1. INTRODUCTION
On
2. BACKGROUND
In the ongoing corporate insolvency resolution process ("CIRP") of
In pursuance of the above, a review application4 was filed by the FCs before the NCLAT against the Order, which was dismissed by the NCLAT on
- Whether the NCLAT, not being vested with any power to review the judgment, can entertain an application for recall of judgment on sufficient grounds?
-
Whether judgments of the NCLAT in
Agarwal Coal Corporation Private Limited (supra) and K.L.J Resources Limited (supra) can be read to mean that there is no power vested in the NCLAT to recall a judgment? -
Whether the judgments of the NCLAT in
Agarwal Coal Corporation Private Limited (supra) and K.L.J Resources Limited (supra) lay down the correct law?
3. ANALYSIS AND DECISION OF THE NCLAT
The NCLAT commenced its analysis by comparing Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 ("Rules") with Section 151 of the Code of Civil Procedure, 1908, and also considered certain judgments of the Supreme Court to observe that while the procedures of courts and tribunals might differ, their functions are not essentially different7 and that the inherent powers of court were not conferred upon it explicitly but rather inherently derived from its duty to uphold justice for the parties involved8.
The NCLAT then examined the judgment of the Supreme Court in A.R Antulay vs. R.S Nayak & Anr.,9 in which it was held that in cases where no notice is served on a party against whom a decree has been passed and there is an obvious infringement of the principles of natural justice, the said party can agitate their grievance before the court which passed the decree. The NCLAT further considered a catena of Supreme Court judgments to draw a distinction between the powers of review and recall of a court/tribunal. After considering such judgments, it was observed that while in its review jurisdiction, the court considers on merits whether there is an error apparent on the face of the record, while exercising the power to recall, the court or tribunal evaluates any procedural infirmity in its order such as an order that was passed without giving an opportunity to the affected party10 or if fraud is played on the court or tribunal in obtaining the order.
On the basis of the above analysis, the NCLAT examined the orders in
4. INDUSLAW VIEW
While the position of law regarding the power of review and recall has been firmly established since many years in relation to courts, this judgment has now definitively established the same for the NCLAT and NCLT as well, which will go a long way in minimizing unnecessary appeals, at least for resolution of clerical and procedural errors expeditiously. Having said this, unscrupulous litigants may seek to exploit this by filing review applications in the guise of recall applications. Given the importance of the Code's regime and the seminal significance of NCLT as a tribunal, having wide economical and financial ramifications, the efficacy of the Code's mechanism for banks and financial institutions may be severely undermined, as parties might exploit this avenue to pursue the reversal of unfavorable outcomes and stall further proceedings. Only time will reveal the true extent to which the delicate balance between the power of review and recall will be upheld in spirit.
Footnotes
1. I.A. No. 3961 in Company Appeal (AT) (Ins.) No. 729 of 2022.
2. Company Appeal (AT) (Ins.) No. 729 of 2022.
3. Civil Appeal Diary Number 5609/2022.
4. Review Application No. 01 of 2022.
5. Judgment dated
6. Judgment dated
7.
8.
9. (1988) 2 SCC 602.
10.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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