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TMI Blog2023 (4) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... e bar of Section 10A has admitted 10A application - HELD THAT:- The present is a case where Appellant exercised its right of appeal and failed. Appellant who have challenged the order on merits in which he has been unsuccessful, cannot be allowed to file an application to recall the order on the same ground on which the appeal was filed by the Appellant. It is true that the Appeals filed by the Appellant were dismissed due to rejection of the application praying for condonation of 321 days delay in refiling the appeal but in the recall application, the ground to challenge the order on which appeal was founded are now being agitated in the Appeal - The IBC is a statute which prescribes timelines for completion of the proceedings. The recall applications have been filed after 17 months of admission of application under Section 227 filed by the RBI that too after unsuccessful challenge by the Appellant to the order dated 08.10.2021 before this Tribunal as well as before the Hon ble Supreme Court. The Adjudicating Authority has correctly observed in the impugned order that there were no grounds made out in the applications filed by the Appellant for recall of the judgment dated 08.10.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f SIFL and SEFL. The Writ Petition filed by the Appellant was dismissed by the Bombay High Court vide its judgment and order dated 07.10.2021. Challenging the order dated 07.10.2021, a Special Leave Petition (Diary) No.17275 of 2022 was filed by the Appellant before the Hon ble Supreme Court which was subsequently dismissed by the Hon ble Supreme Court. The RBI filed CP (IB) No. 295/KB/2021 against SIFL and CP (IB) No.294/KB/2021 against SEFL under Section 227 of the IBC r/w Rules 5 6 of the Insolvency and Bankruptcy (Insolvency Liquidation proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 ( FSP Rules for short). In the application, RBI before presenting the application has issued advance notice to the Administrator of SIFL and SEFL. The Applications were taken by the Adjudicating Authority on 08.10.2021. Administrator of SIFL and SEFL was also present before the Adjudicating Authority. Administrator who was present in the Court gave his consent to act as Administrator unconditionally. Adjudicating Authority by order dated 08.10.2021 admitted both the applications filed under Section 227 and declared the Moratorium in terms of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judicating Authority after hearing the parties in the applications as well as the intervention applications, by impugned order dated 11.08.2023 rejected IA No. 391/KB/2023 and IA No. 389/KB/2023. Aggrieved by the order dated 11.08.2023, these two Appeals have been filed. 3. We have heard Shri Ranjit Kumar, Senior Advocate and Shri Abhijeet Sinha, Learned Senior Counsel with Shri Rishav Banerjee for the Appellant. Shri Gopal Jain, Learned Senior Counsel has appeared for RBI, Shri Krishnendu Datta, Learned Senior Counsel has appeared on behalf of Administrator, Shri Arun Kathpalia, Learned Senior Counsel has also appeared on behalf of the CoC and Shri Raunak Dhillon, Learned Counsel has appeared for SRA. 4. By our order dated 16.08.2023, we granted time to the RBI to file a reply to the application. Reply has been filed by the RBI in pursuance of our order dated 16.08.2023. Counsel for the Administrator, CoC and SRA has also advanced submissions objecting entertainment of these Appeals. 5. Shri Ranjit Kumar, Learned Senior Counsel appearing for the Appellant challenging the order dated 08.10.2021 passed by the Adjudicating Authority admitting CP (IB) No. 294/KB/2021 and CP (IB) No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss Transfer Agreement dated 16.08.2019. Due to above, there was no debt in SIFL and the admission of SIFL to the CIRP is not in accordance with law. No default having been committed by SIFL towards payment of any debt, admission was wholly illegal and deserves to be recalled. 6. Learned Counsel for the RBI refuting the submissions of the Counsel for the Appellant submits that the applications for recall filed by the Appellant were not maintainable and deserves to be rejected and has rightly been rejected by the Adjudicating Authority. It is submitted that the admission order dated 08.10.2021 was assailed by the Appellant by filing two appeals in this Tribunal which were dismissed by this Tribunal on 21.12.2022. Against which order, Appellant also filed Civil Appeals in the Hon ble Supreme Court which too were dismissed by the Hon ble Supreme Court on 30.01.2023. It is submitted that the Appellant having filed the Appeals unsuccessfully against the order dated 08.10.2021 cannot now resort to filing of recall application before the Adjudicating Authority after 17 months of order of admission passed on 08.10.2021. It is submitted that there was no lack of jurisdiction of the Adjudicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently approved by this Tribunal by order dated 05.01.2024. Approval of the Resolution Plan of NARCL was also challenged before this Tribunal in Company Appeal (AT) (Ins.) No.1072 of 2023 which was dismissed on 05.01.2024 and Appeal against the order dated 05.01.2024 of this Tribunal was also being dismissed by the Hon ble Supreme Court on 07.03.2024. The Resolution Plan having been approved and affirmed upto the Hon ble Supreme Court, Appeals filed by the Appellant are virtually infructuous and need to be dismissed on this ground alone. It is submitted that the NARCL has also implemented the Resolution Plan and Appeals need to be dismissed in limine. 8. Shri Arun Kathpalia, Learned Senior Counsel appearing for the CoC also contended that there are no grounds made out in the recall applications filed by the Appellant to recall the judgment dated 08.10.2021. It is submitted that the prayer made in the recall applications was nothing but prayer to review the judgment dated 08.10.2021 on merits which is not the jurisdiction vested with the Adjudicating Authority and the Adjudicating Authority did not commit any error in rejecting the recall applications. It is submitted that the recall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Board of Directors are given in Annex. The major reasons for supersession of Board of Directors are as follows: i. As per data submitted by financial institutions, the total borrowings of SIFL stood at Rs.11,746 crore, on June 30, 2021. SIFL has defaulted with 12 lenders aggregating Rs.3,566 crore. ii. The Board of Directors of SIFL and Srei Equipment Finance Limited (SEFL) had on July 04, 2019 approved transfer of assets and liabilities (including liabilities towards issued and outstanding NCDs) of SIFL by way of slump exchange to SEFL with effect from October 01. 2019. Despite non-receipt of Noobjection Certificate (NOC) from majority of the lending institutions, SIFL and SEFL had given effect to the slump exchange. iii. Several supervisory concerns (e.g. violation of IRACP norms, evergreening of NPA accounts, connected lending, weak corporate governance standards, inadequate systems and control, poor compliance standards, etc.) observed during past inspections by the Reserve Bank have been communicated through supervisory letters, DO letters and also reiterated in the meetings held by the Reserve Bank with the management of the company. iv. Inspection of SIFL with referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent No.2 stood at Rs.11,476 crores as on 30.06.2021, it has defaulted with 12 lenders aggregating Rs.3,566 crores. Board of Directors of both respondent Nos.2 and 3 had on 04.07.2019 approved transfer of assets and liabilities of respondent No.2 by way of slump exchange to respondent No.3 with effect from 01.10.2019. However, despite non-receipt of no objection certificate from majority of the lending institutions, respondent Nos.2 and 3 had given effect to the slump exchange. Respondent No.2 did not maintain minimum regulatory CRAR and NOF. Infrastructure loans as a percentage of total assets was assessed at 3.33% as against the regulatory requirement of 75%. Special audit conducted by Reserve Bank of India during December, 2020 and January, 2021 revealed that funds disbursed to certain borrowers were received back from such borrowers either on the same date or on dates close to the date of disbursement which indicated evergreening. Despite continuous engagement and follow up by Reserve Bank of India, respondent No.2 has failed to take corrective steps and remained noncompliant with Reserve Bank of India regulations and supervisory instructions. 13. It is also relevant to noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 08.10.2021, which are as follows : - 4. Mr. Sudipto Sarkar, Learned Senior Counsel appearing on behalf of the Petitioner/Appropriate Regulator submits as follows:- (a) On the basis of credit information available to it, the Reserve Bank of India (in short RBI ) came to the conclusion that SIFL has committed defaults of significant amount in relation to the financial debt availed by it from various financial creditors: (b) In particular, UCO Bank has intimated vide its letter dated 07/10/2021 that the amount claimed to be in default in relation to working capital demand loan facility is 165,56,30,967.99. Of this the principal amount due is to the tune of ₹150.00 crore and the interest amount due is to the tune of ₹15,56,30,967,99 (c) Date of default with reference to repayment of principal sum is stated to be 13/02/2021. The default with reference to the interest amount is stated to be 01/11/2020. During the course of hearing. Mr. Sudipto Sarkar, Learned Senior Counsel submitted that this was the earliest date of default, and that there are continuing defaults since then. 16. It is relevant to note that in paragraph 4(c) although it was noticed that the date of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recall its judgment is inherent. It was further held that the power of recall is not power of the Tribunal to rehear the case to find out any apparent error in the judgment which is the scope of a review of a judgment. After noticing the judgments of the Hon ble Supreme Court on the subject, following was concluded by this Tribunal in paragraph 20 of the Judgment:- 20. The above judgments of the Hon'ble Supreme Court clearly lays down that there is a distinction between review and recall. The power to review is not conferred upon this Tribunal but power to recall its judgment is inherent in this Tribunal since inherent power of the Tribunal are preserved, powers which are inherent in the Tribunal as has been declared by Rule 11 of the NCLAT Rules, 2016. Power of recall is not power of the Tribunal to rehear the case to find out any apparent error in the judgment which is the scope of a review of a judgment. Power of recall of a judgment can be exercised by this Tribunal when any procedural error is committed in delivering the earlier judgment; for example; necessary party has not been served or necessary party was not before the Tribunal when judgment was delivered adverse to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s filed in accordance with FSP Rules 2019, there was no lack of jurisdiction in the Adjudicating Authority in passing of the order admitting the applications. Thus, the order cannot be said to be without jurisdiction. It is relevant to notice that the Appellant has exercised his right of appeal against order dated 08.10.2021 by filing Appeals in this Tribunal being Company Appeal (AT) (Insolvency) Nos. 1293 of 2022 and 1294 of 2022 which Appeals were dismissed on 21.12.2022 and appeals against order dated 21.12.2022 were also dismissed by the Hon ble Supreme Court on 30.01.2023. 22. The present is a case where Appellant exercised its right of appeal and failed. Appellant who have challenged the order on merits in which he has been unsuccessful, cannot be allowed to file an application to recall the order on the same ground on which the appeal was filed by the Appellant. It is true that the Appeals filed by the Appellant were dismissed due to rejection of the application praying for condonation of 321 days delay in refiling the appeal but in the recall application, the ground to challenge the order on which appeal was founded are now being agitated in the Appeal. As observed above, ..... 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