NCLAT Chennai Bench: Tribunal Dismisses Review Application Seeking Recall of Order

In a recent decision, the National Company Law Appellate Tribunal (NCLAT), Chennai Bench, comprising of Justice M. Venugopal, Justice Sharad Kumar Sharma, and Shri Jatindranath Swain, delivered a significant verdict regarding the jurisdiction of tribunals in recalling orders. The case in question, titled Adv. (CA) V. Venkata Sivakumar v Hari S. Hari Karthik & Ors., arose from an application seeking the inclusion of Rayagada property of the Corporate Debtor in the liquidation estate.

The background of the case involves the admission of the Jeypore Sugar Co. Ltd. (“Corporate Debtor”) into the Corporate Insolvency Resolution Process (“CIRP”) by the NCLT. Subsequently, the NCLT ordered the liquidation of the Corporate Debtor and appointed Mr. V. Venkata Sivakumar as the Liquidator. An application was filed by secured creditors seeking the inclusion of certain properties in the liquidation estate, leading to a series of legal proceedings.

One of the pivotal moments in this legal saga occurred when the NCLT replaced Mr. V. Venkata Sivakumar with Mr. Hari S. Hari Karthik as the new Liquidator. Following this change, the new Liquidator withdrew an appeal filed by the erstwhile Liquidator before the NCLAT. In response, the erstwhile Liquidator filed a review application before the NCLAT, seeking the recall of the order allowing the withdrawal of the appeal.

However, the NCLAT Bench, in its judgment, made a crucial distinction between the power to recall an order and the power to review a judgment. It emphasized that the power to recall an order could only be exercised if there was a procedural error in pronouncing the earlier order. Furthermore, the Bench clarified that the power to recall an order is not tantamount to re-hearing the case de novo or examining the judicial propriety of the earlier decision.

The Bench’s ruling underscores the principle that the power of review is not inherent in the Tribunal under the Insolvency and Bankruptcy Code (IBC). Without express statutory provisions granting such power, the Tribunal cannot exercise the authority to review its own decisions. Additionally, the Bench held that the erstwhile Liquidator lacked locus standi to file a review/recall application in this case.

This decision has significant implications for the legal landscape surrounding insolvency proceedings and the jurisdiction of tribunals in recalling orders. It reaffirms the importance of adhering to procedural rules and statutory provisions while also delineating the boundaries of tribunal authority.

In conclusion, the NCLAT Chennai Bench’s dismissal of the review application seeking the recall of an order serves as a reminder of the limited circumstances under which a tribunal may revisit its own decisions. It highlights the need for parties to avail themselves of available legal remedies and the importance of clarity in the interpretation of statutory provisions governing insolvency proceedings.

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