempt of Courts Act, 1971.
The Legal Issue
The central questions were: (1) Whether the appellant established deliberate and intentional contempt by Respondent No.3 through issuance of cheques in violation of the 05.01.2024 restraint order, and (2) Whether an appeal lies under Section 19 of the Contempt of Courts Act, 1971 against an order dismissing a contempt petition as opposed to an order imposing punishment.
Arguments Presented
For the Appellant
Mr. Anshul Gupta, AOR a/w Mr. Rishabh Darira contended that Respondent No.3 deliberately violated the 05.01.2024 order by issuing cheques dated 08.04.2024, 20.05.2024, 27.05.2024 and 08.06.2024 despite the restraint on operating bank accounts. The appellant argued that the bank honoured these cheques permitting cash withdrawal, constituting willful disobedience punishable under Section 12 read with Section 14 of the Contempt of Courts Act. The appellant further submitted that the appeal was maintainable under Section 19 of the Contempt of Courts Act as attracted by Section 425 of the Companies Act.
For the Respondent
Mr. Mayank Goel, appearing for Respondents No.2 and 3, contended that no money moved out of the account as alleged, nor was any attempt made to siphon funds. Respondent No.3 denied signing any cheque after 05.01.2024 and clarified that 'yourself' cheques are instruments for RTGS transfers, not self-withdrawal. The respondent argued that the contempt petition was rightly dismissed as no deliberate contempt was established, and that no appeal lies under Section 19 against dismissal of contempt proceedings.
The Court's Analysis
The Tribunal examined the scope of the restraint order dated 05.01.2024, which specifically directed that Respondent No.3 was restrained from operating bank accounts along with Respondent No.2, while the appellant and Respondent No.2 would continue operating accounts as before the EOGM. The Court noted that Section 425 of the Companies Act attracts the provisions of the Contempt of Courts Act, 1971 for contempt proceedings.
On the requirement of deliberate contempt, the Tribunal held:
"For the purposes to punish an alleged contemnor, there has had to be an establishment of the fact beyond doubt that the act complained of, to bring it within the ambit of Section 12 of the Contempt of Courts Act, was a deliberate act. No such element was satisfied or even attempted to be satisfied by the applicant in pursuing the contempt petition."
The Court upheld the NCLT's factual findings that bank statements showed no entries regarding encashment of the alleged cheques, the cheques dated 08.04.2024 drawn in favor of 'yourself' were not encashed, and no withdrawal of any amount occurred from restricted accounts after 05.01.2024. The Tribunal found the appellant had acted maliciously by presenting post-dated cheques in possession to fabricate contempt.
On appeal maintainability under Section 19, the Tribunal conducted a simpliciter reading of the provision:
"On a simpliciter language used under Section 19, the contempt appeal was only maintainable as against the order of punishment under Section 12 of the Act of 1971, and not against an order of dropping of the contempt proceedings, observing thereof that no contempt was made out."
The Court elaborated that the applicant in contempt proceedings acts only as an informer; once the court is informed of alleged contempt, the applicant's role ceases and it becomes the court's exclusive prerogative to continue or drop proceedings. Dismissal of contempt does not cause prejudice to the applicant to sustain an appeal under Section 19.
The Verdict
The NCLAT dismissed the Company Appeal (AT) No.05 of 2026 on two independent grounds: first, no contempt was made out as there was no issuance of cheques or encashment after 05.01.2024 and no withdrawal substantiated by the appellant; second, no appeal lies under Section 19 of the Contempt of Courts Act against dismissal of a contempt petition, as the provision only permits appeals against orders of punishment. The impugned order dated 14.10.2025 of the NCLT was upheld in full.
What This Means For Similar Cases
Contempt Requires Proof of Actual Violation Beyond Doubt
Practitioners must establish that the alleged contemnor not only issued instruments in violation of a restraint order but that such instruments were actually encashed or funds withdrawn. Mere issuance of cheques - particularly post-dated cheques in the possession of the applicant - without evidence of encashment or fund movement, will not satisfy the beyond doubt standard for deliberate contempt under Section 12. Bank statements showing no debit entries are decisive evidence.
No Statutory Right to Appeal Dismissal of Contempt Petition
- Section 19 of the Contempt of Courts Act, 1971 only provides for appeals against orders of punishment, not against orders dismissing contempt proceedings
- This applies equally when contempt jurisdiction is invoked under Section 425 of the Companies Act, which borrows the Contempt of Courts Act provisions
- The applicant/complainant in contempt proceedings is a mere informer; once the court is seized of the matter, the applicant has no locus to challenge the court's decision to drop proceedings
- Practitioners should advise clients that dismissal of a contempt petition is final and unappealable under the current statutory framework
Family Disputes in Corporate Governance Require Rigorous Evidence
In disputes among family members/shareholders where allegations of contempt are levied, courts will scrutinise evidence for malicious fabrication. Presenting post-dated cheques in one's own possession as proof of violation after a restraint order may backfire and be viewed as abuse of process. Practitioners should ensure independent corroboration (bank records, third-party verification) before initiating contempt proceedings in closely-held company disputes.
