Standard Chartered Bank vs Satish Kumar Gupta, R.P. Of Essar Steel ... on 16 January, 2024

[Cites 11, Cited by 0]

National Company Law Appellate Tribunal

Standard Chartered Bank vs Satish Kumar Gupta, R.P. Of Essar Steel ... on 16 January, 2024

The application I.A. No. 2854 of 2023 has been filed by two Applicants namely i.e. (i) SREI Infrastructure Finance Ltd., acting through its shareholder, Ms. Limalemla Longkumer, Petitioner No.2 (ii) Ms. Limalemla Longkumer, 536, Agri-Farm Colony, Kohima-797001, praying for recall of the Cont'd.../ -2- order dated 31.03.2023 passed by two-member Bench of this Tribunal in I.A. No.647 of 2023 preferred by the Applicants in Company Appeal (AT) (Ins.) No.242 of 2019 along with few other prayers.

2. We need to first notice the background facts and sequence of events giving rise to this I.A. No. 2854 of 2023 before noticing the respective submissions of the parties in I.A. No.2854 of 2023.

(i) On an application filed by Standard Chartered Bank Ltd. under Section 7 of the I&B Code CIRP process commenced against the Corporate Debtor - ESSAR Steel India Ltd. (herein after referred to as 'ESIL'). Mr. Satish Kumar Gupta was appointed as Interim Resolution Professional. who was confirmed as Resolution Professional.

(ii) The Resolution Plan was submitted in the CIRP of the Corporate Debtor by Arcelormittal India Pvt. Ltd. The Adjudicating Authority by its order dated 08.03.2019 approved the Resolution Plan submitted by Arcelormittal India Pvt. Ltd.

(iii) Several appeals were filed in this Appellate Tribunal challenging the order dated 08.03.2019 passed by the Adjudicating Authority (National Company Law Tribunal), Ahmedabad Bench, Ahmedabad. One of the Appeals filed was "Company Appeal (AT) (Ins.) No.242 of 2019, Standard Chartered Bank vs. Satish Kumar Gupta, R.P. of Essar Steel Ltd. & Ors". In the Company Appeal (AT) (Ins.) No.242 of 2019, SREI Infrastructure I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -3- Ltd. was impleaded as Respondent No.20. SREI Infrastructure Ltd. was Financial Creditor and one of the member of the Committee of Creditors (CoC)of the Corporate Debtor - ESSAR Steel India Ltd.

(iv) This Tribunal vide order dated 04.07.2019 decided several Company Appeals which were filed against the order dated 08.03.2019 and Company Appeals were disposed of. Company Appeal (AT) (Ins.) No.242 of 2019 along with few other Company Appeals was allowed with observations and directions as contained in the order. Company Appeal (AT) (Ins.) No.517 & 518 of 2019 were disposed of with liberty as given in the order.

Company Appeal (AT) (Insolvency) Nos. 257, 265, 375, 428, 429 & 181 of 2019 were dismissed.

(v) Appeals were filed before Hon'ble Supreme Court challenging order dated 04.07.2019 of this Tribunal passed in Company Appeal (AT) (Ins.) No.242 of 2019 and other company appeals. Hon'ble Supreme Court vide its judgment dated 15.11.2019 upheld the Resolution Plan. The Resolution Plan was implemented by the Resolution Applicant in accordance with the Resolution Plan as finally approved.

(vi) The Applicants (i) and (ii) as noted above filed I.A. No. 647 of 2023 in Company Appeal (AT) (Ins.) No.242 of 2019 on 13.02.2023 in this Tribunal praying for recall of judgment dated 04.07.2019 passed by this Tribunal in Company Appeal (AT) I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -4- (Ins.) No.242 of 2019. In the application certain other prayers were also made by the Applicants.

(vii) Application was filed in this Tribunal on 13.02.2023 and it came for consideration before two-member bench of this Tribunal on 15.02.2023, which directed the matter to be listed on 01.03.2023. On 01.03.2023, I.A. No. 647 of 2023 was heard. This Tribunal heard Shri Deepak Khosla, learned counsel for the applicants and learned counsels appearing for the Respondents. This Tribunal reserved the order on the application on 01.03.2023. While reserving the order this Tribunal observed that they have heard learned counsel for the Applicants only on the point of maintainability of the application. The detailed order running into 42 pages was pronounced by this Tribunal on 31.03.2023 dismissing I.A. No.647 of 2023 on the ground of maintainability. This Tribunal in its order dated 31.03.2023 held that the Applicants have no locus to file the Application. In the order dated 31.03.2023 it was also held that order of this Tribunal dated 04.07.2019 passed in Company Appeal (AT) (Ins.) No.242 of 2019 merged with the order of the Hon'ble Supreme Court dated 15.11.2019. The submission raised by learned counsel for the Applicants in support of his application as well as submission of learned counsel for the Respondents were considered in detail in order dated 31.03.2023 while dismissing the application as non-maintainable.

I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -5-

(viii) I.A. No. 2854 of 2023 dated 29.05.2023 has been filed by the Applicants praying for recall of judgment and order dated 31.03.2023 passed in I.A. No. 647 of 2023 preferred by the Applicants. I.A. No. 2853 of 2023 has been filed paying for amendment in Para 12 of I.A. No.647 of 2023, as prayed in Para 14 to 17 of the application.

3. I.A. No.2854 and 2853 of 2023 were heard by us on 14.12.2023. We have also heard Shri Deepak Khosla, learned counsel for the Applicants, Shri Mukul Rohatgi, learned senior counsel appearing for the Successful Resolution Applicant - Arcelormittal India Pvt. Ltd (AMIPL). We have also heard Shri Arun Kathpalia, learned senior counsel appearing for the Lenders.

4. Learned counsel appearing for the Applicants in support of the application submits that order dated 31.03.2023 is a nullity and deserve to be recalled. It is submitted that order dated 31.03.2023 was obtained by the Respondent by citing judgments which were not good law. It is submitted that two judgments relied in the impugned order dated 31.03.2023 are; judgment of two-member bench judgment in "Aggarwal Coal Corporation Pvt. Ltd. vs. Sun Paper Mills Ltd. & Anr." and judgment in "KLJ Resources Ltd through its Managing Director Vs Rajinder Mool Chand Verma". It is submitted that correctness of the aforesaid two judgments was doubted by three-member bench vide its order dated 09.02.2023 passed in "I.A. No. 3961 of 2022, Union Bank of India Erstwhile Corporation Bank VS Mr. Dinkar T. Venkatasubramanian". The three-member bench by order dated I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -6- 09.02.2023 referred the above mentioned two-member bench judgments for consideration of larger bench, hence, the two-member bench judgment in "Aggarwal Coal Corporation Pvt. Ltd. vs. Sun Paper Mills Ltd. & Anr." and "KLJ Resources Ltd through its Managing Director Vs Rajinder Mool Chand Verma" were not good law. It is submitted that one of the member of the bench which delivered judgement dated 31.03.2023 was also member of three-member bench of the Tribunal which referred the two-member bench judgment to larger bench vide its order dated 09.02.2023. It is submitted that the effect of judgment dated 09.02.2023 is that the two-member bench judgments as viewed in aforesaid two cases are void ab initio. It is submitted that in view of the aforesaid, the order dated 31.03.2023 was void ab initio. The second submission which has been pressed by learned counsel for the Applicants is that the order dated 31.03.2023 was obtained by the Respondent by fraud by citing selected extracts of judgment of Hon'ble Supreme Court in "(2000) 6 SCC 359 Kunhayammed and Others vs. State of Kerala and Anr." relying on Para 42-44 of the judgment. It is submitted that Para 14(4) of the judgment was suppressed which placed a caveat in Paras 42-44 i.e. the caveat of a nullity, which is an exception to the doctrine of merger. Judgment of Hon'ble Supreme Court in Kunhayammed supported the proposition that the doctrine of merger is not one of universal or unrestricted application, and that it would not come in the way of a subordinate Court, whose order has been carried in appeal to a Superior Court, from re-visiting its own order on grounds of fraud. Shri Khosla further submitted that order dated 31.03.2023 passed by this Tribunal is per I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -7- incuriam as it did not take notice of the judgment of the Hon'ble Supreme Court in "A. V. Pappaya Sastry vs. State of Andhra Pradesh, AIR 2007 SC 1546", which judgment is squarely applicable in the matter. It is submitted that approval of the Resolution Plan which was not in compliance with the I&B Code was got approved by this Tribunal vide its order dated 04.07.2019 by playing fraud on the Court and suppressing relevant materials from the Court which being nullity was being prayed to be recalled in I.A. No.647 of 2023. It is submitted that this Tribunal committed error in rejecting I.A. No.647 of 2023 by its order dated 31.03.223 by not considering the judgment of Hon'ble Supreme Court as referred above as well as the judgment of Hon'ble Supreme Court in "Union of India vs. Ramesh Gandhi & Ors., (2012) 1 SCC 476". Learned counsel for the Applicants submit that Applicant No.2 who was shareholder of Applicant No.1 was entitled to file the application bringing into notice of the Court the fraud played to obtain order dated 04.07.2019 of this Tribunal. It is submitted that when the order dated 04.07.2023 is nullity; obtained by fraud, this Tribunal can suo moto recall the said judgment. It is submitted that the shareholder is very well entitled to file the application.

5. Shri Mukul Rohatgi, learned senior counsel appearing for the Successful Resolution Applicant refuting the submissions of learned counsel for the Applicants contends that present application filed by the Applicants being I.A. No.2854 of 2023 is not maintainable. The order dated 31.03.2023 was passed after hearing the counsel for the Applicants in detail and the Applicants' intend is to recall the Resolution Plan of the Corporate Debtor I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -8- which was affirmed by the Hon'ble Supreme Court as early as on 15.11.2019. It is submitted that the order of this Tribunal deciding the Appeals dated 04.07.2019 has merged with the judgment of Hon'ble Supreme Court and the application for recall of the judgment dated 04.07.2019 was not maintainable and has rightly been dismissed by this Tribunal by order dated 31.03.2023. A recall can be allowed when the parties is not heard by the Court. In the present case, application was elaborately heard by the Court while passing order dated 31.03.2023, hence, there is no ground for recall. This recall seeks recall of the judgment dated 31.03.2023 which rejected recall of judgment dated 04.07.2019. Order dated 31.03.2023 having been passed after hearing the Applicants, there are no ground made out to recall the order. The Applicant has no locus to file the application I.A. No.647 of 2023. The Applicant claim to have initiated a derivative action on behalf of SREI, who was Financial Creditor of the Corporate Debtor itself in the CIRP where Administrator has been appointed.

6. Shri Arun Kathpalia, learned senior counsel appearing for the Lenders submit that judgment of this Tribunal dated 31.03.2023 was not predicated on two judgments of two-member bench i.e. "Aggarwal Coal Corporation Pvt. Ltd. vs. Sun Paper Mills Ltd. & Anr." and "KLJ Resources Ltd through its Managing Director Vs Rajinder Mool Chand Verma". Against the order dated 31.03.2023, the only remedy available to the Applicant was to file an appeal under 62 of the I&B Code. I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -9-

7. Shri Deepak Khosla in his rejoinder reiterated his submitted that Para 14(4) of the judgment in Kunhayammed clearly lays down that doctrine of merger is not applicable where fraud is played. A Court can always recall such order which has been obtained by fraud and order is without jurisdiction. Recall is not confined only to non-hearing of parties. It is the duty of the Court to recall such order. Nullity should not be allowed to stand. No principle of merger applies in the facts of the present case.

8. We have considered the submissions of the parties and perused the record.

9. Before proceeding further, we need to notice judgment dated 31.03.2023 which is sought to be recalled by this application. A perusal of the judgment dated 31.03.2023 makes it clear that the two-member bench has heard only on the maintainability issue. In the order dated 31.03.2023, the two-member bench noticed the facts of the case, order passed by this Tribunal dated 04.07.2019. This Tribunal also noticed the grounds claimed by Applicant No.2 to maintain the application (I.A. No.647 of 2023). It is useful to extract the following observation made in the order:

"The applicant No.2 though was not party in earlier proceeding claiming to be shareholder of SREI Industrial Finance Ltd who is intervenor/Applicant No.1, has filed the present application. The applicant No.2 to maintain the present application has claimed that she has exercised her derivative right on behalf of applicant No.1.

I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -10- To satisfy her derivative right in the present application at Page 53 in para 4 (c) it has been stated "c) In the present case, it is the admitted position that on 08-10-2021, Applicant No. 1 (SREI Infrastructure Finance Ltd, herein, 'SIFL') has been placed under the care of an Administrator on the request of the Reserve Bank of India, under Section 7 of the IBC.

d) It is also the admitted position that Applicant No. 1 Co is a public limited company whose shares are listed on the National Stock Exchange and the Bombay Stock Exchange, and notwithstanding appointment of an Administrator over its affairs, its shares are reported to be continuing to be traded.

e) It is also the admitted position that Applicant No. 2 is a shareholder of Applicant No. 1. (Leave is craved to file evidence of his shareholding, upon being required to do so.)

f) SIFL is acting in the present proceedings through Applicant No. 2. its shareholder, the latter claiming derivative rights of a shareholder to act for, on behalf of, and in the name of a Company in circumstances that are squarely attracted here. Leave is craved to present judicial precedents on the subject. which, in the circumstances presented herein, fully justify the actions of Applicant No. 2, as a shareholder of Applicant No. 1 Co, acting for, on behalf of, and in the name of the Applicant No. 1 Co.

some of which judicial precedents are set out below.

g) Applicant No. 2: Applicant No. 2 is Ms. Limalemla Longkumer, who is a shareholder of Applicant No. 1 Co (SIFL). She is aggrieved by the fact that Applicant No. 1 Co is presently under the care of an Administrator appointed by Hon'ble National Company Law Tribunal (herein, NCLT), Kolkata at the instance of the Reserve Bank of India, and I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -11- whose activities are overseen by some of the banks who are arrayed as Respondents herein, and who are also Defendants in Money Suit No. 27 of 2022. Therefore, in the opinion of the COC Members of SIFL (who control the actions of the Administrator of SIFL), it is in the interests of these banks that comprise the Committee of Creditors of SIFL that their misdeeds in the affairs of ESSAR Steels India Ltd (herein, "ESIL") and OSPIL not be exposed, neither in the present recall proceedings, nor in the contempt proceedings pending before the Hon'ble High Court of Calcutta and for Hon'ble NCLT (Ahmedabad), nor in the aforementioned Money Suit No. 27 of 2022."

On admission of the applicant it is clear that the management of Applicant No.1 on the date of filing of the present application was under the control of Administrator appointed by NCLT Kolkata at the instance of Reserve Bank of India. To justify for approaching this Tribunal in para 5 a stand has been taken as if the Administrator of the Applicant No.1 had not taken any step to protect the interest of the company. It is necessary to reproduce statement made in paras 5, 6, 7 at page 56:-

"5. In the present case, the Administrator of SIFL has shown over the last 6-8 months that he will not come forward to protect the interests of SIFL if, while protecting such interests, it amounts to taking action against certain lenders who form the COC of SIFL. There are many such members of the COC of SIFL who are sought to be taken action against in the present proceedings, hence, the Administrator is not coming forward to take action against them in the name of SIFL, as is self- evident from the emails reproduced in paras 10-11 below.

I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -12-

6. In other words, he is in breach of his fiduciary duty, given that he prefers to place the interests of the lenders to SIFL on a higher pedestal than the interests of the very company (SIFL) whose affairs he has been appointed to safeguard.

7. On the point of the derivative right of Applicant No. 2 to appear and act in the present proceedings also for SIFL, it is most respectfully submitted that it is an admitted case, albeit, only ordinarily, that it is only the duly-authorised Directors of a Company who can conduct litigation in its name. In other words, the action on the part of Applicant No. 2 in purporting to act for OSPIL on the ground that he is its shareholder, ordinarily, is not admissible in law.""

10. The two-member bench after consideration held that it would be difficult to entertain the application particularly on the ground of locus of the Applicant. Judgment cited by the learned counsel for the Applicants of the Federal Court in "Dr. Satya Charan Law & Ors. vs. Rameshwar Prasad Bajoria & Ors., AIR 1950 FC 133" was also noted. Observations made by the Appellate Tribunal at page 38 of the order dated 31.03.2023 is to the following effect:

"Accordingly it would be difficult to entertain the present application particularly on the ground of locus of the applicant."

11. The two-member bench has further observed that judgment of this Tribunal dated 04.07.2019 has merged with the judgment of Hon'ble Supreme Court dated 15.11.2019 which is another reason due to which it will not appropriate to accede to prayer for recall of judgment. Following observations have been made in judgment dated 31.03.2023:

I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -13- "Moreover in the present case the applicant was not a party in the earlier proceeding before this Tribunal and as such besides having no locus and also no order passed under Section 340 of the Cr PC it would not be appropriate for us to accede to the prayer for recall of the judgement which was passed long back in 2019 and finally merged with the order of Hon'ble Supreme Court on 15.11.2019."

12. Judgments which were cited by learned counsel for the Applicants in support of his submission were also considered by the two-member bench while passing order dated 31.03.2023 as is reflected from the order.

13. After noticing certain observations of the two-member bench in order dated 31.03.2023, we now come to I.A. No. 2854 of 2023 which is an application praying for recall of judgment dated 31.03.2023. Learned counsel for the Applicants himself has relied on five-member beech judgment of this Tribunal in "I.A. No. 3961 of 2022 in Company Appeal (AT) (Ins.) No.729 of 2020, Union Bank of India (Erstwhile Corporation Bank) vs. Dinkar T. Venkatasubramanian & Ors." decided on 25.05.2023. As noted earlier, the two-member bench judgments in "Aggarwal Coal Corporation Pvt. Ltd. vs. Sun Paper Mills Ltd. & Anr., IA No. 3303 of 2022 in Company Appeal (AT) (Insolvency) No. 359 of 2020" and "KLJ Resources Ltd through its Managing Director Vs Rajinder Mool Chand Verma, (2022) SCC Online NCLAT 402" were referred by three-member bench vide its order dated 09.02.2023 to larger bench, where following three questions were referred:

I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -14- "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 "I.A. No. 265 of 2020 in Company Appeal (AT) (Ins.) No. 412 of 2019, Agarwal Coal Corporation Private Limited Vs Sun Paper Mill Limited & Anr." and "I.A. No. 3303/2022 in Company Appeal (AT) (Ins.) No. 359 of 2020, 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?

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?"

14. The five-member bench heard the reference and vide its judgment dated 25.05.2023 answered the reference. The question which was referred to this Tribunal was as to whether when the Tribunal is not vested with any power to review the judgment can entertain an application for recall of judgment on sufficient grounds. The said question has been answered in affirmative that the Appellate Tribunal can entertain an application for recall of judgment on sufficient grounds. The five-member bench also noticed I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -15- various judgments of Hon'ble Supreme Court where both review and recall were considered and the grounds for recall of the judgment has been enumerated. It is useful to notice few paras of the five-member bench judgment, where the five-member bench has noticed the judgment of Hon'ble Supreme Court and also noticed the grounds of recall as enumerated by the Hon'ble Supreme Court. In Para 13, the judgment of the Hon'ble Supreme Court in "(1988) 2 SCC 602, A. R. Antulay vs. R.S. Nayak & Another" was noticed. Para 13 of the judgment is as follows:

"13. Now we proceed to notice the judgments which have been relied by learned counsel for the Applicant and three-member bench judgments of this Tribunal which has been referred to in the referring order. The first judgment which has been relied by learned counsel for the Applicant is judgment of Hon'ble Supreme Court in ""(1988) 2 SCC 602, A. R. Antulay vs. R.S. Nayak & Another". In the above case, before the Hon'ble Supreme Court question arose as to whether the Hon'ble Supreme Court in exercise of its powers can set aside a direction given by earlier judgment of Hon'ble Supreme Court dated 16.02.1984. Justice Venkatachaliah in Paras 159, 160 and 161 laid down following:

"159. But in certain cases, motions to set aside Judgments are permitted where, for instance a judgment was rendered in ignorance of the fact that a necessary party had not been served at all, and was wrongly shown as served or in ignorance of the fact that a necessary party had died, and the estate was not represented. Again, a judgment obtained by fraud could be subject I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -16- to an action for setting it aside. Where such a judgment obtained by fraud tended to prejudice a non party, as in the case of judgments in-rem such as for divorce, or jactitation or probate etc. even a person, not eo-nomine a party to the proceedings, could seek a setting-aside of the judgment.

160. Where a party has had no notice and decree is made against him, he can approach the court for setting-aside the decision. In such a case the party is said to become entitled to relief ex-debito justitiae, on proof of the fact that there was no service. This is a class of cases where there is no trial at all and the judgment is for default. D.N. Gordan, in his "Actions to set aside judgments92." says:

The more familiar applications to set aside judgments are those made on motion and otherwise summarily. But there are judgments obtained by default, which do not represent a judicial determination. In general, Judgments rendered after a trial are conclusive between the parties unless and until reversed on appeal. Certainly in general judgments of superior courts cannot be overturned or questioned bet ween the parties in collateral actions. Yet there is a type of collateral action known as an action of review, by which even a superior court's judgment can be questioned, even between the parties, and set aside.

161. Cases of such frank failure of natural justice are obvious cases where relief is granted as of right. Where a person is not actually served but is held erroneously, to have been served, he can agitate that grievance only in that forum or in any further proceeding therefrom. In Issac's case88 Privy Council referred to:

"a category of orders of such a court which a person affected by the order is entitled to apply to have set aside ex-debito justitiae in exercise of the inherent jurisdiction of the court without needing to have recourse to I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -17- the Rules that deal expressly with proceedings to set aside orders for irregularity and give to the judge a discretion as to the order he will make.""

15. In Para 16 of the judgment of five-member bench noted the judgment of Hon'ble Supreme Court in "(1999) 4 SCC 396, Budhia Swain & Ors. Vs. Gopinath Deb & Ors." and noticed the three grounds which was reiterated by Hon'ble Supreme Court. Para 16 of the judgment is as follows:

"16. In another judgment of "(1999) 4 SCC 396, Budhia Swain & Ors. Vs. Gopinath Deb & Ors.", the Hon'ble Supreme Court has dealt with power to recall. In Paras 5, 6, 7 and 8 following has been laid down:

"5. The only provision for review in the Act is to be found in Section 38-A whereunder a review may be sought for within one year from the date of the decision or order but only on the ground that there has been a clerical or arithmetical mistake in the course of any proceedings in the Act. It was also conceded by the learned counsel for the appellants that the proceedings initiated by the appellants were certainly not under Section 38A. It was also conceded at the bar that the subsequent action of the O.E.A. Collector could be sustained only if supportable by the power to recall.

6. What is a power to recall? Inherent power to recall its own order vesting in tribunals or courts was noticed in Indian Bank Vs. M/s Satyam Fibres India Pvt. Ltd.1 Vide para 23, this Court has held that the courts have inherent power to recall and set aside an order

(i) obtained by fraud practised upon the Court, I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -18-

(ii) when the Court is misled by a party, or

(iii) when the Court itself commits a mistake which prejudices a party.

In A.R. Antulay Vs. R.S. Nayak2 (vide para

130), this Court has noticed motions to set aside judgments being permitted where

(i) a judgment was rendered in ignorance of the fact that a necessary party had not been served at all and was shown as served or in ignorance of the fact that a necessary party had died and the estate was not represented,

(ii) a judgment was obtained by fraud,

(iii) a party has had no notice and a decree was made against him and such party approaches the Court for setting aside the decision ex debito justitiae on proof of the fact that there was no service.

7. In Corpus Juris Secundum (Vol. XIX) under the Chapter "Judgment - Opening and Vacating" (paras.265 to 284 at pages 487-510) the law on the subject has been stated. The grounds on which the courts may open or vacate their judgments are generally matters which render the judgment void or which are specified in statutes authorising such actions.

Invalidity of the judgment of such nature as to render it void is a valid ground for vacating it at least if the invalidity is apparent on the face of the record. Fraud or collusion in obtaining a judgment is a sufficient ground for opening or vacating it.

A judgment secured in violation of an agreement not to enter judgment may be vacated on that ground. However, in general, a judgment will not be opened or vacated on grounds which could have been pleaded in the original action. A motion to vacate will not be entered when the proper remedy is by some other proceedings, such I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -19- as by appeal. The right to vacation of a judgment may be lost by waiver or estoppel. Where a party injured acquiesces in the rendition of the judgment or submits to it, waiver or estoppel results.

8. In our opinion a tribunal or a court may recall an order earlier made by it if

(i) the proceedings culminating into an order suffer from the inherent lack of jurisdiction and such lack of jurisdiction is patent,

(ii) there exists fraud or collusion in obtaining the judgment,

(iii) there has been a mistake of the court prejudicing a party, or

(iv) a judgment was rendered in ignorance of the fact that a necessary party had not been served at all or had died and the estate was not represented.

The power to recall a judgment will not be exercised when the ground for re-opening 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.""

16. The five-member bench in Para 20 laid down that power of recall is inherent in the Tribunal, however, 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. In Para 20 following has been laid down:

I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -20- "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 a party. There may be other grounds for recall of a judgment. Well known ground on which a judgment can always be recalled by a Court is ground of fraud played on the Court in obtaining judgment from the Court. We, for the purpose of answering the questions referred to us, need not further elaborate the circumstances where power of recall can be exercised."

17. The five-member bench has also noticed the two-member bench judgment in "Aggarwal Coal Corporation Pvt. Ltd. vs. Sun Paper Mills Ltd. & Anr." and "KLJ Resources Ltd through its Managing Director Vs Rajinder Mool Chand Verma" and held that the said judgments holding that there is no power of recall does not lay down correct law. In para 26 and 27, the five-member bench held:

I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -21- "26. In view of the law laid down by Hon'ble Supreme Court which holds that the Tribunal has inherent power to recall its judgment on appropriate grounds, the three-member bench judgment in "Agarwal Coal Corporation Private Limited" and "K.L.J Resources Ltd. & Anr." observing that the Tribunal does not have power to recall cannot be approved. The three-member bench judgments of this Tribunal insofar as observation that this Tribunal has no power to review, no exception can be taken to that part of the judgment. We, however, hold that the judgment laying down that this Tribunal has no power to recall the judgment does not lay down correct law.

27. In view of the foregoing discussion, we answer the questions referred to this Bench in following manner:

I: This Tribunal is not vested with any power to review the judgment, however, in exercise of its inherent jurisdiction this Tribunal can entertain an application for recall of judgment on sufficient grounds.

II & III: 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." observing that this Tribunal cannot recall its judgment does not lay down the correct law."

18. The five-member bench of this Tribunal, thus, categorically held that there is inherent power of recall in the Tribunal and application for recall I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -22- is maintainable, however, the recall can be granted on sufficient grounds. The grounds for recall has been enumerated in Para 16 of the order, as extracted above. The preposition is well settled that power of recall would be there if an order is obtained by playing fraud on the Court. The two-member bench in its order dated 31.03.2023 while noticing the judgment of Hon'ble Supreme Court in "S.P. Chengal Varaya Naidu (Dead) By Lrs. Vs. Jagannath (Dead) By Lrs. & Ors., (1994) 1 SCC 1" also expressed its agreement with the conclusion that fraud vitiates everything.

19. Learned counsel for the Applicant has also cited another judgment of this Tribunal in "Vineet Khosla vs. Edelweiss Asset Reconstruction Company Ltd. & Ors in I.A. No.190, 191, 192 & 137 of 2022 in Company Appeal (AT) (Ins.) No.1124-1125 of 2020, decided on 28.02.2022". In the said judgment also this Tribunal after noticing the judgment of Hon'ble Supreme Court has laid down following in Para 28:

"28. The Hon'ble Supreme Court in the aforesaid judgments has settled the principle that every court/ tribunal has power to recall the order obtained by practicing fraud."

20. We now have to consider the grounds in I.A. No.2854 of 2023 to find out whether there are any grounds to recall order dated 31.03.2023 as has now been laid down by the five-member bench of this Tribunal in "Union Bank of India Erstwhile Corporation Bank VS Mr. Dinkar T. Venkatasubramanian" (Supra) as well as judgment of Hon'ble Supreme Court noticed therein. The counsel for the Applicants was fully heard by the I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -23- two-member bench before passing order dated 31.03.2023. Thus the order was passed after hearing the Applicants fully. The submission which are sought to be advanced by learned counsel for the Applicants is that the two- member bench committed error in holding that the doctrine of merger shall apply and failed to notice the exception to the doctrine of merger as in Para 14(4) of the judgment in Kunhayammed. One of the reason for rejecting the application in order dated 31.03.2023 was that relying on the doctrine of merger the order of this Tribunal dated 04.07.2019 came to be merged with the judgment of Hon'ble Supreme Court dated 15.11.2019. The above view taken by the two-member bench in judgment dated 31.03.2023 is sought to be challenged by contending that the precedence of Hon'ble Supreme Court in Kunhayammed has been misinterpreted by the two-member bench and the proposition as laid down by the Hon'ble Supreme Court in Kunhayammed in Para 14(4) was suppressed. The two-member bench having taken the view that doctrine of merger is applicable, we cannot sit over in review of the judgment. The power of review is not conferred to this Tribunal. What in essence the Applicant is asking by this Application I.A. No.2854 of 2023 is to review judgment dated 31.03.2023 on various grounds sought to be contended by the Applicants. The Application I.A. No.2854 of 2023 is in essence application for review disguised as recall application. When after hearing the Applicants a particular view has been taken by the two-member bench and application has been rejected, the Applicants cannot have a second inning to question the said order by means of this recall application.

I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -24-

21. As noted above, one of the grounds on which application I.A. No.647 of 2023 was rejected was that Applicants has no locus to file the Application. The Application filed by the Applicants having been rejected by order dated 31.03.2023 on the ground that Applicants have no locus, we cannot take contrary view in this recall application and hold that Applicants had locus to file application. What is being asked by the Applicant is clearly review of judgment dated 31.03.2023 holding that Applicants has no locus to file the Application. There can be no quarrel to the proposition that any order passed by playing fraud can be recalled by the Court which is well within the one of the accepted grounds for recall of the judgment. We, however, when look into the order dated 30.03.2023, we do not find any fraud played on the Court while passing order dated 31.03.2023. Application I.A. No.647 of 2023 was filed by the Applicant after more than three and half years of passing of the order of this Tribunal approving the Resolution Plan which was approved as early as 08.03.2019.

22. We again reiterate that in this application we are not concerned with the correctness or otherwise of the order dated 31.03.2023 passed by this Tribunal. Our jurisdiction is only limited jurisdiction to find out if there are any reason to recall judgment dated 31.03.2023. Both the counsel for the parties appeared before the two-member bench and made their elaborate submissions and also relied on judgment of Hon'ble Supreme Court and this Tribunal. This Tribunal considered the submissions of both the parties and rejected the application on the grounds as indicated above. We have no jurisdiction to sit in review over the judgment nor we can be persuaded to I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019 -25- take a different view which was taken on 31.03.2023. The submission of the Appellant that order dated 31.03.2023 is nullity cannot be accepted. There is nothing on record to accept the submission that any fraud was played on the Court in passing the order dated 31.03.2023. None of the grounds as has been enumerated by the five-member bench in "Union Bank of India Erstwhile Corporation Bank VS Mr. Dinkar T. Venkatasubramanian"

(Supra) and the judgment of the Hon'ble Supreme Court, as noted above are made out to allow the application for recall of order dated 31.03.2023. No grounds have been made out to recall the judgment. We reject I.A. No.2854 of 2023. In view of the rejection of I.A. No.2854 of 2023, we see no reason to accept prayers in I.A. No.2853 of 2023, which application is also rejected.

[Justice Ashok Bhushan] Chairperson [Arun Baroka] Member (Technical) NEW DELHI 16th January, 2024.

Archana I.A. No. 2853 & 2854 of 2023 in Company Appeal (AT) (Ins.) No. 242 of 2019

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