NCLAT's Authority to Recall Judgments: The Intersection of Tribunal Authority and Justice

Deciphering Legal Judgments: A Comprehensive Analysis of Case Law

Reported as:

2023 (7) TMI 209 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI

I. Introduction

This commentary delves into the significant legal question of whether a Tribunal, not vested with explicit review powers, can entertain an application for the recall of a judgment on sufficient grounds. This issue was brought into focus in a case before the National Company Law Appellate Tribunal (NCLAT).

II. Factual Background

The case under discussion originated from the Corporate Insolvency Resolution Process initiated by a financial institution against a corporate debtor. The resolution plan submitted was approved by the Committee of Creditors. However, the resolution professional and the financial institution filed separate applications with differing objectives. The Adjudicating Authority approved the resolution plan and rejected the application filed by the financial institution. This led to an appeal and subsequent review and recall applications, raising critical questions about the Tribunal's powers.

III. Legal Questions Raised

The primary legal questions addressed were:

1. Does the Tribunal have the power to entertain an application for the recall of a judgment, despite lacking explicit power to review judgments?
2. Do earlier NCLAT judgments, which held that the Tribunal cannot recall its judgment in exercise of its inherent jurisdiction, state the correct law?

IV. Tribunal's Analysis and Conclusion

The Tribunal undertook a comprehensive analysis of the inherent powers of Tribunals, drawing upon various judgments of the Supreme Court of India, the National Company Law Tribunal (NCLT) Rules, and the provisions of the Companies Act and the Insolvency and Bankruptcy Code. The key considerations included:

1. Distinction Between Review and Recall: The Tribunal emphasized the difference between reviewing a judgment on its merits and recalling a judgment due to procedural irregularities or failure of justice.

2. Inherent Powers of Tribunals: Relying on Rule 11 of the NCLT Rules, akin to Section 151 of the Code of Civil Procedure, the Tribunal recognized its inherent powers to pass orders necessary to meet the ends of justice or prevent abuse of its process.

3. Supreme Court Precedents: The Tribunal cited various Supreme Court decisions, which affirmed the inherent power of courts and tribunals to recall orders in cases of fraud, lack of jurisdiction, or procedural irregularities that vitiate the entire proceeding.

4. Relevance to the Present Case: The Tribunal applied these principles to the facts of the case, scrutinizing whether the procedural aspects and principles of natural justice were adhered to in the impugned orders.

V. Decision

The Tribunal concluded that:

1. It does possess the inherent jurisdiction to entertain an application for the recall of its judgment on sufficient grounds.
2. The earlier judgments of the NCLAT, which held that the Tribunal does not have the power to recall its judgment, do not lay down the correct law.

VI. Implications

This decision has significant implications for the functioning of Tribunals and their power to rectify their own orders. It clarifies the scope of inherent powers of Tribunals and ensures that justice is not only done but seen to be done, especially in cases where procedural lapses might lead to a miscarriage of justice.

VII. Conclusion

The Tribunal's ruling reinforces the principle that while Tribunals are bound by statute, they also possess inherent powers to correct errors in their proceedings to uphold the principles of justice and fairness. This judgment thus serves as a crucial precedent in understanding the extent of inherent powers vested in Tribunals.

Full Text:

2023 (7) TMI 209 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI