# In the matter of Palm Developers Pvt. Ltd. Contempt Petition No. CA-11-2021 in Company Petition No. 894-ND-2019

> NCLT judgment dated 2022-01-17. Citation: TCN-2022-NCLT-04433. The present proceeding arises from a Suo-Motu cognizance taken by the Adjudicating Authority…

- **Court:** NCLT
- **Order date:** 17 Jan 2022
- **Citation:** TCN-2022-NCLT-04433
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/palm-developers-pvt-ltd-contempt-petition-no-ca-11-2021-in-company-petition-no-8-e72f6d4a

## Summary

### Background

The present proceeding arises from a Suo-Motu cognizance taken by the Adjudicating Authority regarding a show cause notice issued to Mr. Manoj Kumar Singh, the erstwhile IRP of M/s. Palm Developers Pvt. Ltd, concerning why contempt proceedings should not be initiated against him for violating directions given in an order dated 07.09.2020. The Operational Creditor, M/s. Ram Niwas & Sons, had filed an application for initiating Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor, M/s. Palm Developers Private Limited. The Adjudicating Authority had initiated the CIRP and appointed Mr. Manoj Kumar Singh as the IRP. During the CIRP's pendency, the Insolvency and Bankruptcy Board of India (IBBI) sought to replace Mr. Manoj Kumar Singh as the IRP.

## Facts

M/s. Ram Niwas & Sons, an Operational Creditor, initiated Corporate Insolvency Resolution Process (CIRP) against M/s. Palm Developers Private Limited, the Corporate Debtor, under Section 9 of IBC, 2016. The Adjudicating Authority appointed Mr. Manoj Kumar Singh as the Interim Resolution Professional (IRP). Subsequently, the Insolvency and Bankruptcy Board of India (IBBI) filed an application to replace Mr. Singh. The Adjudicating Authority issued a show cause notice to Mr. Singh for not taking steps to carry forward the CIR process, despite an earlier order dated 17.09.2020 (later clarified as 07.09.2020). Mr. Singh argued that Section 425 of the Companies Act, 2013, does not apply to IBC proceedings and that the NCLT lacks suo-motu cognizance for contempt. He

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## Issues and analysis

### Issue 1: Whether the Adjudicating Authority has the jurisdiction under Section 425 of the Companies Act, …

**Ratio:** Section 425 of the Companies Act, 2013, empowers the Tribunal and Appellate Tribunal with

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**Reasoning:** The court considered judgments passed by the Hon'ble NCLAT, which clarified that under

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**Interpretation:** The court interpreted Section 425 of the Companies Act, 2013, in conjunction

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**Application:** The court applied the ratio of Section 425 and the precedents to the specific

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## Parties

- **Judges:** ABNI RANJAN KUMAR…; L. N. G…
- **Appellants:** Registrar…
- **Respondents:** M/s. Palm…; Manoj Kumar…
- **Advocates:** Raghavendra M.…; Barun Kumar…; +1 more

## Timeline

- **2019-01-01 — Application f…**: M/s. Ram Niwas & Sons filed an Application bearing No. (IB)-894(ND) 2019 under Section 9…
- **2019-01-27 — CIRP Init…**: The Adjudicating Authority initiated the CIR Process against the Corporate Debtor and…

## 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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