2021 (10) TMI 1039 - AT - Insolvency and Bankruptcy

Application to Recall Judgment Dismissed, Applicant Advised to Approach Supreme Court for Challenge

The Tribunal dismissed the Applicant/Appellant's request to recall the judgment, advising them to approach the Supreme Court of India for any challenge. ... Inherent powers - power of review - power to recall - finality of tribunal orders - re-agitation of decided contentions - limitations on re-appraisal of evidence in review - absence of statutory review provision under NCLAT RulesInherent powers - power to recall - finality of tribunal orders - Maintainability of IA No.265/2019 seeking recall of the Tribunal's judgment dated 16.10.2019 by invoking inherent powers. - HELD THAT: - The Tribunal held that an application framed as a recall/review of its final order cannot be entertained by invoking its inherent powers. The power of review is a creature of statute and is distinct from inherent jurisdiction; re-opening concluded adjudications by the Tribunal where no statutory provision permits review or recall is impermissible. The application was essentially a disguised review seeking re appraisal of matters already adjudicated, which the Tribunal lacked jurisdiction to entertain under Rule 11 or otherwise. [Paras 25, 27, 32]IA No.265/2019 is not maintainable as a recall/review of the Tribunal's order and is therefore liable to be dismissed.Absence of statutory review provision under NCLAT Rules - limitations on re-appraisal of evidence in review - re-agitation of decided contentions - Whether Rule 11 of the NCLAT Rules, 2016 confers power to rehear or recall the Tribunal's own final orders. - HELD THAT: - The Tribunal observed that Rule 11, which recognizes inherent powers to meet ends of justice, is not a substantive provision conferring a power to perform acts prohibited by law, including re hearing or recalling a final order. Citing authorities and established principles, the Tribunal reiterated that review does not permit a re appraisal of evidence or a fresh hearing; accordingly, the applicant cannot circumvent the absence of a statutory review remedy by invoking Rule 11. [Paras 31]Rule 11 does not empower the Tribunal to recall or rehear its final judgment; the applicant cannot rely on inherent powers to obtain review or recall.Finality of tribunal orders - power of review - Appropriate remedy available to the Applicant against the Tribunal's order dated 16.10.2019. - HELD THAT: - The Tribunal noted that the order dated 16.10.2019 had become final and binding as no appeal was preferred to the Supreme Court under the relevant statutory provision. Given the absence of a permissible recall/review mechanism before the Tribunal, the only appropriate course for the applicant to challenge the final order is to approach the Hon'ble Supreme Court in accordance with the Code and applicable law. [Paras 29, 32]The applicant should approach the Hon'ble Supreme Court if it seeks further redress; the Tribunal will not entertain the recall/review application.Final Conclusion: IA No.265/2019 seeking recall/review of the Tribunal's order dated 16.10.2019 is dismissed as not maintainable; no order as to costs. Issues Involved:1. Admission of Section 9 Application.2. Allegations of fraudulent acts by Respondents.3. Validity of the Chartered Accountant's Report.4. Manipulation of Books of Accounts.5. Conduct of Corporate Insolvency Resolution Process (CIRP).6. Actions taken by the Suspended Board of Directors during CIRP.7. Power of Review and Recall by the Tribunal.8. Applicability of Rule 11 of NCLAT Rules, 2016.Issue-wise Detailed Analysis:1. Admission of Section 9 Application:The Tribunal had previously observed that the only question was how the Section 9 application was admitted if the amount was found to be Rs. 2,173, which is less than Rs. 1 lakh. It was noted that at the admission stage, the Adjudicating Authority needs to check if the record is complete and if there is a 'debt' and 'default'. The Tribunal referred to the Supreme Court's decision in 'Innoventive Industries Ltd. v. ICICI Bank' which stated that even if the claim amount is disputed but more than Rs. 1 lakh, it should be admitted.2. Allegations of Fraudulent Acts by Respondents:The Applicant/Appellant alleged that the Respondents engaged in fraudulent acts, including submitting frivolous 'Debit Notes' and manipulating 'Books of Accounts'. The Applicant claimed that the Respondents' actions were intended to secure a favorable order through fraud. The Applicant also alleged that the Respondents ignored financial statements available with the Ministry of Corporate Affairs.3. Validity of the Chartered Accountant's Report:The Applicant/Appellant contended that the Chartered Accountant's Report, which verified the claim amount, was erroneous. The report stated that all invoices for 2013-2014 were paid except for Rs. 2,173, and mentioned withheld payments for 2012-2013 invoices. The Applicant argued that the Chartered Accountant did not examine the validity of the 'Debit Notes' or the letter dated 06.07.2013.4. Manipulation of Books of Accounts:The Applicant/Appellant accused the 1st Respondent of manipulating 'Books of Accounts' through fraudulent practices. It was alleged that the custom duty obligation, which led to the issuance of 'Debit Notes', was not reported as a contingent liability in the audited financial accounts submitted to the Ministry of Corporate Affairs.5. Conduct of Corporate Insolvency Resolution Process (CIRP):The Applicant/Appellant suspected that the CIRP was not conducted properly and that the 2nd Respondent created an illusion of conducting CIRP. It was alleged that during the moratorium period, the Suspended Board mortgaged the company's assets to obtain a loan of Rs. 1,01,05,00,000, violating the moratorium imposed under the I&B Code.6. Actions Taken by the Suspended Board of Directors During CIRP:The Applicant/Appellant claimed that the Suspended Board of Directors continued to manage the company and made decisions during the CIRP, including holding board meetings and executing a mortgage deed. The Applicant argued that these actions were illegal and taken in violation of the law.7. Power of Review and Recall by the Tribunal:The Tribunal noted that the power of review is a creature of statute and not an inherent power. The Tribunal referred to the Supreme Court's decision in Lily Thomas v. Union of India, which stated that 'Review' is not an 'Appeal' in disguise. The Tribunal emphasized that it cannot rehear the parties on facts and law under the guise of a review petition.8. Applicability of Rule 11 of NCLAT Rules, 2016:The Tribunal highlighted that Rule 11 of NCLAT Rules, 2016, which provides for inherent powers, is not a substantive rule conferring any power or jurisdiction upon the Tribunal. The Tribunal stated that it cannot perform an act prohibited by law and that there is no express provision for review under the NCLAT Rules, 2016.Conclusion:The Tribunal concluded that the Applicant/Appellant's request to recall the judgment dated 16.10.2019 was impermissible in law. The Tribunal advised the Applicant/Appellant to approach the Supreme Court of India if it desired to challenge the judgment. Consequently, IA No.265/2019 in Comp App (AT)(Ins) No.412/2019 was dismissed without any order as to costs.