2023 (7) TMI 308 - AT - Insolvency and Bankruptcy

Maintainability of Recall Application - whether the present Recall Application which is review in disguise cannot be entertained? - HELD THAT - In another judgment of Budhia Swain Ors. Vs. Gopinath Deb Ors. 1999 (5) TMI 596 - SUPREME COURT , the Hon ble Supreme Court has dealt with poser to recall. The Hon ble Supreme Court held in the said case that power of recall cannot have been exercised and order of the Collector could be sustained only if supportable by the power to recall - The above judgment of the Hon ble Supreme Court clearly laid down that when a judgment is rendered in ignorance of the fact that a necessary party had not been served at all or heard, the power to recall can be used. The subsequent judgment of Rajendra Mulchand Varma Ors VS K.L.J Resources Ltd Anr. 2022 (10) TMI 383 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI heavily rely on judgment of this Tribunal in Agarwal Coal Corporation Private Limited Vs Sun Paper Mill Limited Anr. 2021 (10) TMI 1039 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI . This Tribunal held that in the absence of any power of review or recall, order of this Appellate Tribunal or the Adjudicating Authority cannot be reviewed or recalled. Thus, it is clear that although this Tribunal dealt with both the concepts of review and recall but distinction between review and recall has not been noticed. There is no dispute to the preposition that no power of review is vested in this Tribunal but power to recall judgment can very well be exercised under Rule 11 in an appropriate case - Recall can be asked only as procedural infirmity like order passed without necessary party/service to the necessary party or affected party not being heard by the Court. Thus, it is felt appropriate that the issue which has arisen in the present application need to be referred to a larger bench to decide following questions 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 Agarwal Coal Corporation Private Limited Vs Sun Paper Mill Limited Anr 2021 (10) TMI 1039 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI , Rajendra Mulchand Varma Ors Vs K.L.J Resources Ltd Anr. 2022 (10) TMI 383 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI can be read to mean that there is no power vested in this Tribunal to recall a judgment? III. (In the above two judgments this Tribunal has held that this Tribunal cannot recall its judgment in exercise of its inherent jurisdiction) Whether the judgment of this Tribunal in Agarwal Coal Corporation Private Limited Vs Sun Paper Mill Limited Anr. and Rajendra Mulchand Varma Ors Vs K.L.J Resources Ltd. Anr. lays down the correct law? Let the papers be placed before Hon ble Chairperson, NCLAT for constituting a larger bench for considering the above questions.

Issues Involved:
1. Recall of judgment dated 27.01.2022.
2. Procedural review versus substantive review.
3. Power of recall under Rule 11 of NCLAT Rules, 2016.
4. Distinction between review and recall.
5. Precedent judgments on recall and review.

Detailed Analysis:

1. Recall of Judgment Dated 27.01.2022:
The application seeks to recall the judgment and order dated 27.01.2022 passed by the Tribunal in Company Appeal (AT) (Ins.) No. 729 of 2020. The Applicant contends that the judgment was passed without the Applicant being a party to the Appeal, thus violating principles of natural justice. The Applicant argues that the recall of the order is not a review but a procedural correction.

2. Procedural Review Versus Substantive Review:
The Applicant distinguishes between procedural review and substantive review, arguing that the present application is for procedural review due to the absence of the Applicant during the judgment. The Applicant cites judgments from the Hon'ble Supreme Court (A. R. Antulay Vs. R.S. Nayak, Asit Kumar Kar Vs. State of West Bengal, Budhia Swain & Ors. Vs. Gopinath Deb & Ors.) to support the claim that a judgment passed without hearing a necessary party can be recalled.

3. Power of Recall Under Rule 11 of NCLAT Rules, 2016:
The Tribunal acknowledges that the Insolvency and Bankruptcy Code, 2016 does not confer the power of review to the Appellate Tribunal. However, Rule 11 of the NCLAT Rules, 2016 provides inherent powers to make necessary orders to meet the ends of justice or prevent abuse of the process. The Applicant argues that this rule allows the Tribunal to recall an order passed without hearing a necessary party.

4. Distinction Between Review and Recall:
The Tribunal notes the distinction between review and recall as highlighted by the Hon'ble Supreme Court. While a review petition considers the merits of the case for errors apparent on the face of the record, a recall petition addresses procedural issues, such as orders passed without giving an opportunity of hearing to an affected party.

5. Precedent Judgments on Recall and Review:
The Tribunal refers to previous judgments, including Agarwal Coal Corporation Private Limited Vs Sun Paper Mill Limited and Rajendra Mulchand Varma & Ors VS K.L.J Resources Ltd & Anr., which held that the Tribunal does not have the power to review or recall its own judgment. However, the Tribunal distinguishes these cases by emphasizing the procedural nature of the current application.

Conclusion:
The Tribunal concludes that there is a need to refer the matter to a larger bench to resolve the issue of whether the Tribunal can entertain an application for recall of judgment on sufficient grounds and whether the previous judgments correctly interpreted the Tribunal's powers. The questions referred to the larger bench are:
1. Whether this Tribunal, not being vested with any power to review the judgment, can entertain an application for recall of judgment on sufficient grounds?
2. Whether the judgments in Agarwal Coal Corporation Private Limited Vs Sun Paper Mill Limited and Rajendra Mulchand Varma & Ors VS K.L.J Resources Ltd & Anr. can be read to mean that there is no power vested in this Tribunal to recall a judgment?
3. Whether the judgments in Agarwal Coal Corporation Private Limited Vs Sun Paper Mill Limited and Rajendra Mulchand Varma & Ors VS K.L.J Resources Ltd & Anr. lay down the correct law?

The matter is to be placed before the Hon'ble Chairperson, NCLAT for constituting a larger bench to consider these questions.

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