Merely taking recourse to available statutory remedy of winding up, would not amount to contempt of Court

Any member of a Company is entitled to apply to the Company Law Board (CLB) complaining that the affairs of the Company were being conducted in a manner prejudicial to the public interest or oppressive to any member or members including any one or more of themselves, for an order under the said section. The only rider is that such a Member should have a right to do so under Section 399 of the Companies Act. If the Company Law Board believes, that the Company's affairs are being conducted in a manner prejudicial to the public interest or in a manner oppressive to any member or members and that to wind up the Company would unfairly prejudice such member or members, but that otherwise, the facts would justify the making of a winding-up order on the ground, that it was just and equitable that the Company should be wound up; it was entitled to make such order as it thinks fit, intending to bring to an end such matter complained of.

In the present case, a company petition was filed before Company Law. It was contended on behalf of the petitioner that due to the non-cooperative attitude of the contemnor, the entire functioning of the Company had come to a standstill and due to his non-cooperation in signing cheques, the employees could not be paid their salaries of workers. Company petition was opposed by petitioner on the ground that invoking the jurisdiction of the Company Law Board and entertaining the said proceedings by the Company Law Board, itself amounts to contempt.

Undisputedly parties are entitled to invoke jurisdiction of the Company Law Board. The Company Law Board has passed the order, appointing a Facilitator and further passed an order, enhancing the powers of the Facilitator. The appointment of an independent Director would facilitate the functioning of the Facilitator, appointed by the Company Law Board. As such, merely taking recourse to the statutory remedy available to the party, would not amount to contempt.

Petitioner has failed to make out a case of willful, deliberate and intentional disobedience of any of the directions given by the Supreme Court or acting in breach of an undertaking given to this Court. On the contrary, the contemnor had taken recourse to the legal remedy available to them under the statutory provisions. Apart from that, the petitioner has objected concerning the tenability of the proceedings before the Company Law Board. It could thus be seen, that though the petitioner had raised an issue that without deciding on the maintainability of the petition, the interim order could not be passed, Any order passed by the Company Law Board shall be appealable before the higher forums. Undisputedly, the petitioner has not challenged the said order. Having not challenged the same, it is not open for the petitioner to argue, that since the petitioner has taken objection as to maintainability of the proceedings before Company Law Board, the said orders are without jurisdiction and the initiation of the proceedings and the orders passed thereon, would amount to contemnor committing contempt of this Court. No contempt of Court order is made out.