2024 (1) TMI 895 - AT - Insolvency and Bankruptcy

NCLAT rejects application to recall order despite claims judgments cited were not good law

Standard Chartered Bank Versus Satish Kumar Gupta, R.P. of Essar Steel Ltd. & Ors.

NCLAT Principal Bench rejected an application seeking recall of its order dated 31.03.2023. The applicants alleged the order was obtained by citing ... Doctrine of merger - Seeking recall of order - it is alleged that order dated 31.03.2023 was obtained by the Respondent by citing judgments which were not good law. It is submitted that two judgments relied in the impugned order dated 31.03.2023 are; judgment of two-member bench judgment in Aggarwal Coal Corporation Pvt. Ltd. vs. Sun Paper Mills Ltd. & Anr. [2019 (5) TMI 1140 - NATIONAL COMPANY LAW TRIBUNAL DIVISION BENCH, CHENNAI] and judgment in KLJ Resources Ltd through its Managing Director Vs Rajinder Mool Chand Verma [2022 (10) TMI 383 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI]. It is submitted that correctness of the aforesaid two judgments was doubted by three-member bench vide its order dated 09.02.2023 passed in “I.A. No. 3961 of 2022, Union Bank of India Erstwhile Corporation Bank VS Mr. Dinkar T. Venkatasubramanian [2023 (7) TMI 209 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI]. HELD THAT:- A perusal of the judgment dated 31.03.2023 makes it clear that the two-member bench has heard only on the maintainability issue. In the order dated 31.03.2023, the two-member bench noticed the facts of the case, order passed by this Tribunal dated 04.07.2019. This Tribunal also noticed the grounds claimed by Applicant No.2 to maintain the application (I.A. No.647 of 2023) - The two-member bench after consideration held that it would be difficult to entertain the application particularly on the ground of locus of the Applicant. The five-member bench of this Tribunal in Budhia Swain & Ors. Vs. Gopinath Deb & Ors. [1999 (5) TMI 596 - SUPREME COURT], thus, categorically held that there is inherent power of recall in the Tribunal and application for recall is maintainable, however, the recall can be granted on sufficient grounds. The grounds for recall has been enumerated in Para 16 of the order, as extracted above. The preposition is well settled that power of recall would be there if an order is obtained by playing fraud on the Court. The two-member bench in its order dated 31.03.2023 while noticing the judgment of Hon’ble Supreme Court in S.P. Chengal Varaya Naidu (Dead) By Lrs. Vs. Jagannath (Dead) By Lrs. & Ors., [1993 (10) TMI 315 - SUPREME COURT] also expressed its agreement with the conclusion that fraud vitiates everything. It is also required to be found out whether there are any grounds to recall order dated 31.03.2023 as has now been laid down by the five-member bench of this Tribunal in Union Bank of India Erstwhile Corporation Bank VS Mr. Dinkar T. Venkatasubramanian [2023 (7) TMI 209 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] as well as judgment of Hon’ble Supreme Court noticed therein. The counsel for the Applicants was fully heard by the two-member bench before passing order dated 31.03.2023. Thus the order was passed after hearing the Applicants fully. The submission which are sought to be advanced by learned counsel for the Applicants is that the two-member bench committed error in holding that the doctrine of merger shall apply and failed to notice the exception to the doctrine of merger as in Para 14(4) of the judgment in Kunhayammed [2000 (7) TMI 67 - SUPREME COURT]. One of the reason for rejecting the application in order dated 31.03.2023 was that relying on the doctrine of merger the order of this Tribunal dated 04.07.2019 came to be merged with the judgment of Hon’ble Supreme Court dated 15.11.2019. The above view taken by the two-member bench in judgment dated 31.03.2023 is sought to be challenged by contending that the precedence of Hon’ble Supreme Court in Kunhayammed has been misinterpreted by the two-member bench and the proposition as laid down by the Hon’ble Supreme Court in Kunhayammed in Para 14(4) was suppressed. The two-member bench having taken the view that doctrine of merger is applicable, we cannot sit over in review of the judgment. The power of review is not conferred to this Tribunal. There are no jurisdiction to sit in review over the judgment nor we can be persuaded to take a different view which was taken on 31.03.2023. The submission of the Appellant that order dated 31.03.2023 is nullity cannot be accepted. Application rejected. Issues Involved:1. Maintainability of the application for recall of the order dated 31.03.2023.2. Locus standi of the Applicants to file the application.3. Doctrine of merger and its applicability.4. Allegation of fraud in obtaining the order dated 31.03.2023.5. Power of recall by the Tribunal.Summary:1. Maintainability of the Application:The application I.A. No. 2854 of 2023 was filed by SREI Infrastructure Finance Ltd. and Ms. Limalemla Longkumer, praying for recall of the order dated 31.03.2023. The Tribunal dismissed I.A. No. 647 of 2023 on grounds of maintainability, stating that the Applicants had no locus to file the application. The Tribunal also held that the order dated 04.07.2019 merged with the order of the Hon'ble Supreme Court dated 15.11.2019.2. Locus Standi of the Applicants:The Tribunal noted that Applicant No. 2, a shareholder of SREI Infrastructure Finance Ltd., claimed to act on behalf of the company. However, the Tribunal found that the management of Applicant No. 1 was under the control of an Administrator appointed by NCLT Kolkata. The Tribunal concluded that it would be difficult to entertain the application particularly on the ground of locus of the Applicant.3. Doctrine of Merger:The Tribunal held that the order of this Tribunal dated 04.07.2019 merged with the judgment of the Hon'ble Supreme Court dated 15.11.2019. Therefore, it would not be appropriate to accede to the prayer for recall of the judgment which was passed long back in 2019 and finally merged with the order of the Hon'ble Supreme Court.4. Allegation of Fraud:The Applicants argued that the order dated 31.03.2023 was obtained by fraud, citing selected extracts of judgments and suppressing relevant parts. The Tribunal, however, found no evidence of fraud played on the Court while passing the order dated 31.03.2023. The Tribunal emphasized that the power of recall is inherent but must be based on sufficient grounds such as fraud, which was not established in this case.5. Power of Recall by the Tribunal:The five-member bench of the Tribunal affirmed that while the Tribunal has no power to review, it does have inherent power to recall its judgment on sufficient grounds. The grounds for recall include fraud, lack of jurisdiction, and non-service to a necessary party. However, the Tribunal concluded that none of these grounds were made out to allow the application for recall of the order dated 31.03.2023.Conclusion:The Tribunal rejected I.A. No. 2854 of 2023 and I.A. No. 2853 of 2023, finding no sufficient grounds to recall the judgment dated 31.03.2023. The application was deemed an attempt to review the judgment, which is beyond the Tribunal's jurisdiction.