NCLT Delhi Refuses To Recall 4-Year-Old Resolution Plan, Says Inherent Power Can't Revive Time-Barred Appeal

The National Company Law Tribunal (NCLT) at New Delhi has refused to recall a resolution plan approved more than four years ago.

It ruled that its limited inherent power of recall under Rule 11 of the NCLT Rules cannot be used as a substitute for a time-barred appeal under the Insolvency and Bankruptcy Code (IBC) or to reopen the Committee of Creditors' (CoC) commercial wisdom.

"The limited inherent power of recall preserved under Rule 11 of the NCLT Rules, 2016 cannot be invoked as a substitute for a time-barred appeal under Section 61 of the Code, nor to reopen the non-justiciable commercial wisdom of the CoC or to conduct a fact-intensive enquiry into fraud that is beyond the summary jurisdiction of this Tribunal," the tribunal observed.

The bench of President Justice Anupinder Singh Grewal and Technical Member Ravindra Chaturvedi was hearing an application filed by Manoj Kumar Goyal and Kavita Goyal, members of the suspended board of Bigmoon Buildcon Private Limited.

They sought recall of the January 4, 2021 order approving the resolution plan submitted by the consortium of SBC Exports Limited and JM Propinfra Pvt. Ltd.

The applicants alleged that the corporate insolvency resolution process (CIRP) was vitiated by fraud, collusion, and misrepresentation. They claimed the corporate debtor's assets were grossly undervalued. They also alleged that the CoC consisted of shell companies controlled by the financial creditor and that the successful resolution applicant (SRA) was closely connected to the financial creditor.

Rejecting these contentions, the bench observed that Rule 11 preserves only a limited power to recall an order. It does not confer a power of review.

Referring to the National Company Law Appellate Tribunal's decision in Union Bank of India v. Dinkar T. Venkatasubramanian and later Supreme Court rulings, the bench observed that fraud on the tribunal and fundamental procedural defects are recognised grounds for invoking recall jurisdiction. It added that the power of recall cannot be exercised to reconsider the merits of a concluded insolvency resolution process.

The bench further observed that Section 31 of the IBC gives binding finality to an approved resolution plan. Relying on Essar Steel, K. Sashidhar, Ghanashyam Mishra, and Ebix Singapore, it reiterated that the commercial wisdom of the CoC is ordinarily beyond judicial review. The only exceptions are the limited grounds provided under the Code.

The bench also held that Article 137 of the Limitation Act governed the recall application. Since the right to seek recall accrued on January 4, 2021, the limitation period expired on January 3, 2024. The application was filed after that date. As there was no request for condonation of delay, the bench held that it was barred by limitation.

The bench was also not persuaded by the applicants' claim that they discovered the alleged fraud only later. It noted that they had themselves lodged an FIR in 2020 raising substantially similar allegations. They had also participated in the CIRP and had the opportunity to raise objections before the CoC. In these circumstances, the bench observed that the plea of subsequent discovery of fraud could not extend the limitation period in their favour.