NCLAT: Tribunal has no Inherent Powers to Review under NCLAT Rules

NCLAT: Tribunal has no Inherent Powers to Review under NCLAT Rules

The power to review is not an inherent power. It must be conferred by law either specifically or by necessary implication

The National Company Law Appellate Tribunal (NCLAT) bench comprising of Justices A.I.S. Cheema, Anant Bijay Singh and Ms Shreesha Merla (Member Technical) on 3 February 2021 dismissed a Review Application filed by the appellant - Adish Jain (Shareholder of Corporate Debtor at J.P. Engineers Pvt Ltd) against the respondent - Worldwide Metals Private Limited and ruled that the Tribunal had no inherent powers to review its own order as per the National Company Law Appellate Tribunal Rules, 20216 as there is no express provision for 'Review'.

The Review Application was filed under Section 22 of the Recovery of Debts and Bankruptcy Act, 1993 (RDBA) and Rule 11 of the NCLAT Rules seeking review of the Order dated 10 August 2020, passed by this Tribunal which had dismissed the Appeal preferred by the Applicant/Appellant challenging the Order of the Adjudicating Authority, which had admitted the Application under Section 9 of Insolvency and Bankruptcy Code, 2016 (IBC) preferred by Worldwide Metals Private Limited (Operational Creditor).

The Review applicant/appellant submitted that was a 'pre-existing dispute' and stated that the National Company Law Tribunal (NCLT) had erred in holding that disputes raised by the Corporate Debtor were illusory, especially when the ledger of the Corporate Debtor had been reconciled and admitted by the Operational Creditor by signing the same.

The applicants contended that the NCLT had erred in relying on the bank statement of the Operational Creditor and ought to have questioned the Operational Creditor's narration of payment which was misleading. Under such a scenario the NCLT ought to have called upon the Corporate Debtor to produce its bank account before confirming the bank statement of the Operational Creditor, argued the appellants.

The Review Application had filed the Applicant under Section 22 of the RDBA and Rule 11 of NCLAT Rules and submitted that this Tribunal was bound by the provisions under the Code of Civil Procedure, 1908. Their contention was that this Tribunal was not constituted by RDBA, rather it was established under Companies Act 2013, and conferred with jurisdiction as per provisions of IBC.

The NCLAT discussed the relevant Sections pertinent to inherent powers in brief. The Tribunal referred Rule 11 of the NCLAT, 2016 which deals with 'inherent powers' and Section 420(2) of the Companies Act, 2013 and noted that a Court or Tribunal has no Jurisdiction to review its Orders unless authorized by a statute.

The NCLAT referred to the decision passed by Supreme Court in Assistant CIT vs. Saurashtra Kutch Stock Exchange Ltd. (2008), where it was observed, "it is well-settled that the power to review is not an inherent power. It must be conferred by law either specifically or by necessary implication. No provision in the Act was brought to NCLAT notice from which it could be gathered that the Government had power to review its own orders. If the Government had no power to review its own order, it is obvious that its delegate could not have reviewed its order."

NCLAT observed that "it is significant to mention that in the NCLAT Rules, 2016 there is no express provision for 'Review' and the contention of the Review Application that Rule 11 of the NCLAT Rules, 2016 is applicable and therefore this Application is maintainable, is untenable as the power vested in this Tribunal under Rule 11 can only be exercised to enhance cause of justice or prevent abuse of process. To reiterate, Power of Review has to be granted by statute and the 'power of Review' is not an inherent power and therefore cannot be exercised unless conferred specifically or by necessary implications."

Further NCLAT highlighted that the error must be a 'patent error' which is 'manifest' and 'self-evident' and proceed to record that the submissions of the Review Application, in this case, would amount to the reappraisal of evidence and findings of fact cannot be revisited within the limited scope of exercise of powers under Rule 11 of the NCLAT Rules, 2016.

The NCLAT concluded that there was no 'mistake apparent from the record' and the Applicant cannot be permitted to seek rehearing of the Appeal in regard to any finding which would amount to sitting in an Appeal in disguise and dismissed the appeal as it was impermissible in law.