Order Passed After Considering All Materials Essential For Determining Issue Cannot Be Recalled: 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 an order passed by the Adjudicating Authority after considering all necessary materials essential for determining the issue cannot be recalled. Therefore, it cannot be said that such an order was obtained by playing fraud on the court on which ground only an order can be recalled. Brief Facts: Sarga Udaipur Hotels & Resorts Private Limited (Corporate Debtor) entered into a loan agreement with Housing and Urban Development Corporation Limited (HUDCO) for an amount of Rs.6907.92 Lakhs. Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor commenced by order dated 29.04.2022 passed by the Adjudicating Authority on Section 10 application filed by the Corporate Debtor itself. The Resolution Professional refused to include HUDCO in the Committee of Creditors (CoC) on the ground that HUDCO is a related party of the Corporate Debtor under Section 5(24) of the Insolvency and Bankruptcy Code, 2016 (Code). HUDCO filed an application being I.A. No. 514/KB/2022 before the Adjudicating Authority seeking direction to include HUDCO as member of the CoC. The said application was opposed by the Resolution Professional and after hearing the parties, the said application was allowed by the Adjudicating Authority by its order dated 30.08.2023 holding that HUDCO is not a related party of the Corporate Debtor, hence, deserves place in the CoC and Resolution Professional was directed to reconstitute the CoC. The Application was filed by the Appellant seeking a recall of the above order. The said application was rejected against which the present application was filed. Contentions: The Appellant submitted that the Srishti Urban Infrastructure Development Ltd. (SUIDL) has promoted the Corporate Debtor, hence, HUDCO has control over the Corporate Debtor through SUIDL. HUDCO has a Nominee Director in the Board of the Corporate Debtor to exercise influences. It was also argued that HUDCO while pursuing the IA failed to disclose its Annual Report which described the corporate debtor as its subsisdiary company. This suppression by HUDCO amounted to fraud on the court which is sufficient to recall an order passed on 30 August 2023. Per contra, the Respondents submitted that the Appellant being the promoter of the corporate debtor has effectively filed a review application against the judgment passed on 30 August 2023 which was delivered after considering all submissions and evidence. Appellant is admittedly a related party of the corporate debtor. It was also argued that the Annual Report of HUDCO on which reliance has been placed by the Appellant has also been extracted by the Adjudicating Authority in the impugned order which in no manner indicate that HUDCO has accepted the Corporate Debtor as related party. The Corporate Debtor was mentioned as related party of Associate Company i.e., Srishti Urban Infrastructure Development Ltd. (SUIDL). Observations: The NCLAT in Union Bank of India vs. Dinkar T. Venkatasubramanian & Ors held that the Tribunal may exercise the power to recall a judgment in cases of procedural errors, such as the absence of a necessary party during proceedings. Other grounds for recalling an order is when a fraud is played on the court in obtaining the judgment. The Tribunal noted that the Adjudicating Authority considered all arguments and held that HUDCO is not a related party. It also examined the Resolution Professional's claims regarding HUDCO's control over the corporate debtor through SUIDL, a JV promoted by the HUDCO. The status of the Appellant as a related party remains undisputed. The Adjudicating Authority also noticed HUDCO's 40 percent and the Appellant's 60 percent shareholding in the JV before issuing its order on 30 August 2023. The Tribunal further observed that the Appellant has not claimed that HUDCO failed to file its Annual Report because it was never asked to file. The 51st Annual Report of the HUDCO on which reliance has been placed by the Appellant was duly filed with the RoC and is a matter of public record. Therefore, the allegation of suppression by HUDCO is baseless. Accordingly, the Tribunal dismissed the appeal. Case Title: Shristi Infrastructure Development Corporation Limited Vs Housing and Urban Development Corporation Limited and Anr. Case Number: Company Appeal (AT) (Insolvency) No. 376 of 2025 Judgment Date: 25/03/2025 For Appellant: Mr. Abhishek Anand, Ms. Sugandh Kocchar, Ms. Srishti Juneja and Ms. Akshra Arshi, Advocates. For Respondents: Mr. Ashok Kumar Jain, Advocate. Click Here To Read/Download The Order

Order Passed After Considering All Materials Essential For Determining Issue Cannot Be Recalled: NCLAT

Mohd Malik Chauhan

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