The Five-Judge Bench of the National Company Law Appellate Tribunal, New Delhi comprising Justice Ashok Bhushan, Chairperson, Justice Rakesh Kumar Jain & Justice Rakesh Kumar, Judicial Members and Dr. Alok Srivastava & Barun Mitra, Technical Members were constituted for considering the following questions: Firstly, whether the Tribunal, lacking the power to review judgments, can entertain an application for the recall of judgment based on sufficient grounds. Secondly, whether the judgments in Agarwal Coal Corporation Private Limited v. Sun Paper Mill Limited & Anr. and Rajendra Mulchand Varma & Ors. v. K.L.J Resources Ltd & Anr. serve as precedents, implying that the NCLAT has no authority to recall a judgment. The Five-Judge Bench concluded that the power to recall a judgment is inherent in the National Company Law Appellate Tribunal (NCLAT), as provided under Rule 11 of the National Company Law Appellate Tribunal Rules, 2016, even though the NCLAT does not possess the power of review.
Brief Background:
In the realm of corporate affairs, a notable case emerged involving Amtek Auto Ltd., a company facing financial turmoil. A financial creditor (FC) initiated the corporate insolvency resolution process against Amtek Auto Ltd., seeking a resolution to the financial predicament. After careful deliberation, the Committee of Creditors (CoC) approved a resolution plan with the requisite majority vote.
The resolution plan, deemed satisfactory by the CoC, was subsequently submitted to the Adjudicating Authority (AA) for approval. However, to the disappointment of the FC, the AA rejected certain reliefs sought in an interlocutory application (IA). Feeling aggrieved by the AA's decision, the FC decided to appeal the ruling before the esteemed National Company Law Appellate Tribunal (NCLAT).
To everyone's surprise, the FC chose not to implead the CoC in the appeal before the NCLAT. Nonetheless, the NCLAT partly allowed the FC's appeal, providing some relief from the AA's decision. Encouraged by this outcome, the FC took their case a step further and filed an appeal against the NCLAT judgment before the Hon'ble Supreme Court.
However, the FC's hopes were short-lived, as the Supreme Court dismissed their appeal. Nevertheless, the Court granted the FC the liberty to file a review application should they desire to challenge the NCLAT judgment. Determined to pursue their cause, the FC promptly filed a review application, urging the NCLAT to reconsider its earlier decision.
Alas, the NCLAT, upon careful consideration, dismissed the FC's review application. The Appellate Tribunal emphasized that there exists no provision for a formal review under the applicable Code. However, the NCLAT did provide guidance, stating that if the FC remained dissatisfied, they could seek recourse in accordance with the law.
Undeterred, the FC returned to the NCLAT with a fresh application. This time, they sought to recall the order that was partly allowed by the Appellate Tribunal. Recognizing the importance and implications of the matter, a three-member bench of the NCLAT referred the case to a five-member bench for further deliberation.
Questions for the Consideration:
The five-member bench of the NCLAT took on the responsibility of addressing two critical questions. Firstly, whether the Tribunal, lacking the power to review judgments, can entertain an application for the recall of judgment based on sufficient grounds. Secondly, 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." serve as precedents, implying that the NCLAT has no authority to recall a judgment.
Observation:
After meticulous examination, the NCLAT made crucial observations. The Tribunal scrutinized the judgments of the Hon'ble Supreme Court that had drawn a clear distinction between review and recall. While acknowledging that the power of review is not conferred upon the Tribunal, the NCLAT held that the power to recall a judgment is inherent in the Tribunal, as enshrined in Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 (NCLAT Rules).
In conclusion, the NCLAT, through a comprehensive analysis of relevant legal principles and provisions, established that the power to recall a judgment resides within the Tribunal itself. The five-member bench's ruling effectively overturned the view previously taken by a three-member bench, providing clarity on the matter at hand.
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