National Company Law Appellate Tribunal: A 5-member bench comprising of Ashok Bhushan*, Rakesh Kumar Jain, J Rakesh Kumar, JJ., Dr. Alok Srivastava and Mr. Barun Mitra (Technical Member) held that though NCLAT is not vested with any power to review its judgments, but NCLAT can exercise its inherent power under R. 11 of the National Company Law Appellate Tribunal Rule, 2016 (NCLAT Rules, 2016) to recall its judgements when any procedural error has been committed while delivering the earlier judgment.
“Power to recall a judgment is an inherent power which is in the Tribunal as has been so declared by Rule 11.”
In the instant matter, the Union Bank of India preferred an application under S. 7 of the Insolvency and Bankruptcy Code, 2016 to initiate a Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor (Amtek Auto Ltd.).
The Adjudicating Authority vide order dated 09-07-2020 allowed the application filed by the Resolution Professional and approved the Resolution Plan and by the same order rejected S. 7 application.
The Union Bank of India preferred an appeal before the NCLAT challenging the impugned order dated 09-07-2020 passed by the Adjudicating Authority and vide dated 27-01-2022, the appeal was partly allowed without impleading the Committee of Creditors as one of the parties.
The Union Bank of India filed a Review Application and the NCLAT vide order dated 02-09-2022 dismissed the same with liberty to take recourse in accordance with law. The Union Bank of India then had preferred a recall application before the NCLAT seeking to recall of the order dated 02-09-2022. The respondents raised objections to its maintainability before a 3-member bench and vide order dated 09-02-2023, the 3-member bench considering submission of the parties referred to consider questions before this Larger Bench (5-member bench), which are as follows:
Whether this Tribunal without having any power to review the judgment entertain an application for recall of judgment on sufficient grounds?
If the judgments of this Tribunal in Agarwal Coal Corpn. (P) Ltd. v. Sun Paper Mill Ltd., Company Appeal (AT) (Ins.) No. 412 of 2019, order dated 25-10-2021, and Rajendra Mulchand Varma v. K.L.J Resources Ltd., Company Appeal (AT) (Ins.) No. 359 of 2020, order dated 11-10-2022, could be interpreted as there being no vested power in this Tribunal to recall a judgment?
Whether the above-mentioned judgment of this Tribunal lays down the correct law?
Whether the NCLAT has powers to recall its own judgments?
R. 11 of the NCLAT Rules, 2016 which deals with the inherent powers of the Tribunal.
The NCLAT observed that under S. 424(2) of the Companies Act, 2013, the Tribunals are vested with various powers as are vested with the Civil Court under CPC. Moreover, R. 11 of the NCLAT Rules, 2016 deals with inherent power and is akin to S. 151 of the CPC. The NCLAT further noted that the Supreme Court in Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhunjhunwala, AIR 1961 SC 1669, held that the procedures of Court and Tribunal may differ, but their functions are not essentially different. The NCLAT stated that
“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.”
The NCLAT noted the observation by the Supreme Court in Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal, AIR 1962 SC 527, and opined that “Inherent power by a Court or Tribunal can be exercised to do justice between the parties, which exercise, however, in no manner should contravene any express provision of the statute.”
While noticing the judgments relied by the applicant and 3-member bench of this Tribunal as referred to in the referring order, the NCLAT observed that there is a distinction between review and recall and although this Tribunal is not vested with power to review but have the inherent power to recall its judgment under R. 11 of the NCLAT Rules, 2016.
While discussing what is meant by the term “Power of recall of a judgment”, the NCLAT opined that “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.”
The NCLAT observed that the Coordinate Bench of this Tribunal in Agarwal Coal Corpn. (P) Ltd. (Supra) and K.L.J Resources Ltd. (Supra) has treated review and recall as alike and the 3-member bench without considering the ambit of review and power of recall, held that power of review is not inherent power in the impugned order. The NCLAT held that the impugned order passed by the 3-member bench insofar as observation “that this Tribunal has no power to recall the judgment does not lay down correct law.”
The NCLAT held that “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” and the judgments in in Agarwal Coal Corpn. (P) Ltd. (Supra) and K.L.J Resources Ltd. (Supra) observing that this Tribunal cannot recall its judgment does not lay down the correct law.
[Union Bank of India v. Dinkar T. Venkatasubramanian, 2023 SCC OnLine NCLAT 283, order dated 25-05-2023]
*Judgment by Justice Ashok Bhushan
Advocates who appeared in this case :
Mr. N. Venkataraman, ASG with Mr. Sanjay Kapoor, Ms. Megha Karnwal, Mr. Surya Prakash, Mr. Arjun Bhatia, Mr. Devesh Dubey, Mr. V. Chandrashekhar Bharathi, Ms. Amrita Chandramouli, Ms. Shruthi Shivkumar, Mr. Rahul Vijay Kumar, Counsel for the Applicant;
Mr. R. Venkata Ramani, AG, Mr. Alok Kumar, Mr. Abhinav Shukla, Mr. Kunal Arora, Mr. Raman Yadav, Mr. Abhishek Pandey, Counsel for the Respondent No. 1;
Mr. Sumant Batra, Mr. Sanjay Bhatt, Ms. Ruchi Goyal, Counsel for the Respondent No. 2.