Pranav B Prem

The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, comprising Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member), has held that the inherent powers under Rule 11 of the NCLT Rules, 2016 cannot be invoked as a substitute for statutory remedies. The Tribunal emphasized that such powers are limited to procedural contingencies and cannot be used to recall orders allegedly passed by fraud or without jurisdiction, especially in cases where the party had actively participated in the original proceedings.

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The appeal arose from an order passed by the NCLT Kochi Bench on 14.02.2025 in IA(IBC)27/KOB/2025, whereby the Adjudicating Authority rejected a recall application filed by Mr. Ashique Ponnamparambath, the former Managing Director of M/s. Platino Classic Motors (India) Private Limited. The appellant sought to recall an earlier order dated 11.12.2024 by invoking Rule 11 read with Rule 32 of the NCLT Rules. He contended that the impugned order was wrongly passed on the basis of a consent which, according to him, was never actually given.

The appellant argued that orders passed without jurisdiction or those tainted by fraud fall within the scope of recall and that such applications are maintainable under the inherent powers of the Tribunal. He relied on the Supreme Court's judgment in Sri Budhia Swain & Ors. v. Gopinath Deb & Ors, [(1999) 4 SCC 396], particularly paragraph 15, to support the proposition that an order passed without jurisdiction can be recalled.

However, the NCLAT rejected these arguments, stating that both the issues raised—lack of jurisdiction and wrongful recording of consent—require the adjudication of disputed facts, which cannot be resolved through a recall application under Rule 11. The Tribunal noted that the appellant had participated in the original proceedings, and therefore, if he intended to challenge the correctness of the order, the appropriate course would have been to file a statutory appeal rather than seeking recall.

The Appellate Tribunal made it clear that Rule 11, which provides for inherent powers, is intended only to fill procedural gaps where the rules are silent. It is not meant to create a parallel mechanism to override statutory remedies or allow parties to re-agitate issues which require appreciation of evidence. It observed: "Inherent powers can only be utilized to fill up the vacuums which are prevailing in the given procedural law, but they cannot act as a substitute to the process of law, which could have been exercised by the appellate forum."

The Bench further noted that any exercise of inherent powers must be confined to matters where no other remedy is available under the law. It cannot be extended to situations where a party has a well-defined statutory recourse. The Tribunal emphasized that the appellant’s contention—of fraud and lack of jurisdiction—raises mixed questions of fact and law. Deciding such contentions would require detailed examination of evidence, including whether the consent recorded in the earlier order was voluntary or procured under duress. This, the Tribunal held, is beyond the scope of Rule 11.

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Crucially, the NCLAT also remarked that by seeking recall in such a situation, the appellant was effectively attempting a review of the earlier order, which is impermissible in law as the Tribunal does not possess the power of review. Holding that the impugned order did not suffer from any error, the Tribunal dismissed the appeal. However, it left open the possibility for the appellant to pursue other appropriate remedies as may be available to him in law.  “We don’t find any merit in the appeal; the same is accordingly dismissed, however, without prejudice to the appellant’s right to resort to an appropriate remedy as available to him in accordance with law.”

Appearance

For Appellant: Mr. Arjun Suresh & Ms. Aarthi Rao, Advocates

Cause Title: Mr. Ashique Ponnamparambath V. Reuben George Joseph

Case No: Company Appeal (AT) (CH) (INS) NO.323/2025; IA No. 979 /2025

Coram: Justice Sharad Kumar Sharma [Judicial Member], Jatindranath Swain [Technical Member]