2023 (2) TMI 994 - AT - Companies Law

Tribunal lacks jurisdiction to review orders under Insolvency and Bankruptcy Code

The Tribunal held that it lacked jurisdiction to review or recall its orders under the Insolvency and Bankruptcy Code or NCLT Rules. The Appellants' ... Maintainability of application for recall of order - order passed by the Tribunal attained finality by the order of the Hon’ble Supreme Court - fraud and concealment of facts by Respondents before entire course of litigation - Section 421 of the Companies Act, 2013 - HELD THAT:- It is admitted that the Appellant has committed fraud with the Respondent No.1 company and was under jail for about two months and the Hon’ble High Court has given conditional bail to the Appellant. In this Order (at page 894 to 896, Vol.-VI of the Appeal) the conditions of this bail order is “not to try to tamper with or pressurize the prosecution witnesses or complainant in any manner” (Respondent No. 1 company was complainant and such false litigations are nothing but contempt of Hon’ble High Court order). Considering the high headed attitude of the Appellants and creating hurdles by initiating false and unwanted litigations against the Respondent No.1 company, its shareholders and also against the buyers of plot of land from the Respondent No. 1 company and its statutory auditors as well, all the shareholders have unanimously passed a resolution to buy out the Appellant’s 8% shares under section 236 of the Companies Act, at appropriate value as may be determined by an independent valuer to be appointed by the NCLT. The CP No. 36 of 2018 was filed by the Respondents on 07.03.2018 and further 05.09.2018 in this matter also filed counter petition in the form of an IA against this petition unmbered MA 1 in CP 36 of 2018 on 19.10.2019 and similar voluminous records of 2000 plus pages are placed in MA 1 in CP 36 of 2018. After couple of hearings, the Appellant felt that his exit from the company as shareholder of the company is final with outcome of CP 36 of 2018 and that is why with the sole intention to delay justice in CP 36 of 2018. All these false and frivolous multiple litigations are being created and on the ground of pending this matter, the Appellant keep taking adjournment in CP 36 of 2018. The order dated 23.11.2017 which was passed by the Tribunal attained finality by the order of the Hon’ble Supreme Court and thereafter, recall application for recalling the order dated 23.11.2017 was filed by the Appellants is not tenable in the eye of law. Also the Appellants are trying to reagitate the matter afresh. Keeping in view the aforenoted facts, there are no merit to interfere with the order impugned passed by the NCLT. The impugned order dated 26.04.2021 passed by the National Company Law Tribunal, Ahmedabad Bench, Ahmedabad in IA 608 of 2019 in C.P. No. 68/NCLT/AHM/2017 is hereby affirmed - Appeal dismissed. Issues Involved:1. Jurisdiction and power of the NCLT to review or recall its own orders.2. Allegations of fraud and concealment of facts by the Respondents.3. Maintainability of the recall application under Section 151 of CPC.4. Finality of the order passed by the Supreme Court.5. Inherent powers of the NCLAT to recall its own orders.Detailed Analysis:1. Jurisdiction and Power of the NCLT to Review or Recall its Own Orders:The Tribunal highlighted that it does not possess the power to review or recall its own orders under Section 60(5) of the Insolvency and Bankruptcy Code (IB Code) or Rule 11 of the NCLT Rules, 2016. The Tribunal referred to the case of Deepak Kumar vs. M/s. Phoenix ARC Pvt. Ltd., emphasizing that the power to review is not inherent and must be explicitly conferred by statute. The Tribunal concluded that the application for recalling the order dated 23.11.2017 was beyond its jurisdiction and not maintainable.2. Allegations of Fraud and Concealment of Facts by the Respondents:The Appellants alleged that the Respondents had committed fraud by selling plots without accounting for the sales in the company's books and concealing these facts during litigation. They argued that the order dated 23.11.2017 should be recalled due to fraud and suppression of facts. The Appellants cited various judgments to support their claim that orders obtained by fraud can be set aside.3. Maintainability of the Recall Application under Section 151 of CPC:The Appellants contended that their application for recall was maintainable under Section 151 of the Civil Procedure Code (CPC) due to the alleged fraud and concealment of facts by the Respondents. They argued that the adverse findings against Appellant No. 1 were based on allegations in an FIR, which had been stayed by the Gujarat High Court.4. Finality of the Order Passed by the Supreme Court:The Respondents argued that the order dated 23.11.2017 had reached finality after being upheld by the NCLAT and the Supreme Court. They contended that no lower court could recall an order that had been affirmed by the Supreme Court, and the appeal should be dismissed with exemplary costs for misuse of the judicial process.5. Inherent Powers of the NCLAT to Recall its Own Orders:The Appellants argued that the NCLAT had inherent jurisdiction to set aside the NCLT order and recall its own earlier order due to fraud and misrepresentation by the Respondents. They cited Section 424 of the Companies Act, 2013, which grants the NCLAT powers similar to those of a civil court under the CPC. They also referred to the judgment in Indian Bank vs. Satyam Fibres India Private Limited, where the Supreme Court held that orders obtained by fraud could be recalled by the authorities.Conclusion:After considering the arguments and pleadings, the Tribunal observed that the order dated 23.11.2017 had attained finality by the Supreme Court's order. The recall application was deemed not tenable in law, and the Appellants were found to be attempting to re-agitate the matter. Consequently, the Tribunal affirmed the impugned order dated 26.04.2021 passed by the NCLT, Ahmedabad, and dismissed the appeal with no order as to costs. The Registry was directed to upload the judgment on the website and send a copy to the NCLT, Ahmedabad.