Contempt Plea In Violation Of Company Law Board's Order Can Be Initiated In HC Without Reference From Board: P&H High Court

The Punjab & Haryana High Court has made it clear that the Company Law Board is a court subordinate to the High Court, and contempt proceedings in violation of its order could be initiated by an aggrieved party without requiring a reference from it.Justice Sureshwar Thakur and Justice Vikas Suri said, "there was no requirement for any reference becoming made by the CLB concerned, thus a Court subordinate to this Court, rather to this Court, nor in the absence of making such a reference, thus the assumption of jurisdiction on the instant contempt petition becomes vitiated, nor therebys the impugned order acquires any vice."The Court was hearing an appeal against a contempt order wherein single judge had asked the petitioner Pritpal Singh Grewal, to show cause as to why he should not be sentenced to imprisonment as prescribed under Contempt of Courts Act for violating Company Law Board (CLB) order.The respondent, Gurlal Singh Grewal, filed a petition under Sections 397 and 398 of the Companies Act before the CLB, Principal Bench, alleging oppression and mismanagement in Upper India Steel Manufacturing and Engineering Company.The CLB issued an interim order on 08.05.2007, which included directives for maintaining status quo regarding fixed assets, board composition, and shareholding. Prohibiting the sale of assets without board approval.Alleging non-compliance, the respondent filed a contempt petition before the High Court, claiming the appellant violated the CLB's interim order.The Contempt Court (Single Bench) found the appellant guilty of contempt and directed him to appear in person to show cause why he should not be sentenced to imprisonment. Senior counsel for the appellant argued that the contempt petition should have been initiated based on a reference from the CLB, as per Rule 9(c) of the Contempt of Court (Punjab & Haryana) Rules, 1974.After examining the submissions the Court found the the contempt petition was validly filed by the respondent as an aggrieved party and that he CLB is a court subordinate to the High Court, hence contempt proceedings could be initiated by an aggrieved party without requiring a reference from CLB.However, the Court opined that no wilful Contempt Committed by the appellants because it was alleged that the order of CLB to maintain status quo was violated by moving a 12-inch rolling mill to the scrapyard after it became defunct. The Court found that the same was doneto upgrade other units did not amount to asset alienation prohibited by the CLB's order.The Court also pointed that the decision was made for business efficiency, and no evidence was produced showing loss to the respondent.Moreover, the Court observed that the order passed by CLB was challenged before the National Company Law Tribunal (NCLT) and the appeal was pending before it. Hence, the contempt court should have waited for the outcome of the appeal.In the light of the above, the order passed by the contempt court was quashed.Ms. Munisha Gandhi, Sr. Advocate assisted by Mr. Vaibhav Sharma, Advocate,Mr. Adarsh Dubey, Advocate and for the appellant.Mr. A.S.Narang, Advocate Ms. Ishita Kaur, Advocate, Ms. Manpreet Kaur, Advocate and Mr. Satbir Singh, Advocate for the respondent.Title: Pritpal Singh Grewal v. Gurlal Singh GrewalClick here to read/download the order

Contempt Plea In Violation Of Company Law Board's Order Can Be Initiated In HC Without Reference From Board: P&H High Court

Aiman J. Chishti

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