The National Company Law Tribunal (NCLT), formed on June 1, 2016, as per the provisions of the Companies Act 2013 (Section 408) by the Indian government, a quasi-judicial body in India adjudicating companies’ issues relating to arbitration, compromise, arrangements, reconstructions and the winding up of companies. The National Company Law Appellate Tribunal (NCLAT) a tribunal formed under Section 410 of the Companies Act, 2013 is responsible for hearing appeals from the orders of National Company Law Tribunal(s) (NCLT), starting on 1 June 2016.

A 5-member bench comprising of Justice Ashok Bhushan (Chairperson) Justice Rakesh Kumar Jain (Judicial Member), J Rakesh Kumar (Judicial Member), Dr. Alok Srivastava (Technical Member) and Mr. Barun Mitra (Technical Member) held that though NCLAT is not vested with any power to review its judgments, NCLAT can exercise its inherent power under R. 11 of the NCLAT Rule, 2016 to recall its judgements when any procedural error has been committed while delivering the earlier judgment. Procedural error may include, 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 like fraud played on court in obtaining judgement from the court. However, the power of recall does not include re-hearing of a case to find out any apparent error in the judgment.

Case Law Details:

Case Name: Union Bank of India Vs Dinkar T. Venkatasubramanian (NCLAT Delhi)

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

Date of Judgement/Order: 25/05/2023

Courts: NCLAT

Background Facts:

The Union Bank of India (“Financial Creditor”) had filed a petition under Section 7 of the Insolvency and Bankruptcy Act, 2016 (“IBC”), seeking initiation of Corporate Insolvency Resolution Process (“CIRP”) against Amtek Auto Ltd. (“Corporate Debtor”). The NCLT initiated CIRP against the Corporate Debtor. Mr. Himanshu Gupta and Deccan Value Investors L.P. (“Successful Resolution Applicants/SRA”) submitted a Resolution Plan for the Corporate Debtor, which was approved by the Committee of Creditors (“CoC”) with majority vote. The Financial Creditor had filed an interlocutory application seeking certain reliefs.

On 09.07.2020, the NCLT approved the Resolution Plan and rejected the application filed by the Financial Creditor. Consequently, the Financial Creditor filed an appeal before the NCLAT against the order dated 09.07.2020. The CoC was not impleaded as a party in the appeal.

On 27.01.2022, the NCLAT partly allowed the appeal. Being dissatisfied with the NCLAT order, the Financial Creditor filed an appeal before the Supreme Court. The said appeal was dismissed as withdrawn, with the  

 liberty to  

 file    

a review application before    

the NCLAT. When the Financial Creditor filed a review application before the NCLAT, the same was dismissed on the ground that the IBC does not contain any provision of review. Liberty was granted to the Financial Creditor to take recourse to other remedy in accordance with law.

The Financial Creditor then filed an application for recall of order dated 27.01.2022, which was heard by a three Member Bench of NCLAT. The Respondent opposed the application on the premise that NCLAT does not have any power to review or recall its judgment. A reference was made by the three Member Bench to a larger Bench. A Five Member Bench of NCLAT held that power of review has not been conferred upon the NCLT or NCLAT. However, the power to recall its judgment is inherent in NCLAT by virtue of inherent powers under Rule 11 of 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.

QUESTIONS REFERRED TO LARGER BENCH

A reference was made by the three Member Bench to a larger Bench on the

following points:

1. Whether this Tribunal not being vested with any power to review the judgment can entertain an application for recall of judgment on sufficient grounds?
2. ““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.”
3.  
4. Whether NCLAT judgment in Agarwal Coal Corporation Private Limited Vs Sun Paper Mill Limited & Anr., C.A. (AT) (Ins.) No. 412 of 2019 and Rajendra Mulchand Varma & Ors Vs K.L.J Resources Ltd & Anr., C.A. (AT) (Ins.) No. 359 of 2020, can be read to mean that there is no power vested in this Tribunal to recall a judgment? 
5.  
6. 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?

On the remaining two points of reference, the five Member Bench held that the judgment in Agarwal Coal Corporation Private Limited vs Sun Paper Mill Limited & Anr. and Rajendra Mulchand Varma & Ors vs K.L.J Resources Ltd & Anr., which observes that NCLAT cannot recall its judgment, does not lay down the correct law.