TaxTMI 
TaxTMI 
TaxTMI 
2024 (1) TMI 895
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.... 536, Agri-Farm Colony, Kohima-797001, praying for recall of the order dated 31.03.2023 passed by two-member Bench of this Tribunal in I.A. No.647 of 2023 preferred by the Applicants in Company Appeal (AT) (Ins.) No.242 of 2019 along with few other prayers. 2. We need to first notice the background facts and sequence of events giving rise to this I.A. No. 2854 of 2023 before noticing the respective submissions of the parties in I.A. No.2854 of 2023. (i) On an application filed by Standard Chartered Bank Ltd. under Section 7 of the I&B Code CIRP process commenced against the Corporate Debtor - ESSAR Steel India Ltd. (herein after referred to as 'ESIL'). Mr. Satish Kumar Gupta was appointed as Interim Resolution Professional. who was confirmed as Resolution Professional. (ii) The Resolution Plan was submitted in the CIRP of the Corporate Debtor by Arcelormittal India Pvt. Ltd. The Adjudicating Authority by its order dated 08.03.2019 approved the Resolution Plan submitted by Arcelormittal India Pvt. Ltd. (iii) Several appeals were filed in this Appellate Tribunal challenging the order dated 08.03.2019 passed by the Adjudicating Authority (National Company Law Tribunal), Ahmedab....
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.... No.647 of 2023 on the ground of maintainability. This Tribunal in its order dated 31.03.2023 held that the Applicants have no locus to file the Application. In the order dated 31.03.2023 it was also held that order of this Tribunal dated 04.07.2019 passed in Company Appeal (AT) (Ins.) No.242 of 2019 merged with the order of the Hon'ble Supreme Court dated 15.11.2019. The submission raised by learned counsel for the Applicants in support of his application as well as submission of learned counsel for the Respondents were considered in detail in order dated 31.03.2023 while dismissing the application as non-maintainable. (viii) I.A. No. 2854 of 2023 dated 29.05.2023 has been filed by the Applicants praying for recall of judgment and order dated 31.03.2023 passed in I.A. No. 647 of 2023 preferred by the Applicants. I.A. No. 2853 of 2023 has been filed paying for amendment in Para 12 of I.A. No.647 of 2023, as prayed in Para 14 to 17 of the application. 3. I.A. No.2854 and 2853 of 2023 were heard by us on 14.12.2023. We have also heard Shri Deepak Khosla, learned counsel for the Applicants, Shri Mukul Rohatgi, learned senior counsel appearing for the Successful Resolution Applicant....
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....f merger is not one of universal or unrestricted application, and that it would not come in the way of a subordinate Court, whose order has been carried in appeal to a Superior Court, from re-visiting its own order on grounds of fraud. Shri Khosla further submitted that order dated 31.03.2023 passed by this Tribunal is per incuriam as it did not take notice of the judgment of the Hon'ble Supreme Court in "A. V. Pappaya Sastry vs. State of Andhra Pradesh, AIR 2007 SC 1546", which judgment is squarely applicable in the matter. It is submitted that approval of the Resolution Plan which was not in compliance with the I&B Code was got approved by this Tribunal vide its order dated 04.07.2019 by playing fraud on the Court and suppressing relevant materials from the Court which being nullity was being prayed to be recalled in I.A. No.647 of 2023. It is submitted that this Tribunal committed error in rejecting I.A. No.647 of 2023 by its order dated 31.03.223 by not considering the judgment of Hon'ble Supreme Court as referred above as well as the judgment of Hon'ble Supreme Court in "Union of India vs. Ramesh Gandhi & Ors., (2012) 1 SCC 476". Learned counsel for the Applicants submit that ....
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....ode. 7. Shri Deepak Khosla in his rejoinder reiterated his submitted that Para 14(4) of the judgment in Kunhayammed clearly lays down that doctrine of merger is not applicable where fraud is played. A Court can always recall such order which has been obtained by fraud and order is without jurisdiction. Recall is not confined only to non-hearing of parties. It is the duty of the Court to recall such order. Nullity should not be allowed to stand. No principle of merger applies in the facts of the present case. 8. We have considered the submissions of the parties and perused the record. 9. Before proceeding further, we need to notice judgment dated 31.03.2023 which is sought to be recalled by this application. 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). It is useful to extract the following observation made in the order: "The applicant No.2 though was no....
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....editors of SIFL that their misdeeds in the affairs of ESSAR Steels India Ltd (herein, "ESIL") and OSPIL not be exposed, neither in the present recall proceedings, nor in the contempt proceedings pending before the Hon'ble High Court of Calcutta and for Hon'ble NCLT (Ahmedabad), nor in the aforementioned Money Suit No. 27 of 2022." On admission of the applicant it is clear that the management of Applicant No.1 on the date of filing of the present application was under the control of Administrator appointed by NCLT Kolkata at the instance of Reserve Bank of India. To justify for approaching this Tribunal in para 5 a stand has been taken as if the Administrator of the Applicant No.1 had not taken any step to protect the interest of the company. It is necessary to reproduce statement made in paras 5, 6, 7 at page 56:- "5. In the present case, the Administrator of SIFL has shown over the last 6-8 months that he will not come forward to protect the interests of SIFL if, while protecting such interests, it amounts to taking action against certain lenders who form the COC of SIFL. There are many such members of the COC of SIFL who are sought to be taken action against in the pr....
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.....03.2023 as is reflected from the order. 13. After noticing certain observations of the two-member bench in order dated 31.03.2023, we now come to I.A. No. 2854 of 2023 which is an application praying for recall of judgment dated 31.03.2023. Learned counsel for the Applicants himself has relied on five-member beech judgment of this Tribunal in "I.A. No. 3961 of 2022 in Company Appeal (AT) (Ins.) No.729 of 2020, Union Bank of India (Erstwhile Corporation Bank) vs. Dinkar T. Venkatasubramanian & Ors." decided on 25.05.2023. As noted earlier, the two-member bench judgments in "Aggarwal Coal Corporation Pvt. Ltd. vs. Sun Paper Mills Ltd. & Anr., IA No. 3303 of 2022 in Company Appeal (AT) (Insolvency) No. 359 of 2020" and "KLJ Resources Ltd through its Managing Director Vs Rajinder Mool Chand Verma, (2022) SCC Online NCLAT 402" were referred by three-member bench vide its order dated 09.02.2023 to larger bench, where following three questions were referred: "I. Whether this Tribunal not being vested with any power to review the judgment can entertain an application for recall of judgment on sufficient grounds? II. Whether judgment of this Tribunal in "I.A. No. 265 of 2020 in Compan....
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....9, 160 and 161 laid down following: "159. But in certain cases, motions to set aside Judgments are permitted where, for instance a judgment was rendered in ignorance of the fact that a necessary party had not been served at all, and was wrongly shown as served or in ignorance of the fact that a necessary party had died, and the estate was not represented. Again, a judgment obtained by fraud could be subject to an action for setting it aside. Where such a judgment obtained by fraud tended to prejudice a non party, as in the case of judgments in-rem such as for divorce, or jactitation or probate etc. even a person, not eo-nomine a party to the proceedings, could seek a setting-aside of the judgment. 160. Where a party has had no notice and decree is made against him, he can approach the court for setting-aside the decision. In such a case the party is said to become entitled to relief ex-debito justitiae, on proof of the fact that there was no service. This is a class of cases where there is no trial at all and the judgment is for default. D.N. Gordan, in his "Actions to set aside judgments92." says : The more familiar applications to set aside judgments are those made on moti....
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....vesting in tribunals or courts was noticed in Indian Bank Vs. M/s Satyam Fibres India Pvt. Ltd.1 Vide para 23, this Court has held that the courts have inherent power to recall and set aside an order (i) obtained by fraud practised upon the Court, (ii) when the Court is misled by a party, or (iii) when the Court itself commits a mistake which prejudices a party. In A.R. Antulay Vs. R.S. Nayak2 (vide para 130), this Court has noticed motions to set aside judgments being permitted where (i) a judgment was rendered in ignorance of the fact that a necessary party had not been served at all and was shown as served or in ignorance of the fact that a necessary party had died and the estate was not represented, (ii) a judgment was obtained by fraud, (iii) a party has had no notice and a decree was made against him and such party approaches the Court for setting aside the decision ex debito justitiae on proof of the fact that there was no service. 7. In Corpus Juris Secundum (Vol. XIX) under the Chapter "Judgment - Opening and Vacating" (paras.265 to 284 at pages 487-510) the law on the subject has been stated. The grounds on which the courts may open or vacate their judgmen....
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....al 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. Well known ground on which a judgment can always be recalled by a Court is ground of fraud played on the Court in obtaining judgment from the Court. We, for the purpose of answering the questions referred to us, need not further elaborate the circumstances where power of recall can be exercised." 17. The five-member bench has also noticed the two-member bench judgment in "Aggarwal Coal Corporation Pvt. Ltd. vs. Sun Paper Mills Ltd. & Anr." and "KLJ Resources Ltd through its Managing Director Vs Rajinder Mool Chand Verma" and held that the said judgments holding that there is no pow....
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....judgment of Hon'ble Supreme Court has laid down following in Para 28: "28. The Hon'ble Supreme Court in the aforesaid judgments has settled the principle that every court/ tribunal has power to recall the order obtained by practicing fraud." 20. We now have to consider the grounds in I.A. No.2854 of 2023 to find 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" (Supra) 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. One of the reason for rejecting the application in order dated 31.03.2023 was that relying on the doctrine of merger the order ....