2024 (10) TMI 333 - AT - IBC

Entitlement to file an application for recall of the order - Adjudicating Authority erred in recalling its earlier order or not - review or recall of the order. HELD THAT - The power to recall a judgment will not be exercised when the ground for reopening the proceedings or vacating the judgment was available to be pleaded in the original action but was not done or where a proper remedy in some other proceeding such as by way of appeal or revision was available but was not availed. The right to seek vacation of a judgment may be lost by waiver, estoppel or acquiescence - the NCLT NCLAT have inherent powers to recall order but have no power to review its order. It has been brought out that the Corporate Debtor was required to replace the parts rendered unfit for use and other APU was also treated as parts and for ownership of Parts , the Agreements provided that, if replaced as per the Agreement, title to such replaced part was to vest in the Appellant and title to the removed part would vest with the Corporate Debtor - It has been brought out that as per definition of engine, the terms Engine includes Replacement Engine and engine does not fall within the definition of Parts . As per the original application submitted by the Respondent No. 1, it was clearly stated and supported with documents that Corporate Debtor s Engine bearing number 803473 and Corporate Debtor s APU bearing number 5121 were in possession of the Appellant and should be returned back to maximize the value of Corporate Debtor, as the Corporate Debtor s engine and APU is of greater value. In the same order, it was mentioned that the Original Engine belonging to the Respondent No. 1 has travelled back to the Respondent No. 1 which is not correct position because it was still with Respondent No. 1 as their engine was fitted in the aircraft. However, the Adjudicating Authority did not mention that Corporate Debtor s Engine and APU were in possession of the Appellant and should be returned to Corporate Debtor as it is of greater value. This was corrected in the order of the Adjudicating Authority dated 09.05.2024 mentioning that the Appellant should return Corporate Debtor s engine which is of greater value and the original engine of the Appellant shall be returned them by Corporate Debtor. The Impugned Order dated 09.05.2024 is not considered as review done by the Adjudicating Authority of its earlier order dated 04.12.2023 - the Adjudicating Authority has committed genuine mistakes in order dated 04.12.2023 based on mistaken facts and thus passed the Impugned Order dated 09.05.2024 correcting the same including consequential changes. The Adjudicating Authority has correctly passed the Impugned Order - Appeal dismissed.

Summary

Issues Involved:

1. Whether the Respondent No. 1 was entitled to file an application for recall of the order dated 04.12.2023.
2. Whether the Adjudicating Authority erred in recalling its earlier order dated 04.12.2023.
3. Whether the Impugned Order dated 09.05.2024 is incorrect as it amounts to review rather than recall of the order, providing relief to the Respondent No. 1 wrongly, which is not permissible as per laid down law and judicial precedents.

Detailed Analysis:

Issue 1: Entitlement of Respondent No. 1 to File Recall Application

The Appellant argued that the Respondent No. 1, being functus officio after the approval of the Resolution Plan, could not file for recall. However, the Tribunal referenced the judgment in Tata Steel BSL Ltd., which clarified that the Resolution Professional is not functus officio regarding avoidance applications and related proceedings even after the CIRP concludes. The Tribunal emphasized that the Resolution Professional is authorized to file applications on behalf of the Monitoring Committee for the benefit of the Corporate Debtor. Thus, the Respondent No. 1 had the locus to file the recall application, and the Adjudicating Authority did not err in this regard.

Issue 2: Error in Recalling the Earlier Order

The Tribunal analyzed the distinction between recall and review, noting that recall is an inherent power that does not require statutory provision, unlike review. The power to recall is exercised to correct procedural errors or when a judgment is obtained by fraud. The Tribunal found that the Adjudicating Authority's order dated 04.12.2023 contained factual inaccuracies, which were corrected in the Impugned Order dated 09.05.2024. The corrections were based on the mistaken facts regarding the ownership and possession of the engine and APU, which justified the recall.

Issue 3: Nature of the Impugned Order as Review or Recall

The Tribunal examined whether the Impugned Order amounted to a review disguised as a recall. It noted that the Adjudicating Authority corrected errors related to the factual status of the engine and APU, which were not addressed in the original order. The Tribunal emphasized that the corrections were necessary to rectify the Adjudicating Authority's mistakes, which prejudiced the Respondent No. 1. The Tribunal concluded that the Impugned Order was a legitimate recall rather than a review, as it addressed procedural mistakes and factual inaccuracies without revisiting the merits of the case.

Conclusion:

The Tribunal upheld the Impugned Order, affirming that the Adjudicating Authority appropriately exercised its power to recall to correct its mistakes. The appeal was dismissed, and the Tribunal found no merit in the Appellant's arguments. The Tribunal's decision emphasized the importance of distinguishing between recall and review, ensuring that procedural justice is maintained without reopening substantive issues already decided.