Power and Scope of NCLT to recall its order

 

POWER AND SCOPE OF NCLT TO RECALL ITS ORDER

The National Company Law Appellate Tribunal (NCLAT) in Printland Digital (India) Pvt. Ltd. Versus Nirmal Trading Company (Company Appeal (AT) (Insolvency) No. 504 of 2022) vide Order dated 30.05.20222 ruled on the issue whether the Adjudicating Authority has the power to recall its order.

Background of the case:

The right to file the Reply of Printland Digital (India) Pvt. Ltd. (the Appellant) as Corporate Debtor was closed vide Order dated 22.07.2021 against which the Appellant had filed an application on 16.09.2021 for recalling of the Order. The Application for recalling the order dated 22.07.2021 was dismissed by the Order dated 10.03.2022 passed by the Adjudicating Authority (National Company Law Tribunal, New Delhi, Court-IV) in I.A. No. 5064/ND/2021 in CP No. IB1105/ND/2020 on the grounds that Tribunal is not vested with the power to recall or review its own order but also sufficient opportunities were granted to the Appellant to file the Reply which were not availed. Hence, the Appellant filed an Application for recalling the order dated 22.07.2021.

Contentions of the Appellant

1.   The Tribunal has the jurisdiction to recall its order under Rule 11 of the NCLT Rules, 2016 as the Tribunal had not decided upon any substantial issue on merits. The Rule 11 of the NCLT Rules is reproduced herein:

“11. Inherent Powers.- Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Tribunal to make such orders as may be necessary for meeting the ends of justice or to prevent abuse of the process of the Tribunal.”

2.   The Appellant relied upon the Order dated 16.03.2022 in CA (AT) (Ins) 271 of 2022 wherein the Tribunal was faced with similar facts wherein right to file Reply was closed but on application filed therein the reply was taken on record.

Contentions of Nirmal Trading Company (the Respondent)

1.   The Appellant was granted several opportunities by Adjudicating Authority to file a reply which were deliberately not availed. Thus, the act and conduct of Appellant does not require interference by the Court.

Held

NCLT relied upon the Order dated 16.03.2022 in CA (AT) (Ins) 271 of 2022 and Rule 11 of the NCLT Rules and allowed the Appeal and remanded the case back to the Adjudicating Authority to consider the application on merits and decide the same in accordance with law. It was held that the Adjudicating Authority has no jurisdiction to review its order after deciding a substantial issue, but the Adjudicating Authority has the jurisdiction to recall the order of the kind in dispute i.e. where the right to Reply was closed by an order on the ground that the opportunities granted were not availed.

This Article has been Compiled by Ayushi Misra (Senior Associate) and Arun Gupta (Partner). 

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