In Union Bank of India vs Dinkar T Venkatasubramanian, a 5-member special bench of NCLAT held that the NCLTs and the NCLAT have powers to recall a judgment passed by them.
In a complex case that involves Amtek Auto’s resolution plan, a ‘recall application’ was filed by financial creditors, to which the Union Bank of India objected, citing previous NCLAT judgments in the cases of Agarwal Coal Corporation Private Ltd vs Sun Paper Mill and Rajendra Mulchand Varma vs KLJ Resources.
This recall application was then referred to a five-member special bench of the NCLAT. The following questions were placed before the bench:
1. Whether the NCLAT, not being vested with any power to review the judgment, can entertain an application for recall of judgment on sufficient grounds?
2. Whether judgments of the NCLAT in Agarwal Coal Corporation Private Ltd (supra) and KLJ Resources Ltd (supra) can be read to mean that there is no power vested in the NCLAT to recall a judgment?
3. Whether the judgments of the NCLAT in Agarwal Coal Corporation Private Ltd (supra) and KLJ Resources Limited (supra) lay down the correct law?
The bench examined the judgment of the Supreme Court in AR Antulay vs RS Nayak, in which it was held that in cases where no notice is served on a party against whom a decree has been passed and there is an obvious infringement of the principles of natural justice, the party can bring its grievance before the court that passed the decree.
The NCLAT examined the difference between a review petition and a recall petition. The powers of a court to review or recall an order was looked into. It held that in a review case, the court would see if there was an error, but while recall, the court looks if there was any procedural infirmity, such as not giving an opportunity to an affected party, or a fraud played on the court.
The NCLAT examined the orders in Agarwal Coal Corporation Private Ltd (supra) and KLJ Resources Ltd (supra). Both of these had held that the NCLAT does not have any power or review or recall. Now, after examination, the NCLAT overruled the previous judgments about the ‘recall’ part, so as to say that the tribunals do have recall powers. But it upheld the previous judgments’ order on the ‘review’ part.
Writing in Mondaq, Padmaja Kaul, Yugank Goel and Vansh Bhutani, note that while the position of law regarding the power of review and recall has been firmly established since many years in relation to courts, “this judgment has now definitively established the same for the NCLAT and NCLT as well.”
They say this would go a long way in minimising unnecessary appeals, at least for resolution of clerical and procedural errors expeditiously. “Having said this, unscrupulous litigants may seek to exploit this by filing review applications in the guise of recall applications. Given the importance of the Code’s regime and the seminal significance of NCLT as a tribunal, having wide economical and financial ramifications, the efficacy of the Code’s mechanism for banks and financial institutions may be severely undermined, as parties might exploit this avenue to pursue the reversal of unfavourable outcomes and stall further proceedings,” they say.