2023 (7) TMI 209 - AT - Insolvency and Bankruptcy

Tribunal clarifies power to recall judgments for justice.

The Tribunal held that despite lacking the power to review judgments, it can recall them under inherent jurisdiction to correct procedural errors or ... Power of Tribunal to review the judgment versus Power to re-call its order - Larger Bench (5 Members) decision - power to entertain an application for recall of judgment on sufficient grounds - perusal of decision in Agarwal Coal Corporation Private Limited Vs Sun Paper Mill Limited & Anr. [2021 (10) TMI 1039 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] and Rajendra Mulchand Varma & Ors Vs K.L.J Resources Ltd & Anr. [2022 (10) TMI 383 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] which can be read to mean that there is no power vested in this Tribunal to recall a judgment or not - this Tribunal cannot recall its judgment in exercise of its inherent jurisdiction or not. HELD THAT:- It is to be noticed that Rule 11 is akin to Section 151 of the Code of Civil Procedure. The Court as well as Tribunals exercise juridical power of the State while performing adjudicatory functions. The Hon’ble Supreme court has held in Harinagar Sugar Mills Ltd. vs. Shyam Sunder Jhunjhunwala & Ors. [1961 (4) TMI 23 - SUPREME COURT] that procedures of Court and Tribunal may differ but the functions are not essentially different. The inherent power of the Courts and that of the Tribunals are the powers which are not conferred to it but those powers are inherent in the Courts and Tribunals by strength of duty to do justice to parties before it - Inherent power by a Court or Tribunal can be exercised to do justice between the parties, which exercise, however, in no manner should contravene any express provision of the statute. The first judgment which has been relied by learned counsel for the Applicant is judgment of Hon’ble Supreme Court in A. R. Antulay vs. R.S. Nayak & Another [1988 (4) TMI 432 - SUPREME COURT]. In the above case, before the Hon’ble Supreme Court question arose as to whether the Hon’ble Supreme Court in exercise of its powers can set aside a direction given by earlier judgment - Hon’ble Supreme Court in the above judgment has clearly held that where a party has had no notice and decree is made against him, he can approach the court for setting-aside the decision. The judgments of the Hon’ble Supreme Court clearly lays down that there is a distinction between review and recall. The power to review is not conferred upon this Tribunal but power to recall its judgment is inherent in this Tribunal since inherent power of the Tribunal are preserved, powers which are inherent in the Tribunal as has been declared by Rule 11 of the NCLAT Rules, 2016. Power of recall is not power of the Tribunal to rehear the case to find out any apparent error in the judgment which is the scope of a review of a judgment. 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. Now two three-member bench judgments of this Tribunal which have been noted and referred to in the order are perused, which are Agarwal Coal Corporation Private Limited vs. Sun Paper Mill Limited & Anr. and Rajendra Mulchand Varma & Ors vs. K.L.J Resources Ltd & Anr. Agarwal Coal Corporation Private Limited was a case where an I.A. was filed in decided Company Appeal seeking to place on record fraudulent acts of the Respondent and prayed for exercise of inherent power in allowing the application. Appellate Tribunal in the above case vide its judgment dated 16.10.2019, refused to interfere in the order of the Adjudicating Authority while dismissing the Appeal. A three-member bench had occasion to consider the ambit of review and power of recall. This Tribunal held that power of review is not inherent power, with which there can be no quarrel. Tribunal has observed that order passed by Adjudicating Authority or Appellate Tribunal cannot be either reviewed or recalled. From reasons given in the judgment, it is clear that against the order of the Tribunal dismissing the appeal on 16.10.2019 an appeal was filed under Section 62 of the I&B Code before the Hon’ble Supreme Court, which appeal was dismissed as not pressed. Three-member bench held that the judgment of this Tribunal dated 16.10.2019 has become final between the parties - the reason for rejecting the application are contained in Para 29 and 30, however, observations in Para 27 were made in wide terms that Adjudicating Authority and Appellate Tribunal has no power to review or recall. The above judgment of This Tribunal holding that there is no power to recall a judgment cannot be held to be laying down a correct law. Power to recall a judgment is an inherent power which is in the Tribunal as has been so declared by Rule 11. The Tribunal has inherent power to recall its judgment on appropriate grounds, the three-member bench judgment in Agarwal Coal Corporation Private Limited and K.L.J Resources Ltd. & Anr. observing that the Tribunal does not have power to recall cannot be approved. The three-member bench judgments of this Tribunal insofar as observation that this Tribunal has no power to review, no exception can be taken to that part of the judgment. This Tribunal is not vested with any power to review the judgment, however, in exercise of its inherent jurisdiction this Tribunal can entertain an application for recall of judgment on sufficient grounds - The judgment of this Tribunal in “Agarwal Coal Corporation Private Limited vs Sun Paper Mill Limited & Anr.” and “Rajendra Mulchand Varma & Ors vs K.L.J Resources Ltd & Anr.” observing that this Tribunal cannot recall its judgment does not lay down the correct law. Let this order be placed before the appropriate bench for consideration. Issues Involved:1. Whether this Tribunal can entertain an application for recall of judgment on sufficient grounds despite not being vested with any power to review the judgment.2. Whether the judgments in 'Agarwal Coal Corporation Private Limited Vs Sun Paper Mill Limited & Anr.' and 'Rajendra Mulchand Varma & Ors Vs K.L.J Resources Ltd & Anr.' imply that there is no power vested in this Tribunal to recall a judgment.3. Whether the judgments in the above cases lay down the correct law regarding the Tribunal's power to recall its judgment.Summary:Issue I: Power to Recall JudgmentThe Tribunal examined whether it could entertain an application for recall of a judgment despite not having the power to review. It was argued that inherent power, as preserved by Rule 11 of the NCLAT Rules, 2016, allows the Tribunal to recall judgments to correct procedural errors, such as delivering a judgment without necessary parties being present. The Tribunal concluded that while it does not have the power to review its judgments, it does have inherent power to recall judgments on sufficient grounds to meet the ends of justice or prevent abuse of process.Issue II: Interpretation of Previous JudgmentsThe Tribunal considered whether the judgments in 'Agarwal Coal Corporation Private Limited Vs Sun Paper Mill Limited & Anr.' and 'Rajendra Mulchand Varma & Ors Vs K.L.J Resources Ltd & Anr.' could be interpreted to mean that the Tribunal has no power to recall a judgment. It was noted that these judgments were interpreted to imply that neither a review nor a recall application is maintainable. However, the Tribunal clarified that these judgments do not correctly reflect the law regarding the Tribunal's inherent power to recall judgments.Issue III: Correctness of Previous JudgmentsThe Tribunal addressed whether the previous judgments laid down the correct law. It was held that the judgments in 'Agarwal Coal Corporation Private Limited' and 'Rajendra Mulchand Varma & Ors' incorrectly stated that the Tribunal has no power to recall its judgments. The Tribunal emphasized that while it does not have the power to review, it does possess the inherent power to recall judgments to rectify procedural errors or instances of fraud.Conclusion:The Tribunal concluded that it can entertain applications for recall of judgments on sufficient grounds under its inherent jurisdiction, despite not having the power to review. The judgments in 'Agarwal Coal Corporation Private Limited' and 'Rajendra Mulchand Varma & Ors' were found to be incorrect in stating that the Tribunal has no power to recall its judgments. The matter was referred back to the appropriate bench for further consideration of the specific application in question.