Inadvertent Typographical Errors In Orders Passed By NCLT Can Be Corrected Under Rule 154 Read With Rule 11 Of NCLT Rules: NCLAT

The National Company Law Appellate Tribunal (NCLAT) New Delhi bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) has held that inadvertent typographical errors in the orders passed by the National Company Law Tribunal (NCLT) can be corrected by exercising its powers under Rule 154 read with Rule 11 of the NCLT Rules, 2016. It further held that correcting such errors will not amount to review of the order. Brief Facts: Corporate Insolvency Resolution Process (“CIRP”) against the Corporate Debtor (“CD”) – Gontermann Peipers India Ltd. commenced on 11.12.2019. Resolution Plan was submitted, which was not approved by the Committee of Creditors (“CoC”). Subsequently, liquidation order was passed on 30.04.2021. In the liquidation proceedings, Howen International Funds SPC (Appellant) was declared the Successful Auction Purchaser through an e-auction and deposited the full sale consideration. Subsequently, the Appellant filed IA (IB) No.1277/KB/2023 seeking certain reliefs and concessions, which were granted by the Adjudicating Authority by order dated 10.05.2024. Following the order dated 10.05.2024, the Liquidator filed IA (IB) No.1124/KB/2024 seeking correction of an inadvertent error in the reliefs granted—specifically, the erroneous mention of assignment of personal guarantees to the Successful Auction Purchaser, which was neither sought nor granted and was in fact objected to during the hearing. The Adjudicating Authority by its order dated 04.10.2024, allowed the Application and rectified the inadvertent error in the order dated 10.05.2024 at Sl. No.12, by substituting word “NOT GRANTED” in placed of word “GRANTED” in the order dated 10.05.2024. Against the above order, the present appeal has been filed. Contentions: The Appellant submitted that the impugned order by deleting the word “GRANTED” from order dated 10.05.2024 and substituting with “NOT GRANTED” is nothing but review of the judgment dated 10.05.2024, which is not within the jurisdiction of the Adjudicating Authority. It was further submitted that there was no case of any inadvertent error, nor there was any such pleading before the Adjudicating Authority.By the impugned order by refusing to grant the reliefs and concessions, as prayed for, the Appellant remedy to challenge the decision of the Adjudicating Authority is lost. Per contra, the Respondent submitted that the auction in the liquidation proceeding was 'as is where is basis' and there was no such condition in the auction sale that there shall be extinguishment of personal guarantees. Lastly, it was submitted that the Liquidator during the hearing has objected to Clause-12 and during the hearing the Counsel appearing for the Appellant has also agreed that said relief is contrary to settled legal position. Observations: The Tribunal noted that in the application filed by the Liquidator, it was specifically pleaded that the word "GRANTED" had been mistakenly used instead of "NOT GRANTED" regarding the assignment of personal guarantees. The Liquidator relied on the Supreme Court's judgment in Lalit Kumar Jain v. Union of India, (2021), which held that approval of a resolution plan does not automatically extinguish personal guarantees. Hence, the Liquidator's application was not for review of the order dated 10.05.2024 but for correction of an inadvertent error. The Tribunal further said that the Adjudicating Authority, in paragraph 15 of its order, clearly held that the use of the word “GRANTED” instead of “NOT GRANTED” in the order dated 10.05.2024 was an inadvertent typographical error, as evident from the record and SCC meeting minutes. Acknowledging that it has no power to review its own order, the Adjudicating Authority relied on Rule 154 and Rule 11 of the NCLT Rules, 2016 to justify correction of the error. Based on the above, it observed that the Adjudicating Authority in paragraph-17 has rightly observed that present is not a case where Adjudicating Authority is reviewing its judgment, rather it is rectifying an inadvertent typographical error. The Tribunal concluded that the Appellant failed to produce any material evidence supporting its claim for extinguishment of personal or third-party guarantees. Since the sale was of the Corporate Debtor as a going concern, and no basis existed for such relief, the Adjudicating Authority rightly treated the earlier mention of "GRANTED" as a typographical error. It exercised its inherent powers under the NCLT Rules to correct the mistake. A party cannot be permitted to benefit from an inadvertent judicial error. Accordingly, the present appeal was dismissed. Case Title: Howen International Funds SPC Versus Raj Singhania Liquidator of Gontermann Peipers India Ltd. Case Title: Company Appeal (AT) (Insolvency) Nos. 2275 and 2276 of 2024 ...

Inadvertent Typographical Errors In Orders Passed By NCLT Can Be Corrected Under Rule 154 Read With Rule 11 Of NCLT Rules: NCLAT

Mohd Malik Chauhan

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