A five-Member Bench of the National Company Law Appellate Tribunal (‘NCLAT’) has held that NCLAT is not vested with any power to review its own judgment, however, in exercise of its inherent jurisdiction it can entertain an application for recall of judgment on certain grounds. The Tribunal was of the view that it has an inherent jurisdiction to recall a judgement which was made with procedural lapses, per se, when a party affected by the judgment has not been impleaded. The Tribunal in Union Bank of India (Erstwhile Corporation Bank) v. Dinkar T. Venkatasubramanian, thus, overturned its previous decisions wherein it held that it had no power to recall a judgment.
Brief facts:
In the present case, the Corporate Insolvency Resolution Process (‘CIRP’) was initiated after an application under Section 7 of the Insolvency and Bankruptcy Act, 2016 (‘IBC’) which was filed by the Union Bank of India (‘Respondent’) against Amtek Auto Ltd. (‘Corporate Debtor’). By a majority vote, the Committee of Creditors (‘CoC’) approved a Resolution Plan filed by the successful Resolution Applicant. The Respondent, being one of the Financial Creditors, dissented to the Resolution Plan and filed an interlocutory application seeking certain reliefs and modification of the Resolution Plan.
The National Company Law Tribunal (‘NCLT’) approved the Resolution Plan, while rejecting the application filed by the Respondent. Consequently, the Respondent filed an appeal before the NCLAT in which the Committee of Creditors (‘CoC’) was not impleaded as a party. The NCLAT partly allowed the appeal. The Financial Creditors led by State Bank of India (‘Appellant’) were aggrieved by the order and the same was challenged in an appeal before the Hon’ble Supreme Court. The said appeal was dismissed with the liberty to file a review application before the NCLAT.
The review application was filed before the NCLAT by the Appellant, which was dismissed on the ground that the IBC does not contain any provision of review. However, the NCLAT granted liberty to take recourse to any other remedy in accordance with law. Pursuant to this, the Appellants filed an application for recalling the order dated 27 January 2022, which was heard by a three Member Bench of NCLAT. The Bench referred the matter to a Larger Bench for adjudication on the issue whether NCLAT has the inherent jurisdiction to entertain application for the recall of judgment on sufficient grounds.
Judgement:
The Tribunal examined the nature and extent of the inherent powers of the NCLAT and held that in exercise of its inherent jurisdiction it can entertain an application for recall of judgment when any procedural error is committed in delivering the judgment, for instance when a necessary party was not before the Tribunal.
It held that a Court or a Tribunal exercises juridical power of the State while performing adjudicatory functions. For the exercise of this function, Courts and Tribunals are conferred upon with the inherent power to do justice. In this regard, the Tribunal relied on the Hon’ble Supreme Court’s decision in Asit Kumar Kar v. State of West Bengal & Ors., (2009) 2 SCC 703 and A. R. Antulay v. R.S. Nayak & Another, (1988) 2 SCC 602 wherein it was held that where a party has had no notice and decree is made against him or a judgment was rendered in ignorance of the fact that a necessary party had not been served at all, such party can approach the court for setting-aside the decision.
The Tribunal then discussed various decisions of the Apex Court to draw distinction between a review petition and a recall petition. It held that in a recall petition the Court does not go into the merits but simply recalls an order which was passed without giving an opportunity of hearing to an affected party. It was further discussed that the term review is used in two different senses: procedural review and review on merits. It was held that when a review is sought due to a procedural defect, the inadvertent error committed by the Tribunal must be corrected to prevent the abuse of its process, and such power is inherent in every court or Tribunal. This inherent power of NCLAT has been preserved by Rule 11 of the NCLAT Rules, 2016.
The Tribunal, therefore, declared that the two three-member bench judgments of NCLAT holding that there is no power to recall a judgment cannot be held to be laying down a correct law.