2024 (1) TMI 897 - AT - Insolvency and Bankruptcy

NCLAT rejects recall application as no fraud or procedural defect found in Section 7 insolvency proceedings

D. Srinivasa Rao Versus Stressed Assets Stabilisation Fund, M/s. Priyaranjani Fiber Limited

The NCLAT dismissed a recall application seeking to overturn an earlier order that had rejected an appeal. The original appeal was dismissed because the ... Seeking Recall of the Order - Appeal was dismissed on the ground that there was a Debt and a Default and that the Section 7 Application filed by the Respondent / Financial Creditor was not barred by Limitation - HELD THAT:- Keeping in view that all the issues raised by the Applicant in the Recall Application has been addressed to in detail and this Tribunal, does not find any existence of Fraud, Collusion, an Error or a Mistake, nor any Ignorance of any fact that a Necessary Party, had not been served at all or had expired or that the Estate was not represented and therefore, there are no grounds at all to entertain this Recall Application. This Tribunal is of the considered view that in the garb of this Recall Application, the Applicant is trying to reargue the entire matter on Limitation, Acknowledgement, under Section 18 of the Limitation Act, 1963, Jural Relationship and the Locus. Keeping in view the grounds raised and this Tribunal’s limited Jurisdiction, there are no substantial reasons to entertain this Recall Application and hence, the same is dismissed accordingly. Issues Involved:1. Misrepresentation and Fraud2. Jural Relationship3. Limitation and Acknowledgment of Debt4. Conditional Acknowledgment and Recall Application GroundsSummary:Issue A: Misrepresentation and FraudThe Applicant contended that the Respondent misrepresented facts and committed fraud by including the Sivananda Reddy Group, who allegedly had no jural relationship with the debtors. The Tribunal found no merit in this argument, stating that the Sivananda Reddy Group was indeed managing the affairs of the Company as per the BIFR Order dated 22.11.2011. The Tribunal dismissed the claims of fraud and misrepresentation, noting that the Applicant was a party to the BIFR proceedings.Issue B: Jural RelationshipThe Applicant argued that the Sivananda Reddy Group had no locus to submit the One Time Settlement (OTS) proposals. The Tribunal reiterated its previous findings that the Sivananda Reddy Group was managing the Company's affairs and that the Applicant's attempts to reargue this issue were not permissible within the limited jurisdiction of a Recall Application.Issue C: Limitation and Acknowledgment of DebtThe Applicant claimed that the OTS proposals were made after the expiry of the limitation period. The Tribunal referenced its previous order and the Supreme Court's judgment in Axis Bank Limited Vs. Naren Sheth & Anr., concluding that the OTS proposals were within the period of limitation. The Tribunal emphasized that rearguing the matter of limitation was not within its jurisdiction in a Recall Application.Issue D & E: Conditional Acknowledgment and Recall Application GroundsThe Applicant contended that the OTS proposals were conditional and did not attract Section 18 of the Limitation Act, 1963. The Tribunal referred to its earlier detailed discussions on this issue and cited the Supreme Court's judgment in Budhia Swain & Ors. Vs. Gopinath Deb & Ors., which clarified the grounds for recall. The Tribunal found no procedural errors, fraud, or mistakes that would justify recalling the order.The Tribunal concluded that the Applicant was attempting to reargue the entire matter under the guise of a Recall Application. Given the limited jurisdiction and lack of substantial reasons, the Recall Application was dismissed. The Tribunal noted that the Applicant had already filed an appeal before the Supreme Court, which was pending.