The Five-Judge Bench of the National Company Law Appellate Tribunal, New Delhi comprising Justice Ashok Bhushan, Chairperson, Justice Rakesh Kumar Jain & Justice Rakesh Kumar, Judicial Members and Dr. Alok Srivastava & Barun Mitra, Technical Members recently held the NCLAT has the inherent power to recall a judgment under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016, despite not having the power of review.
Brief Facts:
Amtek Auto Ltd., a financially troubled company, faced a notable case in the corporate realm. A financial creditor (FC) initiated the insolvency resolution process, leading to the Committee of Creditors (CoC) approving a resolution plan. However, certain reliefs sought in an interlocutory application were rejected by the Adjudicating Authority (AA). The FC appealed this ruling to the National Company Law Appellate Tribunal (NCLAT), excluding the CoC. Surprisingly, the NCLAT partially granted the appeal. The FC then appealed to the Supreme Court, but their appeal was dismissed, with an option to file a review application. The NCLAT ultimately dismissed the review application, stating that no formal review provision exists. The FC persisted by filing a fresh application, seeking the recall of the partially granted order. Recognizing the importance of the case, the NCLAT referred it to a larger bench for further deliberation.
Contentions of the Appellant:
Shri N. Venkataraman, Senior Counsel, argued that the Tribunal has inherent power to recall a judgment under Rule 11 of the NCLAT Rules, 2016. In this case, where the Committee of Creditors was not included in the appeal, it was argued that the Tribunal can recall the judgment. Relying on Supreme Court judgments, it was emphasized that the jurisdiction to recall a judgment is inherent in the Tribunal exercising judicial power. It was contended that a judgment delivered without the necessary party present can be recalled based on Rule 11. The counsel disagreed with the three-member bench's judgment in "Agarwal Coal Corporation Private Limited" and "K.L.J Resources Ltd.," stating that it does not establish the correct law.
Contentions of the Respondent:
Shri R. Venkata Ramani, the learned Attorney General, argued that in I.A. No. 222/2020, filed by the Union Bank of India, only the Resolution Professional was involved. Hence, there was no need to include any other party when challenging the rejection of the application by the Adjudicating Authority. He asserted that there is no error in this Tribunal's judgment dated 27.01.2022 and no recall is necessary. The judgment was made after hearing all the parties involved in the Appeal.
Observations by the Court:
The five-member NCLAT bench took on the responsibility of addressing two critical questions. Firstly, can the Tribunal entertain an application to recall a judgment without the power to review judgments? Secondly, do the judgments in "Agarwal Coal Corporation Private Limited Vs Sun Paper Mill Limited & Anr." and "Rajendra Mulchand Varma & Ors Vs K.L.J Resources Ltd & Anr." establish that the NCLAT lacks the authority to recall a judgment? After careful examination, the NCLAT made significant observations. It analyzed relevant judgments of the Hon'ble Supreme Court, distinguishing between review and recall. While recognizing the lack of review power, the NCLAT affirmed the inherent power to recall a judgment as per Rule 11 of the NCLAT Rules. Ultimately, the NCLAT ruled that the Tribunal possesses the power to recall a judgment, overturning the previous three-member bench's view and providing clarity on the matter.
The decision of the Court:
The case was referred to the appropriate bench.
Case Name: Union Bank of India (Erstwhile Corporation Bank) Versus Dinkar T. Venkatasubramanian & Ors
Coram: Hon’ble Mr. Justice Ashok Bhushan Chairperson, Justice Rakesh Kumar Jain Member (Judicial), Justice Rakesh Kumar Member (Judicial), Dr. Alok Srivastava Member (Technical) and Mr. Barun Mitra Member (Technical)
Case No: I.A. No. 3961 of 2022 in Company Appeal (AT) (Ins.) No. 729 of 2020
Advocate of the 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.
Advocate of the Respondent: 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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