Fraud Allegations in CIRP Not Grounds for Revisiting Delay Condonation Order: NCLAT Dismisses SEBI’s Recall Application [Read Order]
The Tribunal clarified that allegations of fraud in the CIRP cannot serve as grounds for reviewing procedural orders. The ruling reinforces procedural discipline in insolvency appeals and underscores the finality of NCLAT orders once the Supreme Court has dismissed an appeal
NCLAT, CIRP, SEBI’s Recall Application, Fraud Allegations in CIRP
NCLAT, CIRP, SEBI’s Recall Application, Fraud Allegations in CIRP
The principal bench of the National Company Law Appellate Tribunal (NCLAT) has dismissed SEBI’s attempt to recall a NCLAT judgment rejecting its delay condonation application in a CIRP-related appeal.
SEBI filed an IA before the Tribunal seeking recall of its judgment dated 21.11.2024 in Company Appeal. The appeal had challenged an NCLT order. SEBI argued that its application for condonation of delay had been rejected without considering relevant grounds, including the exclusion of time under Section 14 of the Limitation Act.
The regulator also raised concerns regarding a purportedly fraudulent Resolution Plan and procedural lapses in the Corporate Insolvency Resolution Process (CIRP) and sought to tag the appeal for consolidated consideration.
SEBI contended that the NCLAT had not addressed material grounds for condonation, including statutory provisions for exclusion of time, and that the CIRP involved fraudulent practices that warranted reconsideration.
SEBI argued that recalling the judgment was necessary to protect investor interests and ensure integrity in insolvency proceedings.
The respondents objected to the maintainability of the application. They noted that the Supreme Court had already dismissed SEBI’s Civil Appeals against the judgment and had not granted any liberty to file a recall.
They further submitted that allegations of fraud related to the CIRP were irrelevant to the procedural order on condonation of delay and could not be raised as grounds for recalling the judgment.
The bench comprising Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) examined established principles governing recall of judgments, referring to precedents such as Greater Noida Industrial Development Authority v. Prabhjit Singh Soni (2024) and Union Bank of India v. Dinkar T. Venkatasubramanian (2020).
It noted that recall applications are limited to cases of error apparent on the face of the record, clerical mistakes, or circumstances where justice demands intervention. Allegations of fraud in the CIRP were unrelated to the delay condonation order and therefore did not constitute valid grounds for recall.
Considering the Supreme Court’s dismissal of SEBI’s appeal and the absence of any recognized grounds for recall, the Tribunal dismissed the IA.
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