Case Details

Case Name: State Bank of India & Ors. vs. Jyoti Structures Limited & Ors.

Court/Authority: National Company Law Appellate Tribunal, Principal Bench, New Delhi

Case Number: Comp. App. (AT) (Ins) No. 388 & 389 of 2026

Date of Judgment: 26.05.2026

Appeal Against: Order dated 16.02.2026 passed by NCLT Mumbai Bench-I in Contempt Application No. 39 of 2025 and Contempt Application No. 41 of 2025

Original Case: C.P. (IB) 1137/MB/2017

Period of Dispute: 2021-2026 (From Closing Date achievement to contempt proceedings)

Parties Involved

Appellants (Lender Banks):

  • State Bank of India (Lead Bank)
  • Bank of India
  • Canara Bank
  • ICICI Bank
  • Indian Bank
  • Union Bank of India

Respondents:

  • Jyoti Structures Limited (Corporate Debtor)
  • Abhinav Angirish (Shareholder)
  • Sharad Sanghi (Resolution Applicant and Shareholder)

Legal Representatives:

  • For Appellants: Mr. Tushar Mehta (Solicitor General), Mr. Sunil Fernandes, Sr. Advocate
  • For Respondents: Mr. Darius Khambata, Sr. Adv. & Mr. Arun Kathpalia, Sr. Advocate for R1; Mr. Abhijeet Sinha, Sr. Advocate for R2 and R3

Issues / Allegations / Violations

Core Dispute: Non-release of Non-Fund Based (NFB) facilities including Bank Guarantees (BGs) and Letters of Credit (LCs) worth Rs. 507 crore as mandated under the approved resolution plan.

Background Timeline:

  • Corporate Debtor admitted into CIRP on 04.07.2017
  • Resolution plan approved by NCLT on 27.03.2019
  • Closing Date achieved on 09.11.2021
  • Investors infused Rs. 170 crore equity as per plan
  • Non-Fund Based Facility Agreement executed post-plan approval

Specific Allegations:

1. Lender banks failed to release rolled-over BG/LC limits despite resolution plan obligations

2. Banks issued fresh sanction letters with new conditions inconsistent with approved resolution plan

3. Alleged wilful disobedience of NCLT order dated 20.08.2024 and NCLAT order dated 09.12.2024

4. Contempt applications filed on 12.10.2025 seeking compliance and imprisonment of bank officers

Findings & Observations

Procedural Deficiencies Found by NCLAT:

1. No prima facie satisfaction recorded by NCLT before initiating contempt proceedings

2. No specific show-cause notice issued to individual officers

3. No precise charges framed against alleged contemnors

4. Composite order passed without examining individual bank sanction terms

5. Punishment imposed without identifying specific individuals to be penalized

Substantive Findings:

1. Resolution plan and NFB Agreement permitted lenders to evaluate projects before BG/LC issuance

2. August 20 NCLT order recognized lenders' right to evaluate each project

3. December 9 NCLAT order prohibited reassessment of borrower but allowed project appraisal

4. Fresh sanction letters with conditions were bonafide as per impugned order observations

5. RBI regulations and internal banking policies required periodic review of credit limits

Penalties / Settlements / Directions

NCLT's Impugned Order (16.02.2026):

  • Directed lenders to release rolled-over BG limits within one month
  • Ordered one-day simple imprisonment in civil prison for non-compliance
  • Found bank officers in contempt but acknowledged their concern for public money safety

NCLAT's Final Ruling:

1. Allowed the appeal and set aside the impugned contempt order

2. No penalties imposed due to procedural irregularities in contempt proceedings

3. Directed fresh process for revival of contempt applications if needed

Corrective Actions & Future Obligations

NCLAT's Directions:

1. Respondents may send written communication to each bank separately for NFB release

2. Banks must respond categorically within one month of receiving request

3. Banks to provide names of specific officers dealing with NFB disbursal

4. Respondents liberty to revive contempt applications with specific officer names and fresh pleadings

Ongoing Requirements:

  • Compliance with resolution plan terms regarding NFB facilities
  • Adherence to RBI regulations and standard banking practices
  • Maintenance of financial discipline as required under banking norms

Final Ruling & Enforcement

NCLAT Decision:

  • Appeal allowed and impugned order set aside
  • No costs awarded to either party
  • Parties to bear their own costs

Legal Basis:

  • Violation of procedural requirements under Contempt of Courts Act, 1971
  • Non-compliance with natural justice principles in contempt proceedings
  • Reference to Supreme Court judgments in Ram Kishan v. Tarun Bajaj & Ors. and Union of India Vs. Satish Chandra Sharma

Operational Impact:

  • Banks required to formally respond to NFB release requests within stipulated timeline
  • Future contempt proceedings must identify specific officers and follow due process
  • Resolution plan implementation to continue under judicial supervision