The NCLT has inherent power to recall orders only under specific circumstances, and insufficient evidence of fraud or procedural injustice warrants dismissal of recall applications.

1. The present application has been filed by the Applicant under Rule 11 of the NCLT Rules, 2016, seeking appropriate directions to recall the order dated 03.05.2023 (“CIRP Order”) and also to restore the CP No. 892 of 2023 and rehear the same after granting the Applicant an opportunity to file an Affidavit-in-Reply.

2. Brief Facts as per the Application:

2.1 The CP was filed by the Respondent No. 1 seeking initiation of CIRP against the Corporate Debtor. It is contended that an unauthorized Affidavit-in-Reply on behalf of the Corporate Debtor was tendered and the Board Resolution dated 10.02.2022 relied upon by Mr. Anil Chhabria, authorizing him to represent the Corporate Debtor was fraudulent and invalid. The applicant attempted to intervene in the matter, however, this Tribunal rejected such a request as there was no formal application on record. Accordingly, the Applicant had filed Intervention Petition No. 33 of 2023, however, during pendency of the Intervention Application, the Company Petition was allowed vide CIRP order dated 03.05.2023.

2.2 Thereafter, the Applicant approached Hon’ble NCLAT to assail the CIRP order vide CA(AT)(Ins.) No. 1171. The said appeal came to be withdrawn with liberty to approach this Tribunal for recalling the Order dated 03.05.2023.

2.3 It is submitted that the minutes of the Board Meeting in which the Board Resolution dated 10.02.2022 was passed has not been furnished. Furthermore, the Applicant is 50% shareholder of the Corporate Debtor and no such Board Resolution pertaining to the appointment of advocates in the captioned Petition has been ratified or signed by him and such a resolution without the Applicant’s approval has no legal sanctity. It is contended that the signatures on the Board Resolution are forged.

2.4 It is submitted that Company Petition claim arises out of default of the Consent terms dated 29.01.2021 filed before the Hon’ble Bombay High Court in Commercial Arbitration Petition No. 5939 of 2020 and such a claim cannot be the basis to maintain a Company Petition under Section 7 of the IBC.

2.5 It is submitted that default in the consent terms cannot be the basis for initiating CIRP as clause 11 of the consent terms stipulates that so long any default occurs the Respondent No. 1 has to continue to charge the default interest and proceed towards attachment and sale of its securities in execution proceedings before Hon’ble High Court.

2.6 It is submitted that the Applicant hypothecated certain securities with the Financial Creditor under the DTD Agreements and the Share Pledge Agreement, which was invoked by the Financial Creditor vide notice dated June 2020. Hence, the repayment obligations have been discharged for which the captioned Company Petition has been filed. It is submitted that Respondent No. 1 did not crystallize when the shares were realized or the amount that was received by them. The reliance has been placed on the judgment passed in PTC India Financial Services Limited v Venkateswarlu Kari and Anr . 2022 SCC OnLine SC 608 and S.P. Chengalvaraya Naidu v. Jagannath 1994 1 SCC 1, to contend that the in cases of invocation of the share pledge agreement, it was required disclose the amount received from such invocation and the date of invocation.

2.7 It is contended that the IIFL had executed financial documents with the Corporate Debtor with the intention of giving funds to Radius and Deserves builders LLP, an entity of Mr. Sanjay Chhabria. The Financial Creditor was aware of this arrangement and accordingly proceeded to institute CP No. 239 of 2022 for the exact same debt against Radius and Deserves Builders LLP and this Tribunal vide order dated 23.09.2023 rejected the said petition