Recall Application u/r 11 Cannot be Utilised as Camouflage to Seek Review of an Order Decided on Merits: NCLAT [Read Order]
Dismissing the appeal of the appellant, the Tribunal clarified that Rule 11 preserves inherent powers only for correcting procedural errors or preventing abuse of process, not for reopening substantive findings.
The National Company Law Appellate Tribunal (NCLAT) Chennai bench has ruled that recall applications filed under Rule 11 of the NCLT Rules, 2016, cannot be misused as a disguise to seek review of orders already decided on merits.
The case arose from a challenge to the NCLT’s order dated 28 April 2025 rejecting RCC E‑Construct’s recall plea against an earlier order of 24 March 2025.
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The appellant, RCC E‑Construct, claimed to be the successful resolution applicant in the insolvency proceedings of P Dot G Constructions Pvt. Ltd. and sought recall of the NCLT’s directions requiring it to act in accordance with the approved resolution plan.
The recall application was filed under Rule 11 of the NCLT Rules, which preserves the Tribunal’s inherent powers to pass orders necessary to meet the ends of justice or prevent abuse of process.
RCC E‑Construct argued that grave injustice had been caused as its replies were not considered and that the applications of homebuyers were disposed of without proper adjudication.
The Appellate Tribunal, however, held that the grounds raised by the appellant essentially amounted to a review of the merits of the order dated 24 March 2025. It emphasised that Rule 11 cannot be invoked to revisit substantive findings, as the power of review is not vested in the NCLT or NCLAT under the Insolvency and Bankruptcy Code (IBC).
The Tribunal drew upon precedents including Printland Digital (India) Pvt. Ltd. v. Nirmal Trading Company, Aircastle (Ireland) Ltd. v. RP of Jet Airways, and Union Bank of India v. Dinkar T. Venkatasubramanian, all of which clarified that recall is limited to correcting procedural errors such as fraud, lack of notice, or mistake of the court, while review requires statutory conferment.
The judgment further referred to the Supreme Court’s decision in Greater Noida Industrial Development Authority v. Prabhjit Singh Soni, which distinguished between procedural review and review on the merits.
The Court had held that procedural review, akin to recall, is an inherent power to set aside palpably erroneous orders passed under misapprehension or in violation of natural justice. However, a review of merits involves re‑examination of substantive findings, which is not an inherent power.
Applying these principles, the two-member bench of Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member) concluded that RCC E‑Construct had voluntarily participated in the proceedings leading to the 24 March 2025 order, which was passed after hearing its submissions.
The grounds of “grave injustice” and “lack of opportunity to file replies” were found to be vague and insufficient to invoke recall jurisdiction. Since the order was passed on merits, the recall application was in effect a review attempt, which is impermissible under Rule 11.
The Tribunal categorically held that recall under Rule 11 cannot be utilised as a camouflage to reopen or re‑examine findings already adjudicated. It dismissed the company's appeal, affirming the NCLT’s rejection of the recall application, and closed all pending interlocutory applications.
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