Supreme Court rules that seeking legal remedy before Company Law Board does not amount to contempt in family dispute over hotel management

In Rama Narang v. Ramesh & Rajesh Narang, the Hon’ble Supreme Court dismissed a contempt petition filed by Rama Narang against his sons over a family dispute concerning Narang International Hotel Ltd. The Court held that approaching the Company Law Board (CLB) under Sections 397, 398, and 403 of the Companies Act, due to alleged non-cooperation from Rama, did not amount to wilful disobedience of a prior settlement endorsed by the Court. The CLB’s appointment of a Facilitator to preserve the company’s operations, which employ 3,000 people, was found to be a lawful exercise of jurisdiction. The Court emphasized that bona fide recourse to statutory remedies before a competent forum cannot constitute contempt, especially where prior Supreme Court orders had already acknowledged and directed continuation of the arrangement involving the Facilitator. The petition was dismissed, and parties were relegated to their remedies under company law, including before the NCLT.