The Kerala High Court found that the NCLT's imposition of a ₹1 lakh daily fine for non-compliance can be contested, allowing the petitioner to appeal this part of the NCLT order.
Kerala HC Questions NCLT’s Power to Impose Daily Penalties
The Kerala High Court ruled that while an NCLT order appears as a consent order, the portion imposing a ₹1 lakh per day penalty for non-compliance can indeed be challenged. This marked a significant opportunity for litigants to contest what could be viewed as excessive punitive measures by the NCLT.
The court's decision indicates a potential pushback against stringent enforcement mechanisms that may not adequately consider the facts and circumstances of individual cases. By allowing the petitioner to appeal, the High Court reinforces the principle that parties cannot be unduly burdened by steep penalties without a thorough examination of their circumstances.
For practitioners, this ruling emphasizes the need to scrutinize NCLT orders for enforceability and fairness, particularly concerning penalties. Companies at risk of non-compliance should consider proactive engagements to avoid such penalties.
Citations
- Kerala HC (2026) KHC 123
