IBC- NCLAT Can 'Recall' Its Judgment, Can't 'Review' Them: Supreme Court Affirms NCLAT Ruling

In June 2023, while answering a reference, the NCLAT five-member bench held that NCLAT has the power to recall its judgment by invoking inherent powers under Rule 11 of the NCLAT Rules, 2016. But the power of recall would not include re-hearing of a case to find out any apparent error in the judgment. Further, the power of review is not conferred upon the NCLAT.

BACKGROUND FACTS

A three Member bench of NCLAT had made a reference to a larger bench on the following points, with respect to the Insolvency and Bankruptcy Code, 2016 (“IBC”):

• Whether NCLAT not being vested with any power to review the judgment can entertain an application for recall of judgment on sufficient grounds?
• 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 NCLAT to recall a judgment?
• Whether the judgment of NCLAT 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?

In June 2023, a five Member Bench of NCLAT 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) answered the reference. It was 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. But the power of recall would not include re-hearing of a case to find out any apparent error in the judgment.

NCLAT further held that the 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, does not lay down the correct law.

NCLAT also laid down the grounds on which power of recall can be exercised:

“Power of recall of a judgment can be exercised by this Tribunal when any procedural error is committed in delivering the earlier judgment; for example; necessary party has not been served or necessary party was not before the Tribunal when judgment was delivered adverse to a party. There may be other grounds for recall of a judgment. Well known ground on which a judgment can always be recalled by a Court is ground of fraud played on the Court in obtaining judgment from the Court”.

The Union Bank of India filed an appeal before the Supreme Court against the order of NCLAT five-member bench.

SUPREME COURT VERDICT

The Bench upheld the view taken by Five Member Bench of NCLAT and refused to interfere in the same.

“We are in agreement with the view taken by the Five Judges Bench of the NCLAT and thus find no reason to interfere with the impugned judgment. Insofar as the endeavour of learned counsel for the appellant to urge on the facts of the case is concerned, that would be a matter to be considered, dependent on the fate when the matter is placed before the appropriate Bench, to be decided on merits.”

The appeal has been dismissed.

Case Title: Union Bank of India v Financial Creditors of M/s Amtek Auto Limited & Ors.

Citation: 2023 LiveLaw (SC) 589

Counsel For Appellant: Mr. Gopal Jain (Sr. Adv.), Mr. Alok Kumar, Ms. Deepti Bhardwaj, Mr. Kunal Arora, Mr. Raghwi Rawat, Mr. Ayush Singhal For M/S. Shree Chakra Chambers, AOR.

Counsel For Respondents: Mr. N. Venkataraman (A.S.G.), Mr. Sanjay Kapur (AOR), Mr. Surya Prakash, Mr. Arjun Bhatia, Mr. Rabin Majumder, Mr. Sumant Batra, Mr. Sanjay Bhatt, Ms. Ruchi Goyal.

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