Bombay High Court: No Parallel Contempt Jurisdiction Over NCLT in Insolvency Cases
NCLT and NCLAT Empowered to Handle Contempt Under Companies Act
Ruling Strengthens Insolvency Framework and Clarifies Jurisdictional Boundaries
By Our Legal Reporter
New Delhi: January 24, 2026:
In a landmark judgment, the Bombay High Court has held that High Courts cannot exercise parallel contempt jurisdiction over the National Company Law Tribunal (NCLT) in matters arising under the Insolvency and Bankruptcy Code (IBC). The ruling, delivered by Justice Milind N. Jadhav, emphasizes that NCLT and the National Company Law Appellate Tribunal (NCLAT) are fully empowered under Section 425 of the Companies Act, 2013 to punish for contempt of their own orders.
The decision provides much-needed clarity on jurisdictional boundaries, ensuring that insolvency proceedings remain streamlined and free from overlapping judicial interventions.
Background of the Case
- The Dispute: A contempt petition was filed before the Bombay High Court alleging violation of NCLT orders in insolvency proceedings.
- Legal Question: Whether High Courts can entertain contempt petitions for alleged violations of NCLT orders.
- Court’s Finding: The High Court dismissed the contempt petition, ruling that NCLT and NCLAT have exclusive jurisdiction to deal with contempt of their orders.
This ruling aligns with the legislative intent of the IBC, which aims to create a specialized forum for insolvency matters, thereby reducing interference from parallel jurisdictions.
Court’s Observations
The Bombay High Court made several important points:
- Section 425 of Companies Act: Grants NCLT and NCLAT the same powers as High Courts to punish for contempt of their orders.
- No Parallel Jurisdiction: Once contempt powers are vested in NCLT, High Courts should not exercise parallel jurisdiction under the Contempt of Courts Act, 1971.
- Strengthening Insolvency Framework: Allowing High Courts to entertain contempt petitions would undermine the autonomy of NCLT and NCLAT.
- Predictability in Insolvency: The ruling ensures certainty and predictability in insolvency proceedings by clarifying jurisdictional boundaries.
Why This Ruling Matters
- For Insolvency Professionals: Provides clarity on where to file contempt petitions, reducing confusion and delays.
- For Companies: Ensures that insolvency disputes remain within specialized forums, avoiding multiple litigations.
- For Courts: Reinforces judicial discipline by preventing overlapping jurisdiction.
- For Investors: Strengthens confidence in India’s insolvency framework by ensuring streamlined processes.
Wider Implications
- Jurisdictional Discipline: The ruling sets a precedent for other High Courts, ensuring uniformity across India.
- Efficiency in Insolvency: By restricting contempt jurisdiction to NCLT/NCLAT, insolvency cases can be resolved faster.
- Legal Clarity: The judgment removes ambiguity, making it clear that High Courts cannot be approached for contempt of NCLT orders.
- Strengthening IBC: The decision reinforces the IBC’s objective of creating a specialized, self-contained mechanism for insolvency resolution.
Conclusion
The Bombay High Court’s ruling that High Courts cannot exercise parallel contempt jurisdiction over NCLT in IBC matters is a landmark in strengthening India’s insolvency framework. By affirming that NCLT and NCLAT have independent powers to punish for contempt under Section 425 of the Companies Act, the court has ensured jurisdictional clarity, efficiency, and predictability in insolvency proceedings.
This judgment will serve as a guiding precedent for future cases, reinforcing the autonomy of specialized tribunals and ensuring that insolvency resolution remains streamlined and effective.
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