2020 (12) TMI 285 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Guarantor - review of application on the ground that this Appellate Tribunal has made an inadvertent error in Para 14 of the Judgment ignoring various documents placed on record by both the parties which included the Deed of Guarantee executed by Chamber Constructions in favour of Respondent No. 1 on 9th December, 2013 - HELD THAT - Admittedly, power of review has not been expressly conferred on this Appellate Tribunal and the power vested in this Appellate Tribunal under Rule 11 can only be exercised for correction of a mistake. This Appellate Tribunal does not enjoy power of review under Rule 11. The power of review is not an inherent power which cannot be exercised unless conferred specifically or by necessary implication. Exercise of inherent powers under Rule 11 has limitations and same cannot be enlarged to review the decisions and substitute a view. The error apparent on the face of record must be manifest and self-evident and it is impermissible to travel beyond record to see whether the judgment is correct or not. The inherent power cannot be exercised in a manner that it would amount to sitting in appeal over the findings recorded on appreciation of evidence. Reappraisal of evidence for examining correctness or otherwise of the finding would amount to sitting in appeal in disguise. Applicant cannot be permitted to seek rehearing of the appeal or reconsideration of the judgment in regard to a finding, even when the same is erroneous. It would be appropriate to refer to provisions of Section 420 of the Companies Act, 2013 dealing with orders of the Tribunal as this Appellate Tribunal is a creation of the statute. In the instant case, Applicant is primarily aggrieved of the finding recorded by this Appellate Tribunal in para 14 of the judgment that there was nothing on record to suggest that with regard to the very same debt M/s Chamber Constructions Pvt. Ltd. had issued any Guarantee. Assuming that such finding is erroneous and there is material in the form of Deed of Guarantee, admission of Respondent No. 1 and other material on record to justify a finding contrary to the one recorded by this Appellate Tribunal in para 14 of the judgment, it would be impermissible for this Appellate Tribunal to substitute the finding within the scope of powers exercisable under Rule 11 of NCLAT Rules, 2016. Application dismissed.

Summary

Issues Involved:
1. Whether the application under Section 7 of the I&B Code by the Financial Creditor was barred by limitation.
2. Whether the dictum of law laid down in "Dr. Vishnu Kumar Agrawal Vs. Piramal Enterprises Ltd." was applicable.
3. Whether there was an error apparent on the face of the record in the judgment dated 7th February, 2020.
4. Whether the Appellate Tribunal has the power to review its decisions under Rule 11 of NCLAT Rules, 2016.

Issue-wise Detailed Analysis:

1. Limitation of Application under Section 7 of I&B Code:
The judgment initially addressed the issue of whether the application filed under Section 7 of the I&B Code by the Financial Creditor, Bank of India, seeking initiation of Corporate Insolvency Resolution Process (CIRP) against RNA Corporation Ltd. (Corporate Debtor), who was the Guarantor, was barred by limitation. The Tribunal concluded that the application was not barred by limitation.

2. Applicability of "Dr. Vishnu Kumar Agrawal Vs. Piramal Enterprises Ltd.":
The Tribunal also considered whether the case of the appellant was attracted by the dictum of law laid down in "Dr. Vishnu Kumar Agrawal Vs. Piramal Enterprises Ltd." It was held that the dictum of law laid down in the aforementioned case was not applicable to the appellant's case.

3. Error Apparent on the Face of the Record:
The appellant filed an application under Rule 11 of NCLAT Rules, 2016 to review the judgment dated 7th February, 2020, arguing that the Tribunal made an inadvertent error in Para 14 of the judgment by ignoring various documents, including the Deed of Guarantee executed by Chamber Constructions in favor of Respondent No. 1 on 9th December, 2013. The appellant contended that this error led to a situation where there was no debt due payable in law by the Corporate Debtor, as the same amount was claimed in the CIRP of the Guarantor, M/s Chamber Constructions Pvt. Ltd. The appellant argued that the Tribunal should not have upheld the order admitting the application under Section 7 for the same claim and default, as it would result in claiming the same amount twice.

4. Power of Review under Rule 11 of NCLAT Rules, 2016:
The Tribunal examined whether it had the power to review its decisions under Rule 11 of NCLAT Rules, 2016. It was argued by the respondents that the Tribunal does not have the power to review its decisions beyond correcting arithmetical or typographical errors. The Tribunal referred to the inherent powers under Rule 11, which are intended to meet the ends of justice or prevent abuse of the Tribunal's process. However, it was emphasized that these powers do not extend to reappreciating evidence or substituting findings of fact. The Tribunal cited the case "Lily Thomas and Ors. Vs. Union of India & Ors." to underline that review powers cannot be treated as an appeal in disguise and that mere possibility of two views on the subject is not a ground for review.

Conclusion:
The Tribunal concluded that it does not have the power to review its decisions under Rule 11 of NCLAT Rules, 2016, as the power of review is not an inherent power and cannot be exercised unless specifically conferred. The Tribunal noted that the error must be apparent on the face of the record and self-evident. It cannot involve reappraisal of evidence or substitution of findings. The application to review the judgment was dismissed, as it sought to reexamine findings and substitute conclusions, which is beyond the scope of Rule 11.