NCLAT: NCLT Can Rectify Inadvertent Typographical Errors Under Rule 154 Without Exercising Power of Review
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, comprising Justice Ashok Bhushan (Chairperson), Mr. Barun Mitra (Technical Member), and Mr. Arun Baroka (Technical Member), dismissed two appeals filed by Howen International Funds SPC against the correction of an inadvertent typographical error made by the National Company Law Tribunal (NCLT), Kolkata Bench. The Appellate Tribunal upheld the NCLT's order, holding that typographical errors in judicial orders can be corrected under Rule 154 read with Rule 11 of the NCLT Rules, 2016, and that such corrections do not amount to a review of the order.
Background
The Corporate Insolvency Resolution Process (CIRP) against Gontermann Peipers India Ltd. commenced on 11.12.2019. After the Committee of Creditors (CoC) failed to approve a resolution plan, the NCLT passed a liquidation order on 30.04.2021. During the liquidation proceedings, an e-auction was conducted where Howen International Funds SPC emerged as the Successful Auction Purchaser and paid the full sale consideration.
Thereafter, the Successful Auction Purchaser filed an application—IA (IB) No.1277/KB/2023—seeking various reliefs and concessions related to the acquisition. By an order dated 10.05.2024, the Adjudicating Authority granted several reliefs as prayed. However, Sl. No.12 in the list of granted concessions mentioned that all personal guarantees (including third-party guarantees) stood assigned to the Successful Auction Purchaser—an issue neither argued nor accepted during the hearing.
The Liquidator, as well as Indian Bank (a financial creditor), filed separate applications—IA (IB) No.1124/KB/2024 and IA (IB) No.1493/KB/2024—pointing out that the inclusion of the word “GRANTED” in relation to Sl. No.12 was an inadvertent typographical error. It was submitted that such a relief had not been granted during the hearing and was contrary to binding legal precedent. The Liquidator relied on Lalit Kumar Jain v. Union of India [(2021) 9 SCC 321], where the Supreme Court held that approval of a resolution plan does not ipso facto discharge personal guarantors of liability.
Accepting these applications, the Adjudicating Authority passed an order dated 04.10.2024, substituting the word “NOT GRANTED” in place of “GRANTED” under Sl. No.12 of its earlier order. Aggrieved by this rectification, the appellant approached the NCLAT.
Appellant's Contentions
The appellant contended that the impugned order amounted to a review of the order dated 10.05.2024, which is beyond the jurisdiction of the NCLT. It was argued that the correction altered the substance of the order, and no application for review had been filed. The appellant also asserted that the relief regarding assignment of personal guarantees was specifically sought and granted, and therefore, no case of inadvertent error could be made out.
Respondents' Submissions
The Liquidator and Indian Bank argued that the auction was conducted on an "as is where is" basis, and no extinguishment or assignment of personal guarantees was ever contemplated or approved by the CoC or the Stakeholders Consultation Committee (SCC). They emphasized that during the hearing, the Liquidator had objected to the inclusion of such a relief and the appellant's own counsel conceded that the request for assignment of personal guarantees was not legally sustainable. The erroneous inclusion of the word “GRANTED” was therefore clearly a typographical mistake. The Liquidator further pointed to its written submissions filed in IA (IB) No.1277/KB/2023, which recorded that the appellant had expressly given up its prayer for assignment of personal guarantees, making the mistake apparent on the face of the record.
NCLAT’s Analysis and Findings
The Appellate Tribunal extensively examined the record and found that the NCLT had rightly exercised its powers under Rule 154 (rectification of orders) and Rule 11 (inherent powers) of the NCLT Rules. It observed that the correction did not involve a re-evaluation of the merits of the earlier decision but merely rectified a clerical mistake.
Citing paragraph 17 of the NCLT’s order, the Tribunal emphasized: “We are conscious of the legal position that the Adjudicating Authority is not vested with any power to review its own decisions. We make it clear that this order is being issued only to rectify that inadvertent typographical error... under Rule 154 read with 11 of the NCLT Rules, 2016.”
The NCLAT also referred to the Supreme Court’s rulings in Lalit Kumar Jain v. Union of India and Maharashtra State Electricity Board v. Official Liquidator [[2017] ibclaw.in 19 SC], reiterating that liquidation or insolvency of a principal debtor does not discharge the guarantor unless explicitly provided under contract.
The Tribunal held that there was no evidence to suggest that the appellant was ever granted extinguishment or assignment of personal guarantees. Since no such relief was approved by the SCC or mentioned in the auction conditions, the NCLT correctly rectified the mistaken use of the word “GRANTED.” It added that courts cannot permit a party to take advantage of a manifest judicial error that occurred inadvertently.
Verdict
The NCLAT concluded that the Adjudicating Authority had not exceeded its jurisdiction in rectifying the typographical error and had rightly acted under Rule 154 and Rule 11 of the NCLT Rules. It held that there was no question of review, and the correction was necessary to prevent misuse of a mistake in the judicial order. Accordingly, both the appeals were dismissed, and the rectification of the order dated 10.05.2024 was upheld.
Appearance
For Appellants: Mr. Abhijeet Sinha, Sr. Advocate with Mr. Akshat Malpani, Advocate.
For Respondents: Mr. Kumarjeet Banerjee, Ms. Sanchari Chakraborty, Mr. Aadil Naushad, Mr. Devanshu Lahiry, Advocates.
Cause Title: Howen International Funds SPC V. Raj Singhania Liquidator of Gontermann Peipers India Ltd.
Case No: Company Appeal (AT) (Insolvency) Nos. 2275 and 2276 of 2024
Coram: Justice Ashok Bhushan [Chairperson] , Mr. Arun Baroka [Member (Technical)], Mr. Barun Mitra [Member (Technical)]
[Read/Download order]
