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2020 (1) TMI 1279 - Tri - Insolvency and BankruptcyJurisdiction - power of Tribunal to recall its own order - Liquidation Order - in view of the dismissal of appeal and since the period of CIRP already exceeds 330 days the Ld.RP submits that since CoC has not approved any resolution plans an order of liquidation is to be passed under section 33(1) (a) of the Code - whether this Tribunal has got power to recall or modify or set aside its own order under Section 60(5) of the Code or as per Rule 11 of NCLT Rules as alleged? HELD THAT - As per Rule 155 of NCLT Rules it is clear that there is no inherent power to review as is under Order 47 Rule 11 of the Code of Civil Procedure 1908 but the Tribunal has power conferred by sub-section (2) of Section 420 of the Act 2013 to rectify any mistake apparent from the record and to amend the order accordingly - The inherent power as provided under Rule 11 is for making such order for meeting the ends of justice or for preventing abuse of justice or if necessary for meeting the end of justice or abuse of process of Tribunal. But such power can be exercised during hearing of an application/appeal and not after disposal or for review of its own order. By filing appeal against the interim order passed by this Bench the very same contention regarding the maintainability of the order of admission has been challenged by the applicant herein and the Hon ble Appellate Tribunal discussed at length as to the contention on side of the applicant that the applicant does not fall under the definition of corporate person under the purview of Section 3(7) of the Code and it came to the conclusion that the applicant/appellant has failed to show any document that it is actually performing the business of financial service provider as defined under the Insolvency and Bankruptcy Code. On the other hand the respondent has shown that it is not actually performing the business of Financial service provider and thereby does not come within the meaning of financial service provider. The Corporate Debtor as well as one of the Directors of the suspended Board of Corporate Debtor challenged the order of admission. The applicant also raised the very same issue in an appeal CA (AT) (Insolvency) No. 588 589 of 2018 filed before the Hon ble Appellate Tribunal. In the aforesaid legal position it appears to us that the appellant has not succeeded in proving that he had any statutory right of review - application dismissed.
Issues Involved:
1. Challenge to the admission order of Corporate Insolvency Resolution Process (CIRP). 2. Alleged illegal transactions by the suspended Board of Directors during the moratorium. 3. Maintainability of the application for recalling the order of admission. 4. Whether the Corporate Debtor being a Non-Banking Financial Company (NBFC) exempts it from CIRP. 5. Tribunal's power to recall or review its own orders under Section 60(5) of the Insolvency and Bankruptcy Code (IBC) and Rule 11 of the NCLT Rules. Detailed Analysis: 1. Challenge to the admission order of CIRP: The application was filed by a director of the suspended board of the Corporate Debtor, challenging the order of admission of CP 695 of 2017. The Corporate Debtor was ordered to undergo CIRP by an order dated January 15, 2018, which was upheld by the Appellate Tribunal. The applicant argued that the Corporate Debtor, being an NBFC, should not be subjected to CIRP. The Tribunal, however, found that the Corporate Debtor does not fall under the definition of a financial service provider as per Section 3(16) of the Code. 2. Alleged illegal transactions during the moratorium: The Resolution Professional (RP) filed an application alleging illegal transactions by the suspended Board of Directors in violation of the moratorium under Section 14 of the IBC. The Committee of Creditors (CoC) also filed an application seeking the return of funds diverted during the moratorium. An interim order directed the directors to refund the amount within 15 days. The applicant’s appeal against this interim order was dismissed by the Appellate Tribunal. 3. Maintainability of the application for recalling the order of admission: The RP and CoC opposed the application, arguing that it was not maintainable as the issue had already been adjudicated. The Tribunal agreed, stating that reopening the case would amount to abuse of the process of the Code. The Tribunal emphasized that the order of admission had been upheld by the Appellate Tribunal, and the applicant had no locus standi to seek a review or recall of the order. 4. Whether the Corporate Debtor being an NBFC exempts it from CIRP: The applicant contended that the Corporate Debtor, being an NBFC, should be excluded from the definition of "Corporate Person" under Section 3(7) of the Code. The Tribunal, however, held that merely having an NBFC registration does not exempt the Corporate Debtor from CIRP unless it is a financial service provider as defined under the Code. The Tribunal noted that the Corporate Debtor was not performing financial services as defined in Section 3(16) of the Code and thus could not be excluded from CIRP. 5. Tribunal's power to recall or review its own orders: The Tribunal examined whether it had the power to recall or modify its own order under Section 60(5) of the IBC or Rule 11 of the NCLT Rules. The Tribunal referred to the Supreme Court's judgment in Kunhayammed and Others Vs. State of Kerala, which states that an issue not decided cannot be revisited. The Tribunal also cited the Swiss Ribbon case, which recognized the power of NCLT to recall, set aside, or modify its own orders. However, the Tribunal concluded that it did not have the inherent power to review or recall its own orders unless there was a clerical or arithmetical mistake. The Tribunal held that the application lacked merit and dismissed it. Conclusion: The Tribunal dismissed the application for recalling the order of admission, stating that the issue had already been adjudicated and upheld by the Appellate Tribunal. The Tribunal found no grounds to review or recall its own order and emphasized that the Corporate Debtor, despite being an NBFC, was not exempt from CIRP as it did not perform financial services as defined under the Code. The application was deemed an abuse of the process of the Code and was dismissed with no order as to costs.
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