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TMI Blog2023 (11) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... art from the well-settled legal position that a co-ordinate Bench cannot comment upon the judgment rendered by another co-ordinate Bench of equal strength and that subsequent decision or a judgment of a co-ordinate Bench or larger Bench by itself cannot be regarded as a ground for review, the submissions made by the learned Counsels for the Review Petitioners that the court in the impugned decision had failed to consider the waterfall mechanism as contained in Section 53 and failed to consider other provisions of IBC, are factually incorrect - As evident from the bare reading of the impugned judgment, the Court had considered not only the Waterfall mechanism under Section 53 of IBC but also the other provisions of the IBC for deciding the priority for the purpose of distributing the proceeds from the sale as liquidation assets. The well-considered judgment sought to be reviewed does not fall within the scope and ambit of Review. The learned Counsels for the Review Petitioners have failed to make out any mistake or error apparent on the face of record in the impugned judgment, and have failed to bring the case within the parameters laid down by this Court in various decision for rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellant-State Tax Officer against the Respondent-Rainbow Papers Limited (Corporate Debtor), being aggrieved by the Judgment and Order dated 19.12.2019 passed by the National Company Law Appellate Tribunal (hereinafter referred to as the NCLAT ), dismissing the Company Appeal (At) (INs) No. 404 of 2019 filed by the appellant. The said company Appeal was filed against the order dated 27.02.2019 passed by the Adjudicating Authority, rejecting the Application being I.A. No. 224/271/272/337 of 2018 and P-01/2019 in CP No. (IB) 88/9/NCLT/AHM/2017 filed by the appellants, in which it was held that the appellant cannot claim first charge over the property of the Corporate Debtor, as Section 48 of the Gujarat Value Added Tax 2003 (hereinafter referred to as the GVAT Act ) cannot prevail over Section 53 of the Insolvency and Bankruptcy Code 2016 (hereinafter referred to as the IBC). 3. Civil Appeal No. 2568 of 2020 was preferred by the appellant- State Tax Officer against the Respondents- Mr. Chandra Prakash Jain and M/s. Mekaster Engineering Ltd., being aggrieved by the Order dated 23.01.2020 passed by the NCLAT in Company Appeal (At) (Ins) No. 1193 of 2019. The NCALT by the said judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to as the GVAT Act ) and the Central Sales Tax Act, 1956 (hereinafter referred to as the Sales Tax Act ). The Review Petitioner was not a party to the proceedings of Civil Appeal No. 1661 of 2020, however, has filed the Review Petition claiming to be an aggrieved person on the ground that the impugned order dated 06.09.2022 passed by this Court would have direct effect on the proceedings pending between the Review Petitioner and the Gujarat Sales Tax Authority before the Gujarat High Court in Special Civil Application No. 23256 of 2019. (ii) The Review Petition No. 1621 of 2023 in Civil Appeal No. 1661 of 2020 has been filed by the Review Petitioner Ramchandra Dallaram Choudhary, who happened to be the Resolution Professional (hereinafter referred to as the RP) of the Corporate Debtor, Rainbow Papers Limited and was the respondent in the proceedings before the National Company Law Tribunal (hereinafter referred to as the NCLT ) in Intervention Application No. P-01 of 2019 in CP No. 88/9/NCLT/AHM/2017 and was respondent no. 2 before the NCLAT in Company Appeal (At) (Ins) No. 404 of 2019). According to the Review Petitioner, he was not made party in the Civil Appeal No. 1661 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45 of the Constitution of India has framed the Supreme Court Rules, 2013. The Order XLVII of Part IV thereof deals with the provisions of Review. Accordingly, in a Civil Proceeding, an application for review is entertained only on the grounds mentioned in Order XLVII Rule 1 of the Code of Civil Procedure and in a Criminal Proceeding on the ground of an error apparent on the face of record. However, it may be noted that neither Order XLVII CPC nor Order XLVII of Supreme Court Rules limits the remedy of review only to the parties to the judgment under review. Even a third party to the proceedings, if he considers himself to be an aggrieved person, may take recourse to the remedy of review petition. The quintessence is that the person should be aggrieved by the judgment and order passed by this Court in some respect. (2019) 18 SCC 586, Union of India vs. Nareshkumar Badrikumar Jagad Others In view of the said legal position, the Review Petitioners who claimed to be the aggrieved persons by the impugned judgment dated 06.09.2022, were permitted to file Review Petitions and were heard by the Court. 8. Before adverting to the contentions raised by the learned counsels for the parties, le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umar Rawat and Others (2021) 13 SCC 1 , this Court restated the law with regard to the scope of review under Section 114 read with Order XLVII of CPC. 14. In R.P. (C) Nos. 1273-1274 of 2021 in Civil Appeal Nos. 8345- 8346 of 2018 (Arun Dev Upadhyaya vs. Integrated Sales Service Limited Another), this Court reiterated the law and held that: - 15. From the above, it is evident that a power to review cannot be exercised as an appellate power and has to be strictly confined to the scope and ambit of Order XLVII Rule 1 CPC. An error on the face of record must be such an error which, mere looking at the record should strike and it should not require any long-drawn process of reasoning on the points where there may conceivably be two opinions. 15. It is very pertinent to note that recently the Constitution Bench in Beghar Foundation vs. Justice K.S. Puttaswamy (Retired) and Others (2021) 3 SCC 1 , held that even the change in law or subsequent decision/ judgment of co-ordinate Bench or larger Bench by itself cannot be regarded as a ground for review. 16. The gist of the afore-stated decisions is that: - (i) A judgment is open to review inter alia if there is a mistake or an error apparent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing paragraph: - 49. Rainbow Papers (supra) did not notice the waterfall mechanism under Section 53 the provision had not been adverted to or extracted in the judgment. Furthermore, Rainbow Papers (supra) was in the context of a resolution process and not during liquidation. Section 53, as held earlier, enacts the waterfall mechanism providing for the hierarchy or priority of claims of various classes of creditors. The careful design of Section 53 locates amounts payable to secured creditors and workmen at the second place, after the costs and expenses of the liquidator payable during the liquidation proceedings. However, the dues payable to the government are placed much below those of secured creditors and even unsecured and operational creditors. This design was either not brought to the notice of the court in Rainbow Papers (supra) or was missed altogether. In any event, the judgment has not taken note of the provisions of the IBC which treat the dues payable to secured creditors at a higher footing than dues payable to Central or State Government. 20. Taking recourse to the said observations made by the co-ordinate bench, the learned Counsels for the Review Petitioners have ur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice under our system. Therefore, it has always been insisted that the decision of a coordinate Bench must be followed. (Vide Tribhovandas Purshottamdas Thakkar vs. Ratilal Motilal Patel, Sub-Committee of Judicial Accountability vs. Union of India, and State of Tripura vs. Tripura Bar Association.) 24. Apart from the well-settled legal position that a co-ordinate Bench cannot comment upon the judgment rendered by another co-ordinate Bench of equal strength and that subsequent decision or a judgment of a co-ordinate Bench or larger Bench by itself cannot be regarded as a ground for review, the submissions made by the learned Counsels for the Review Petitioners that the court in the impugned decision had failed to consider the waterfall mechanism as contained in Section 53 and failed to consider other provisions of IBC, are factually incorrect. As evident from the bare reading of the impugned judgment, the Court had considered not only the Waterfall mechanism under Section 53 of IBC but also the other provisions of the IBC for deciding the priority for the purpose of distributing the proceeds from the sale as liquidation assets. 25. To be precise, the Court in the impugned judgment ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces which require discretion to be exercised one way or the other. 26. After considering the Waterfall mechanism as contemplated in Section 53 and other provisions of IBC for the purpose of deciding as to whether Section 53 IBC would override Section 48 of the GVAT Act, it was finally concluded in the impugned order as under: - 55. In our considered view, the NCLAT clearly erred in its observation that Section 53 of the IBC over-rides Section 48 of the GVAT Act. Section 53 of the IBC begins with a nonobstante clause which reads: - Notwithstanding anything to the contrary contained in any law enacted by the Parliament or any State Legislature for the time being in force, the proceeds from the sale of the liquidation assets shall be distributed in the following order of priority. .......... 56. Section 48 of the GVAT Act is not contrary to or inconsistent with Section 53 or any other provisions of the IBC. Under Section 53(l)(b)(ii), the debts owed to a secured creditor, which would include the State under the GVAT Act are to rank equally with other specified debts including debts on account of workman's dues for a period of 24 months preceding the liquidation commencement date. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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