# In the matter of Delhi Control Devices Private Limited Company Application No. CA-1222 (PB)-2019 in (IB)-1567(PB)-2018

> NCLT judgment dated 2019-08-06. Citation: TCN-2019-NCLT-02075. M/s National Products, an operational creditor, filed an application to initiate contempt…

- **Court:** NCLT
- **Order date:** 6 Aug 2019
- **Citation:** TCN-2019-NCLT-02075
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/delhi-control-devices-private-limited-company-application-no-ca-1222-pb-2019-in-eb5239a8

## Summary

### Background

M/s National Products, an operational creditor, filed an application to initiate contempt proceedings against M/s Delhi Control Devices Private Limited, the corporate debtor, and one of its directors, seeking enforcement of a memorandum of settlement dated 22.02.2019. The operational creditor had previously initiated Corporate Insolvency Resolution Process (CIRP) against the corporate debtor, which was admitted on 15.02.2019. An IRP, Mr. Ashok Kumar Gupta, was appointed. Subsequently, a settlement was reached, and the main petition was withdrawn on 07.03.2019, nullifying the admission order. However, the operational creditor moved the Adjudicating Authority for revival of the Company Petition due to a breach of the settlement. The company petition was revived, and the

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## Facts

M/s National Products, an operational creditor, initiated CIRP against M/s Delhi Control Devices Private Limited. The CIRP was admitted on 15.02.2019, and Mr. Ashok Kumar Gupta was appointed as IRP. A settlement was reached between the parties, leading to the withdrawal of the main petition on 07.03.2019, nullifying the admission order. Subsequently, due to a breach of the settlement, the operational creditor sought revival of the company petition, which was granted. The Resolution Professional was directed to proceed with the CIRP. The operational creditor then filed an application seeking contempt proceedings and enforcement of the settlement agreement. The key fact is the ongoing CIRP and the legal restrictions it imposes on initiating suits or proceedings against

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## Issues and analysis

### Issue 1: Whether contempt proceedings can be initiated against the corporate debtor and its directors during …

**Ratio:** Section 14(1)(a) of the Insolvency and Bankruptcy Code, 2016 bars the institution of

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**Reasoning:** The court reasoned that allowing contempt proceedings during CIRP would violate the

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**Interpretation:** Section 14(1)(a) is interpreted as a blanket prohibition on initiating any

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**Application:** Since CIRP was ongoing against M/s Delhi Control Devices Private Limited, the

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## Parties

- **Judges:** M. M. K…; S. К. МОН…
- **Appellants:** M/s National…
- **Respondents:** M/s Delhi Control…

## Timeline

- **2019-02-15 — CIRP Admi…**: Corporate Insolvency Resolution Process (CIRP) was initiated against the respondent…
- **2019-02-22 — Settlement Ag…**: Memorandum of…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 14 — Moratorium](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-14)

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