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TMI Blog2025 (1) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant-Corporate Debtor who was present before the Adjudicating Authority on 04.06.2024. The order also records the submission made by the Counsel for the Corporate Debtor that the Marvel Isola J Building Housing Project had 282 unit holders and that there is no record to show that the applicants had complied with the eligibility laid down in the amended provision of the IBC. Basis these submissions made by the Counsel for the Corporate Debtor, the Adjudicating Authority had returned the finding that the Company Petition stands disposed since the Respondents lacked the requisite number/percentage of unit holders to be eligible to continue the Company Petition. After perusing the order of 04.06.2024, there is no ambiguity in mind that the Adjudicating Authority in passing the order on 04.06.2024 had preponderantly relied on the submissions made by the Counsel of the Corporate Debtor on whether the Appellants were compliant with the 2nd proviso to Section 7(1) of the IBC to file the Company Petition No. 4320 of 2019. Per contra, looking at the material on record placed, it is found that the Respondents in the said Company Petition had categorically informed the Corporate Debtor on af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B) /2024 in Company Petition (IB) No. 4320/2019. By the impugned order, the Adjudicating Authority has recalled its earlier order dated 06.04.2024 disposing of this Company Petition. Aggrieved by the restoration of the Company Petition 4320/2019 by this impugned order, the present appeal has been preferred by the Appellant. 2. The sequence of events which require to be noticed by this Tribunal for consideration of the matter at hand are as outlined herein. The Corporate Debtor-Appellant had entered into Agreements to Sale with the Respondents- Homebuyers/Financial Creditors for purchase of residential units in the Marvel Isola J Building Project. Since the residential units could not be constructed and possession could not be handed over on time, the Respondents had filed a Section 7 petition for initiation of Corporate Insolvency Resolution Proceedings ('CIRP' in short) on 30.11.2019. The Corporate Debtor raised questions on the maintainability of the Section 7 petition, inter alia, including the ground that the Respondents had failed to meet the requirements laid down by the 2nd proviso to Section 7(1) of the IBC which had come into effect with an amendment in the IBC during 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent has managed to seek review of the order of 04.06.2024 which is not permissible. Submission was also pressed that the order passed by the Adjudicating Authority on 04.06.2024 was clearly decided on the merits of dispute between both parties particularly with regard to maintainability of the petition of the Respondents. The Adjudicating Authority in its orders had categorically held that the Company Petition was not maintainable as it did not comply with the requirements under 2nd proviso to Section 7(1) of the IBC. The Adjudicating Authority by allowing the recall application and rehearing the matter on maintainability issue committed a mistake as it did not have the power to re-examine the merits of the case while hearing a recall application. 5. In support of their contention, reliance was placed on the judgement of this Tribunal in Union Bank of India Vs Dinkar T. Venkatasubramanian & Ors in CA(AT) (Ins.) No. 729 of 2020 where it has been held that 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. Attention was also adverted to the judgment of the Hon'ble Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the counsel on both these dates was not intentional but was on account of serious life-threatening medical complication suffered by the wife of the Ld. Counsel during that period. It was pointed out that for good measure they attached the medical certificate of the doctor with their IA No. 4881 of 2024 which clearly shows that as on 04.06.2024 also, the counsel's wife was under treatment in the hospital. There were compelling circumstances for the absence of the counsel during the two crucial hearings held on 15.05.2024 and 04.06.2024. Due to the prolongation of the critical and emergent medical condition of the wife of the counsel, the Respondents were not able to communicate with their counsel even thereafter. However as soon as it came to their knowledge that the Adjudicating Authority had passed an order on 04.06.2024, they filed the recall application IA No 4881 of 2024. Since the Adjudicating Authority had passed the order on 04.06.2024 in their absence, this had prejudicially affected their rights as allottees. Hence, in the interest of justice, the recall application was filed by them before the Adjudicating Authority. It was also asserted that it is a well settled di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icating Authority by suppression of fact and making misleading statements, the Adjudicating Authority was well within its jurisdiction to exercise its inherent powers under Rule 11 of NCLT Rules. 9. We have duly considered the arguments advanced by the Learned Counsel for both the parties and perused the records carefully. 10. To arrive at our analysis and findings, at the outset, it would be useful and constructive to note the order of the Adjudicating Authority dated 04.06.2024 which is as extracted below: 1. Heard Counsel for the CD on the main CP and two IAs. There is no representation from the FC. It has been stated by the Counsel for the CD that there are originally 282 unit-holders for the Housing Project, namely, 'Marvel Isola J Building'. However, there are only 12 Applicants who have filed the CP as FCs. The application was filed on 29.11.2019. There is no record to show that the Applicants have complied with the amended law to make the requisite percentage/number of the unitholders to make them eligible to continue with the present C.P. 2. Counsel for CD also submits that RERA has granted extension for completion of the Project up to 30.12.2024 and based on which, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is, however, the case of the Appellant that the Adjudicating Authority in its order of 04.06.2024, had arrived at a specific finding that the Company Petition was not maintainable. The dismissal of the Company Petition was therefore not on grounds of non-prosecution but was a decision on merits. It is the contention of the Appellant that the statutory provisions of the IBC do not permit the Adjudicating Authority to revisit its own findings of fact or law in any order delivered by it. Having already dismissed the Company Petition on 04.06.2024, the Adjudicating Authority, basis a recall application, cannot revisit the Company Petition on the ground that the dismissal was incorrect or that it had been incorrectly adjudicated because of disputed facts once having dismissed it. It was asserted that the impugned order has sought to review its earlier order of 04.06.2024 which is not permissible in a recall application and therefore needs to be set aside. 14. When we look at the impugned order, we find that the Adjudicating Authority in paragraph 2 therein has clearly taken note of the objections of the present Appellant that the power of recall is not a power of the Tribunal to be exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate Debtor, the Adjudicating Authority had returned the finding that the Company Petition stands disposed since the Respondents lacked the requisite number/percentage of unit holders to be eligible to continue the Company Petition. 16. After perusing the order of 04.06.2024, there is no ambiguity in our mind that the Adjudicating Authority in passing the order on 04.06.2024 had preponderantly relied on the submissions made by the Counsel of the Corporate Debtor on whether the Appellants were compliant with the 2nd proviso to Section 7(1) of the IBC to file the Company Petition No. 4320 of 2019. Per contra, when we look at the material on record placed before us, we find that the Respondents in the said Company Petition had categorically informed the Corporate Debtor on affidavit that they were in compliance with the 2nd proviso to Section 7(1) of the IBC. It was vehemently contended by the Respondents that in their Rejoinder affidavit to the Reply filed by the Corporate Debtor in the Company Petition, at paragraphs 4(iv) to 4(vii) it had been categorically pleaded that they were fully compliant with the amended Section 7 of IBC. This fact has been reiterated by the Respondents in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... number of apartments in the said project. Therefore, the applicants are conveniently more than the minimum requirement of 10% as per the amendment act of2020. vii. I say that, accordingly the present company petition filed by the applicants is well in compliance of the Amendment Act of 2020 and as such requires no modification whatsoever. Therefore, this Hon'ble Tribunal is well within its jurisdiction to entertain and dispose off the captioned company petition on its own merits and the same is not deemed to be withdrawn as the captioned company petition complies with the Amendment Act of 2020." ( Emphasis supplied ) 17. From the above narration, it becomes clear that the Adjudicating Authority was misled by the present Appellant-Corporate Debtor for they suppressed the fact that the present Appellants-Homebuyers in their Reply affidavit to the Rejoinder filed by the Corporate Debtor had clearly articulated that they were compliant with the eligibility terms laid down in the 2nd proviso to Section 7(1) of the IBC along with supporting documents including MAHARERA certificate to buttress their claim. Instead, the Corporate Debtor wrongfully apprised the Adjudicating Authority d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be viewed as a genuine ground for delay. However, keeping in mind the facts and circumstances, we are reasonably satisfied with the explanation offered by the Respondents for their absence and would like to give benefit of doubt to them. 20. We have no quarrel with the ratio in the judgment delivered by the Hon'ble Apex Court in My Palace Mutually Aided Co-operative Society supra that Civil Courts in exercising their inherent powers cannot exercise substantive jurisdiction to unsettle already decided issues. Be that as it may, the same judgment at paragraph 35 has also clarified that it does not doubt the proposition of law that fraud nullifies all proceedings, or that the Court has power to recall an order which was passed due to a fraud played on the Court. The order of 04.06.2024 was passed by the Adjudicating Authority by predicating on the mis-statement made by the Corporate Debtor. As the order of 04.06.2024 had been obtained by the Appellants by suppressing material fact and by taking advantage of the absence of the Respondents, the Adjudicating Authority had therefore rightly recalled the order of 04.06.2024 which it had passed on incorrect and false submissions without go ..... 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