IBC: NCLAT Has No Power To Review Its Judgment, Rules NCLAT Five Member Bench

The National Company Law Appellate Tribunal (“NCLAT”), Principal Bench, comprising of Justice Ashok Bhushan (Chairperson), Justice Rakesh Kumar (Judicial Member), Justice Rakesh Kumar Jain (Judicial Member), Dr. Alok Srivastava (Technical Member) and Mr. Barun Mitra (Technical Member) while adjudicating an appeal filed in Union Bank of India (Erstwhile Corporation Bank) Vs. Dinkar T. Venkatasubramanian & Ors., has held that the power of review is not conferred upon the NCLAT. However, the NCLAT has the power to recall its judgment by invoking inherent powers under Rule 11 of the NCLAT Rules, 2016.

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 The said appeal was dismissed as withdrawn, with the liberty to file a review application before the NCLAT.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 Respondents opposed the application on the premise that NCLAT does not have any power to review or recall its judgment.

Reliance was placed on NCLAT three judge bench judgment in Agarwal Coal Corporation Private Limited v Sun Paper Mill Limited & Anr., Company Appeal (AT) (Ins.) No. 412 of 2019, and Rajendra Mulchand Varma & Ors. v K.L.J Resources Ltd & Anr., Company Appeal (AT) (Ins.) No. 359 of 2020, wherein it was held that NCLT and NCLAT have no jurisdiction to review or recall their orders.

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. 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?
3. 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?

NCLAT VERDICT

No power of review conferred upon NCLAT

In reference, the Bench placed reliance on the judgment in SERI Infrastructure Finance Ltd. vs. Tuff Drilling Pvt. Ltd., (2018) 11 SCC 470, wherein the Supreme Court while distinguishing between review and recall, had observed that power of review has to be expressly conferred by a Statute.

The Five Member Bench held that power of review has not been conferred upon the NCLAT. However, the power to recall its judgment is inherent in NCLAT by virtue of inherent powers under Rule 11 of NCLAT Rules, 2016.

“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”, the Bench ruled.

NCLAT 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.’ do not lay down the correct law

The Bench observed that since the Supreme Court has held that the Tribunal has inherent power to recall its judgment on appropriate grounds, therefore, the three-Member Bench 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.’, wherein it has been observed that the Tribunal does not have power to recall, cannot be approved.

“The three-member bench judgments of this Tribunal insofar as observation that this Tribunal has no power to review, no exception can be taken to that part of the judgment. We, however, hold that the judgment laying down that this Tribunal has no power to recall the judgment does not lay down correct law. 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”, the Bench held.

Case Title: Union Bank of India (Erstwhile Corporation Bank) Vs. Dinkar T. Venkatasubramanian & Ors.

Case No.: CA (AT) (Ins.) No. 729 of 2020

Counsel For Applicant: 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, Advocates for Applicant in I.A. No. 3961 of 2022.

Counsel For Respondents: Mr. R. Venkata Ramani, AG, Mr. Alok Kumar, Mr. Abhinav Shukla, Mr. Kunal Arora, Mr. Raman Yadav, Mr. Abhishek Pandey, Advocates for R1/UBI. Mr. Sumant Batra, Mr. Sanjay Bhatt, Ms. Ruchi Goyal, Advocates for R-2 (RP).

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