NCLAT dismisses review attempt, upholds judgment; Applicant to pay costs

The NCLAT dismissed I.A. No. 915 of 2021, ruling that the application for clarification amounted to a review attempt, impermissible under the IBC and NCLAT Rules. The Tribunal found no errors in the judgment's observations, affirming the Applicant's legal rights remained unaffected. The application was rejected with costs of Rs. 1 Lakh charged to the Applicant.

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Issues Involved:
1. Clarification of an observation in the judgment.
2. Validity of the 2020 Lease Deed.
3. Compliance with Section 65A of the Transfer of Property Act, 1882.
4. Compliance with Section 13(13) of the SARFAESI Act, 2002.
5. Role and actions of the Resolution Professional.
6. Rights of the Applicant as a secured creditor.
7. Legal grounds for filing an application under Rule 31 read with Rule 11 of the NCLAT Rules, 2016.
8. Precedent and applicability of Supreme Court judgments.
9. Jurisdiction and powers of the NCLAT to review or clarify judgments.

Detailed Analysis:

1. Clarification of an Observation in the Judgment:
The Applicant, M/s Vistra ITCL (India) Limited, filed I.A. No. 915 of 2021 seeking clarification on an observation in paragraph 24 of the judgment dated 16.04.2021. The Applicant argued that the observation "lease has been entered into in accordance with law for renewing the existing lease hold rights" resulted in an anomalous situation contrary to the intent and ratio of the judgment.

2. Validity of the 2020 Lease Deed:
The Applicant contended that the Lease Deed dated 28.01.2020, executed after the issuance of the SARFAESI Notice on 21.01.2020, was unlawful and violated Section 13(13) of the SARFAESI Act, 2002. The Applicant argued that the lease was executed without the prior written consent of the mortgagee, making it invalid.

3. Compliance with Section 65A of the Transfer of Property Act, 1882:
The Applicant argued that Section 65A of the Transfer of Property Act, 1882, limited the right of the mortgagor to lease the property. Any lease created after the encumbrance was not lawful unless it satisfied the conditions of Section 65A(2) of the TPA. The Applicant contended that the 2020 Lease Deed violated these provisions.

4. Compliance with Section 13(13) of the SARFAESI Act, 2002:
The Applicant argued that the creation of the 2020 Lease Deed after the issuance of the SARFAESI Notice was in clear contravention of Section 13(13) of the SARFAESI Act, 2002. The Applicant contended that the resolution professional's actions were illegal and not in accordance with the law.

5. Role and Actions of the Resolution Professional:
The Applicant contended that the resolution professional failed to ensure that the resolution plan did not contravene any provisions of law. The resolution professional was aware of the contravention and actively participated in it, violating Section 30(2) of the Insolvency and Bankruptcy Code (IBC).

6. Rights of the Applicant as a Secured Creditor:
The Applicant argued that its rights as a secured creditor were vitally affected by the impugned observation. The Applicant sought to ensure that its rights with respect to the secured property were not affected by the approval of the resolution plan.

7. Legal Grounds for Filing an Application under Rule 31 read with Rule 11 of the NCLAT Rules, 2016:
The Applicant filed the application for clarification under Rule 31 read with Rule 11 of the NCLAT Rules, 2016. Rule 11 provides the Appellate Tribunal with inherent powers to make orders necessary for meeting the ends of justice. Rule 31 deals with interlocutory applications in pending matters.

8. Precedent and Applicability of Supreme Court Judgments:
The Respondent relied on the Supreme Court judgment in Delhi Administration V/s Gurdip Singh Uban and Others, arguing that the application for clarification was, in reality, a review application. The Supreme Court had deprecated the practice of filing review applications disguised as applications for clarification or modification.

9. Jurisdiction and Powers of the NCLAT to Review or Clarify Judgments:
The Tribunal noted that there are no provisions in the IBC that permit the review of judgments passed by the Tribunal. The Tribunal referred to its previous decision in Action Barter Private Limited V/s SREI Equipment Finance Limited & Anr., which held that Rule 11 of the NCLAT Rules does not admit of reviewing findings on merit or revising the judgment. The Tribunal concluded that the application for clarification was not maintainable as it sought to revisit the findings of the judgment, which is not permissible under the NCLAT Rules.

Conclusion:
The Tribunal dismissed I.A. No. 915 of 2021, stating that the application for clarification was, in reality, an attempt to review the judgment, which is not permissible under the IBC and NCLAT Rules. The Tribunal found no error in the observations made in the judgment and concluded that the Applicant's legal rights were not affected. The application was dismissed with costs of Rs. 1 Lakh imposed on the Applicant.

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