Pranav B Prem

The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, comprising Justice Sharad Kumar Sharma (Member-Judicial) and Jatindranath Swain (Member-Technical), has held that the National Company Law Tribunal (NCLT) cannot recall an order passed on merits by invoking its inherent powers under Rule 11 of the NCLT Rules, 2016. The Tribunal emphasized that the power to recall is limited to rectifying procedural errors and cannot be used as a substitute for a statutory review, which the NCLT has no power to undertake under the Insolvency and Bankruptcy Code, 2016 (IBC).

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Background

The corporate insolvency resolution process (CIRP) of M/s P Dot G Constructions Pvt. Ltd. was initiated in 2018. The appellant, RCC E-Construct Pvt. Ltd., was the Successful Resolution Applicant (SRA) under the approved resolution plan. Subsequently, six homebuyers filed applications before the NCLT, Chennai, seeking execution of their respective sale deeds. The NCLT, by a common order dated 24 March 2025, directed the SRA to act in accordance with the approved resolution plan and execute the sale deeds. The appellant later filed an application under Rule 11 of the NCLT Rules, 2016, seeking recall of the said order, claiming that its replies were not permitted to be filed and that the order caused “grave injustice.”

However, the NCLT dismissed the recall application on 28 April 2025, holding that the order was passed after hearing the parties on merits and could not be recalled through Rule 11. Aggrieved by this, the SRA filed the present appeal before the NCLAT.

Contentions

The appellant contended that the NCLT erred in deciding the homebuyers’ applications without considering its written submissions. It argued that Rule 11 preserves the tribunal’s inherent powers to recall an order where justice demands, and that the non-consideration of its reply amounted to procedural unfairness.

The respondent homebuyers, on the other hand, submitted that the order was passed after full participation of the appellant and consideration of its submissions. They argued that Rule 11 could not be invoked to revisit an order passed on merits, as such recall would amount to an impermissible review of the order.

Findings Of The NCLAT

The appellate tribunal noted that the order dated 24 March 2025 had been passed after hearing the appellant and that the directions were issued in accordance with the approved resolution plan. The grounds raised in the recall application — alleging that replies were not accepted or that the order caused injustice — would require re-examination of the merits of the case, which is beyond the scope of Rule 11. The bench observed:“Invocation of Rule 11 of NCLT Rules for the purposes of seeking recall of an order passed on merits, after participation of a party in the connected proceedings, is neither intended to prevent an abuse of process nor to meet the ends of justice.”  The NCLAT clarified that Rule 11 acts as a saving clause, empowering the tribunal to pass necessary orders only in exceptional cases — such as where there is procedural error, fraud, collusion, or violation of natural justice — and not for re-hearing or reviewing the matter on merits.

Reliance On Precedents

The bench referred to several judgments explaining the distinction between recall and review:

• In Aircastle (Ireland) Ltd. v. Ashish Chawchharia, RP of Jet Airways (India) Ltd. (Comp. App. (AT) (Ins) No.1178/2024), it was held that the power to recall may be exercised only in cases of procedural error, fraud, or prejudice caused by the tribunal itself, and that Rule 11 cannot be used to reopen or re-examine findings.

• In Union Bank of India v. Dinkar T. Venkatasubramanian (I.A. No.3961 of 2022 in Comp. App. (AT) (Ins.) No.729 of 2020), a five-member bench of the NCLAT held that while tribunals have inherent power to recall orders to correct procedural mistakes, they do not have power to review orders on merits. The Supreme Court later upheld this view in Union Bank of India v. Financial Creditors of Amtek Auto Ltd. (Civil Appeal No.4620/2023).

• The tribunal also cited the Supreme Court’s ruling in Greater Noida Industrial Development Authority v. Prabhjit Singh Soni (2024), which clarified that procedural review, i.e., setting aside an order passed under misapprehension or without hearing a party, is distinct from review on merits, and that the latter is not an inherent power of tribunals.

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Decision

Applying these principles, the NCLAT concluded that the NCLT had rightly dismissed the recall application. The appellant’s grounds—such as alleged denial of opportunity or injustice—did not fall within the limited circumstances where Rule 11 can be invoked. The bench held: “None of the grounds taken by the appellant fall within the ambit of recall. Since the order was passed on merits after participation, the NCLT rightly rejected the application, holding it beyond the scope of Rule 11 of the NCLT Rules, 2016.” Accordingly, the appeal was dismissed, and all pending interlocutory applications were disposed of.

Appearance

For Appellant: Mr. Shobit Phutela, Advocate

For Respondents: Mr. P. Elayarajkumar, Advocate for R1 to R6

Cause Title: RCC E-Construct Pvt. Ltd. v. J. Ramkumar & Ors.

Case No: Company Appeal (AT) (CH) (Ins) No. 446 of 2025 (IA No. 1280 of 2025)

Coram: Justice Sharad Kumar Sharma (Member-Judicial), Jatindranath Swain (Member-Technical)