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2024 Supreme(Online)(NCLAT) 515

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Justice Ashok Bhushan (Chairperson) , Hon'ble Mr. Barun Mitra (Member (Technical)) ,
ADISRI COMMERCIAL PRIVATE LIMITED – Appellant
Versus
RESERVE BANK OF INDIA AND OTHERS – Respondent
1075/ND/2023 COMPANY APPEAL(AT)(INS)

Mr. Ranjit Kumar and Mr. Abhijeet Sinha, Sr. Advocates with Mr. Rajarshi Banerjee, Mr. Rishav Banerjee, Mr. Bhavya Sethi, Mr. Chanakya Sharma, Advocates. Mr. Gopal Jain, Sr. Advocate with Mr. Vijayendra Pratap Singh, Mr. Vivek Shetty, Mr. Nishant Upadhyay, Mr. Akhilesh M., Mr. Kushapra Jain, Advocates for R1/RBI. Mr. Krishnendu Datta, Sr. Advocate with Mr. Raghav Shankar, Mr. Navneet R. Mr. Rahul Gupta, Ms. Neha, Advocates for Administrator. Mr. Arun Kathpalia, Sr. Advocate with Mr. Saurav Panda, Mr. Vaijayant Paliwal, Ms. Charu Bansal, Ms. Arushi Chandra, Ms. Mehak Nayak, Ms. Rashi Sharma, Ms. Diksha Gupta, Advocates for CoC. Mr. Raunak Dhillon, Mr. Nihood D., Advocates for SRA.

The Tribunal lacks jurisdiction to review its judgments but can recall them under specific circumstances; recall applications were deemed attempts to review merits, which is impermissible.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Section 227 - Reserve Bank of India Act, 1934 - Section 45-IE - Appeals against rejection of recall applications for order admitting corporate debtor into Corporate Insolvency Resolution Process (CIRP) - Appellant, a shareholder, challenged the admission order citing violation of natural justice and jurisdictional errors - The Adjudicating Authority found no merit in the recall applications, emphasizing that the appeals were essentially attempts to review the merits of the earlier decision - The applications were rejected as infructuous due to the approval of a Resolution Plan. (Paras 5, 21, 22)

(B) Jurisdiction - The Tribunal lacks the power to review its judgments but can recall them under specific circumstances - The recall applications were deemed to be a disguised review of the earlier order, which is not permissible. (Paras 18, 19)

(C) Principle of Natural Justice - The order was not in violation of natural justice as the Administrator represented the Corporate Debtor during the admission hearing. (Paras 20, 21)

Facts of the case:
The Appellant, a shareholder of SREI Infrastructure Finance Limited and SREI Equipment Finance Limited, filed appeals against the rejection of recall applications for an order admitting the companies into CIRP, which was based on defaults reported by the RBI.

Findings of Court:
The Adjudicating Authority found no grounds for recalling the admission order and emphasized that the recall applications were essentially attempts to review the merits of the earlier decision.

Issues: Whether the Adjudicating Authority had jurisdiction to admit the application under Section 227 and whether the recall applications were maintainable.

Ratio Decidendi: The Tribunal held that the recall applications were attempts to review the merits of the earlier decision, which is not within the Tribunal's jurisdiction, and that the order was not in violation of natural justice.

Result: Appeals dismissed.

JUDGEMENT

(4th April, 2024) Ashok Bhushan, J. These two Appeals by the same Appellant, the Shareholder of the Corporate Debtor have been filed against the common order dated 11.08.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench in IA (IB) No. 389/KB/2023 & IA (IB) No.391/KB/2023 respectively. The above IAs were filed by the Appellant for recall of the order dated 08.10.2021 passed by this Tribunal admitting the Corporate Debtor namely— ‘SREI Infrastructure Finance Limited’ (SIFL) and ‘SREI Equipment Finance Limited’ (SEFL) into CIRP. Both the Applications i.e. IA No. 391 of 2023 and IA No. 389 of 2023 having been rejected by the Adjudicating Authority, these Appeals have been filed challenging the said order dated 11.08.2023.

2. Brief background facts need to be noted for considering the issue raised in these Appeals:-

2.1. SIFL and SEFL are financial service providers registered with Reserve Bank of India (RBI). RBI passed an order dated 01.10.2021 in exercise of jurisdiction under Section 45- IE of the RBI Act, 1934 superseding the Board of Directors of SEFL and SIFL. One Mr. Rajneesh Sharma was appointed as Administrator with immediate effect. The Appellant who is shareholder of the Corporate Debtor- SIFL filed Writ Petition under Article 226 of the Constitution of India before the High Court of Bombay challenging the order dated 01.10.2021 passed by the RBI superseding the Board of Directors of SIFL and SEFL. The Writ Petition filed by the Appellant was dismissed by the Bombay High Court vide its judgment and order dated 07.10.2021. Challenging the order dated 07.10.2021, a Special Leave Petition (Diary) No.17275 of 2022 was filed by the Appellant before the Hon’ble Supreme Court which was subsequently dismissed by the Hon’ble Supreme Court. The RBI filed CP (IB) No. 295/KB/2021 against SIFL and CP (IB) No.294/KB/2021 against SEFL under Section 227 of the IBC r/w Rules 5 & 6 of the Insolvency and Bankruptcy (Insolvency & Liquidation proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 (“FSP Rules” for short). In the application, RBI before presenting the application has issued advance notice to the Administrator of SIFL and SEFL. The Applications were taken by the Adjudicating Authority on 08.10.2021. Administrator of SIFL and SEFL was also present before the Adjudicating Authority. Administrator who was present in the Court gave his consent to act as Administrator unconditionally. Adjudicating Authority by order dated 08.10.2021 admitted both the applications filed under Section 227 and declared the Moratorium in terms of Section 14 of the IBC in respect of financial service providers. The order dated 08.10.2021 passed in CP (IB) No.295/KB/2021 and order dated 08.10.2021 passed in CP (IB) No. 294/KB/2021 was challenged by the Appellant in this Tribunal by filing Company Appeal (AT) (Insolvency) No.1293 of 2022 and Company Appeal (AT) (Insolvency) No.1294 of 2022. The memo of appeal was presented in the office of the Appellate Tribunal on 22.11.2021 and after due scrutiny, defects were intimated, however, after delay of 321 days, Appellant filed memo of appeal with an application for condonation of delay of 321 days in re-filing the Appeal. Application seeking condonation of re-filing delay in both the above Appeals was heard and dismissed by this Appellate Tribunal vide its judgment dated 21.12.2022. In view of the dismissal of the application for condonation of delay in re-filing the Appeals, memo of both the Appeals were also rejected. Aggrieved by the order dated 21.12.2022, Appellant filed Civil Appeal No. 473 of 2023 and Civil Appeal No. 486 of 2023 before the Hon’ble Supreme Court. Hon’ble Supreme Court on 30.01.2023 dismissed both the Appeals filed by the Appellant being Civil Appeal No. 473 of 2023 and Civil Appeal No. 486 of 2023. After dismissal of Civil Appeals by the Hon’ble Supreme Court upholding the order of this Tribunal

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2024 Supreme(Online)(NCLAT) 515

NATIONAL COMPANY LAW APPELLATE TRIBUNALJustice Ashok Bhushan (Chairperson) , Hon'ble Mr. Barun Mitra (Member (Technical)) ,ADISRI COMMERCIAL PRIVATE LIMITED – AppellantVersusRESERVE BANK OF INDIA AND OTHERS – Respondent1075/ND/2023 COMPANY APPEAL(AT)(INS)

The Tribunal lacks jurisdiction to review its judgments but can recall them under specific circumstances; recall applications were deemed attempts to review merits, which is impermissible.

NATIONAL COMPANY LAW APPELLATE TRIBUNAL
Justice Ashok Bhushan (Chairperson) , Hon'ble Mr. Barun Mitra (Member (Technical)) ,
ADISRI COMMERCIAL PRIVATE LIMITED – Appellant
Versus
RESERVE BANK OF INDIA AND OTHERS – Respondent
1075/ND/2023 COMPANY APPEAL(AT)(INS)