“NCLAT Has Power To Recall Its Judgment”- Held Five Members Tribunal Bench

“NCLAT Has Power To Recall Its Judgment”- Held Five Members Tribunal Bench

“NCLAT Has Power To Recall Its Judgment”- Held Five Members Tribunal Bench

Recently, a 5-member bench led by Hon’ble Mr. Justice Ashok Bhushan (Chairperson) of Hon’ble National Company Law Appellate Tribunal, Delhi held that in exercise of its inherent jurisdiction the NCLAT can entertain an application for recall of judgment on sufficient grounds and overruled the findings of its own given in “Agarwal Coal Corporation Private Limited vs Sun Paper Mill Limited & Anr.” and “Rajendra Mulchand Varma & Ors vs K.L.J Resources Ltd & Anr.”, while hearing a reference referred by 3 member bench of the Tribunal.

BRIEF FACTS OF THE CASE

Corporate Insolvency Resolution Process initiated by an application filed by Union Bank of India under Section 7 against the Corporate Debtor – Amtek Auto Ltd. The Adjudicating Authority by order dated 09.07.2020 allowed the I.A. filed by the Resolution Professional and approved the Resolution Plan and by the same order rejected I.A. No. 222/2020 filed by the Union Bank of India. Union Bank of India filed Company Appeal (AT) (Ins.) No. 729 of 2020 assailing the order dated 09.07.2020. In the Company Appeal (AT) (Ins.) No. 729 of 2020, Union Bank of India did not implead the Committee of Creditors as one of the parties. Company Appeal (AT) (Ins.) No. 729 of 2020 was partly allowed by judgment dated 27.01.2022 of this Tribunal.

The Financial Creditors of the Corporate Debtor filed Civil Appeal in the Hon’ble Supreme Court challenging the judgment dated 27.01.2022, which Appeal was dismissed as withdrawn with liberty to file a Review Application, as was prayed by order dated 01.04.2022. After the order of the Hon’ble Supreme Court dated 01.04.2022, Review Application being Review Application No. 01 of 2022 was filed which was dismissed by this Tribunal on 02.09.2022 holding that there is no provision of Review and granted liberty to take proper available recourse.

Thereafter, applicants filed review and respondents quoted aforesaid two precedents in which it was held that neither any review or recall is maintainable against the judgment of the Tribunal. The three member bench referred this question before 5-member bench for consideration.

QUESTION FRAMED BY THE TRIBUNAL

  • Whether this Tribunal not being vested with any power to review the judgment can entertain an application for recall of judgment on sufficient grounds?
  • Whether judgment of this Tribunal in “I.A. No. 265 of 2020 in Company Appeal (AT) (Ins.) No. 412 of 2019, Agarwal Coal Corporation Private Limited Vs Sun Paper Mill Limited & Anr.” and “I.A. No. 3303/2022 in Company Appeal (AT) (Ins.) No. 359 of 2020, Rajendra Mulchand Varma & Ors Vs K.L.J Resources Ltd & Anr.” can be read to mean that there is no power vested in this Tribunal to recall a judgment?
  • Whether the judgment of this Tribunal in “Agarwal Coal Corporation Private Limited Vs Sun Paper Mill Limited & Anr.” and “Rajendra Mulchand Varma & Ors Vs K.L.J Resources Ltd. & Anr.” lays down the correct law?”

CONTENTION OF APPLICANTS

Shri N. Venkataraman, learned senior counsel submits that inherent power of this Tribunal is preserved by virtue of Rule 11 of the NCLAT Rules, 2016 and in exercise of inherent power, Tribunal can recall the judgment, in facts of the present case where the Committee of Creditors of the Financial Creditor which have approved the Resolution Plan was not impleaded as Respondent in the Appeal, which Appeal was allowed by this Tribunal. It is submitted that there is no quarrel that this Tribunal has not been vested with power to review its judgment but power to recall a judgment is very much there with this Tribunal which can be exercised in appropriate case.

CONTENTION OF RESPONDENT

Shri R. Venkata Ramani, learned Attorney General submits that in I.A. No. 222/2020 which was filed by the Union Bank of India before the Adjudicating Authority, only party impleaded was the Resolution Professional, hence, by challenging the order of Adjudicating Authority rejecting the said application on 09.07.2020, Union Bank of India was not required to implead any other party to the Appeal. He submits that there is no error in the judgment of this Tribunal dated 27.01.2022 which need to be recalled. The judgment was delivered by hearing all the parties to the Appeal.

HON’BLE TRIBUNAL’S OBSERVATIONS

At the outset, Hon’ble Tribunal observed that NCLAT is vested with powers of Civil Court and it has its own inherent powers under Rule 11 of the National Company Law Appellate Tribunal Rule, 2016. However, it is not govern by the procedures of Civil Procedure Code.

Hon’ble Tribunal further while answering the reference observed that :

“11. The inherent power of the Courts and that of the Tribunals are the powers which are not conferred to it but those powers are inherent in the Courts and Tribunals by strength of duty to do justice to parties before it. While considering nature of inherent powers under Section 151, Hon’ble Supreme Court in “AIR 1962 SC 527, Manohar Lal Chopra vs. Rai Bahadur Rao Raja Seth Hiralal” laid down following in Para 23:

“23. ……… The section itself says that nothing in the Code shall be deemed to limit or otherwise affect the inherent power of the Court to make orders necessary for the ends of justice. In the face of such a clear statement, it is not possible to hold that the provisions of the Code control the inherent power by limiting it or otherwise affecting it. The inherent power has not been conferred upon the Court; it is a power inherent in the Court by virtue of its duty to do justice between the parties before it.”

Hon’ble Tribunal while dealing with the A. R. Antulay vs. R.S. Nayak & Another” as referred by the three member bench while referring, observed that the Hon’ble Supreme Court in the above judgment has clearly held that where a party has had no notice and decree is made against him, he can approach the court for setting-aside the decision.

Next,  while dealing with “(2009) 2 SCC 703, Asit Kumar Kar Vs. State of West Bengal & Ors.” As referred by appellants, Hon’ble Tribunal held that in the said judgment has noted distinction between review and recall petition in para 6, which is to the following effect:

“6. There is a distinction between a petition under Article 32, a review petition and a recall petition. While in a review petition the Court considers on merits where there is an error apparent on the face of the record, in a recall petition the Court does not go into the merits but simply recalls an order which was passed without giving an opportunity of hearing to an affected party.

  1. In another judgment of “(1999) 4 SCC 396, Budhia Swain & Ors. Vs. Gopinath Deb & Ors.”, the Hon’ble Supreme Court has dealt with power to recall. In Paras 5, 6, 7 and 8 following has been laid down:

5…………..

  1. What is a power to recall? Inherent power to recall its own order vesting in tribunals or courts was noticed in Indian Bank Vs. M/s Satyam Fibres India Pvt. Ltd.1 Vide para 23, this Court has held that the courts have inherent power to recall and set aside an order (i) obtained by fraud practised upon the Court, (ii) when the Court is misled by a party, or (iii) when the Court itself commits a mistake which prejudices a party.

7……………

  1. In our opinion a tribunal or a court may recall an order earlier made by it if (i) the proceedings culminating into an order suffer from the inherent lack of jurisdiction and such lack of jurisdiction is patent, (ii) there exists fraud or collusion in obtaining the judgment, (iii) there has been a mistake of the court prejudicing a party, or (iv) a judgment was rendered in ignorance of the fact that a necessary party had not been served at all or had died and the estate was not represented.

The power to recall a judgment will not be exercised when the ground for re-opening the proceedings or vacating the judgment was available to be pleaded in the original action but was not done or where a proper remedy in some other proceeding such as by way of appeal or revision was available but was not availed. The right to seek vacation of a judgment may be lost by waiver, estoppel or acquiescence.”

Hon’ble Tribunal after considering number of judgments as referred by appellants and respondents observed that :-

“20. The above judgments of the Hon’ble Supreme Court clearly lays down that there is a distinction between review and recall. The power to review is not conferred upon this Tribunal but power to recall its judgment is inherent in this Tribunal since inherent power of the Tribunal are preserved, powers which are inherent in the Tribunal as has been declared by Rule 11 of the NCLAT Rules, 2016. Power of recall is not power of the Tribunal to rehear the case to find out any apparent error in the judgment which is the scope of a review of a judgment. Power of recall of a judgment can be exercised by this Tribunal when any procedural error is committed in delivering the earlier judgment; for example; necessary party has not been served or necessary party was not before the Tribunal when judgment was delivered adverse to a party. There may be other grounds for recall of a judgment. Well known ground on which a judgment can always be recalled by a Court is ground of fraud played on the Court in obtaining judgment from the Court. We, for the purpose of answering the questions referred to us, need not further elaborate the circumstances where power of recall can be exercised”.

Further, the Hon’ble Tribunal held that judgment laying down that this Tribunal has no power to recall the judgment does not lay down correct law in Agarwal Coal Corporation Private Limited vs Sun Paper Mill Limited & Anr.” and “Rajendra Mulchand Varma & Ors vs K.L.J Resources Ltd & Anr (supra) is not good law.

In view of the above, Hon’ble Tribunal answered the above framed question as following:-

I: This Tribunal is not vested with any power to review the judgment, however, in exercise of its inherent jurisdiction this Tribunal can entertain an application for recall of judgment on sufficient grounds.

II & III: The judgment of this Tribunal in “Agarwal Coal Corporation Private Limited vs Sun Paper Mill Limited & Anr.” and “Rajendra Mulchand Varma & Ors vs K.L.J Resources Ltd & Anr.” observing that this Tribunal cannot recall its judgment does not lay down the correct law.

 

Case title :- Union Bank of India Vs. Dinkar T Venkatsubramaniam & ors

Case no. :- I.A. No. 3961 of 2022 in Company Appeal (AT) (Ins.) No. 729 of 2020

Order date :- 25.05.2023

 

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