Inadvertent Typographical Errors in NCLT Orders can be Corrected u/r 154 of NCLT Rules: NCLAT [Read Order]

In a recent case, the New Delhi bench of the National Company Law Appellate Tribunal (NCLAT) has held that inadvertent typographical errors in the orders passed by the National Company Law Tribunal (NCLT) can be corrected by exercising its powers under Rule 154 read with Rule 11 of the NCLT Rules, 2016.

On December 11, 2019, Gontermann Peipers India Ltd. began the Corporate Insolvency Resolution Process ("CIRP") against the Corporate Debtor ("CD"). The Committee of Creditors ("CoC") rejected the presented Resolution Plan. On April 30, 2021, a liquidation order was subsequently passed.

Through an e-auction, the appellant was deemed the Successful Auction Purchaser in the liquidation proceedings of Howen International Funds SPC, and they deposited the entire sale consideration. The Adjudicating Authority thereupon granted the reliefs and concessions requested by the appellant in IA (IB) No.1277/KB/2023 by order dated 10.05.2024.

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The Liquidator filed IA (IB) No.1124/KB/2024 after the order dated 10.05.2024 to correct an error in the reliefs granted. Specifically, the incorrect mention of assigning personal guarantees to the successful auction buyer was made during the hearing, but it was not requested or granted.

In its order dated 04.10.2024, the Adjudicating Authority granted the application and corrected the mistake that had occurred in the order dated 10.05.2024 at Sl. No.12 by replacing the phrase "GRANTED" with "NOT GRANTED."

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The appellant argued that the impugned order, which removed the phrase "GRANTED" from the order dated May 10, 2024, and replaced it with "NOT GRANTED," was merely a review of the judgment of May 10, 2024, which is outside the Adjudicating Authority's purview.

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In contrast, the Respondent argued that the auction in the liquidation process was conducted on a "as is where is basis" and that there was no clause stating that personal guarantees would be extinguished.

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The bench of Justice Ashok Bhushan (Judicial Member), Mr. Arun Baroka (Technical Member) and Mr. Barun Mitra (Technical Member) found that, as was evident from the record and minutes of the SCC meeting, the Adjudicating Authority explicitly held in paragraph 15 of its judgment that the use of the word "GRANTED" rather than "NOT GRANTED" in the order dated 10.05.2024 was an unintentional typographical error. The Adjudicating Authority used Rules 154 and 11 of the NCLT Rules, 2016 to support the correction of the error, acknowledging that it lacked the authority to review its own order.

In paragraph 17, it was noted that the adjudicating authority correctly noted that the current case is not one in which it is revisiting its ruling; rather, it is correcting an unintentional typographical error.

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 The Tribunal concluded that the appellant had not provided any substantial evidence to substantiate its claim for the extinguishment of personal or third-party guarantees, and thus dismissed the appeal.  The Adjudicating Authority correctly saw the earlier reference to "GRANTED" as a typographical error because the sale was of the Corporate Debtor as a continuing concern and there was no foundation for such relief.  It fixed the error by using its inherent authority under the NCLT Rules.  An unintentional judicial error cannot be allowed to benefit a party.

To Read the full text of the Order CLICK HERE

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