NCLAT Limits Rule 11 Jurisdiction: Recall Allowed Only for Procedural Lapses, Not Merits
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REEDLAW Legal News Network reports: In a pivotal ruling, the Appellate Tribunal clarified the narrow contours of Rule 11 jurisdiction, holding that inherent powers cannot be invoked to recall or revisit an order already adjudicated on merits. The Tribunal emphasised that recall under Rule 11 is confined strictly to correcting procedural lapses such as absence of notice or fraud, and cannot be used as a mechanism to re-argue concluded issues.
The Appellate Tribunal, comprising Justice Sharad Kumar Sharma (Judicial Member) and Mr. Jatindranath Swain (Technical Member), examined whether Rule 11 of the NCLT Rules could be invoked to recall an order that had been fully adjudicated. It held that inherent powers, by their nature, cannot serve as a vehicle to re-open issues determined on the merits and are limited solely to addressing procedural defects, including lack of notice or fraud. Since the order in question had been conclusively decided, the Tribunal found no legal basis for granting a recall.
The Appellant had challenged the impugned order dated 28.04.2025, by which the Adjudicating Authority dismissed an application filed under Rule 11 of the NCLT Rules seeking recall of an order passed on 24.03.2025. The Appellant had initially participated in the proceedings in which the order dated 24.03.2025 was passed on merits. Without questioning that principal order in appeal, the Appellant later invoked Rule 11 to recall the order, contending that replies were not permitted to be filed and that grave injustice would otherwise be caused. The Tribunal noted that Rule 11, being a savings provision, could not be invoked to reopen a matter already adjudicated on the merits after full participation of a contesting party.
It emerged from the record that the Corporate Debtor had been admitted into CIRP in July 2018 and that a Resolution Plan had been approved. Several homebuyers had sought execution of sale deeds for allotted units, and their interlocutory applications were disposed of by the Adjudicating Authority on 24.03.2025, directing the Appellant, as the Successful Resolution Applicant, to implement the plan. The Appellant was present and heard in those proceedings. The recall application filed subsequently sought restoration of the interlocutory applications and reconsideration of the entire matter, effectively seeking a review of the issues determined on the merits.
The Tribunal observed that the grounds urged by the Appellant—such as grave injustice and inadequate opportunity to file replies—were not supported by any procedural irregularity apparent on the face of the record. The recall request essentially invited the Adjudicating Authority to revisit and re-adjudicate issues already settled, which was outside the permissible scope of inherent powers. Since the Appellant had voluntarily participated in the proceedings
culminating in the order dated 24.03.2025, and had not raised objections at the relevant stage, the order was treated as a merit-based decision not open to recall.
Relying on precedents, the Tribunal reaffirmed that the power of recall under Rule 11 could be exercised only to correct procedural errors, such as orders passed without notice to necessary parties, judgments obtained by fraud, or errors resulting from oversight. It could not be invoked to review the substantive correctness of an order. The Tribunal referred to earlier NCLAT and Supreme Court decisions distinguishing recall from review, emphasising that review required statutory conferment, whereas recall was confined to procedural defects. As none of the recognised grounds for recall existed, the application was rightly dismissed.
The Appellate Tribunal thus concluded that the recall application amounted to a disguised review petition seeking rehearing of issues already adjudicated. Since such review jurisdiction was not available under the IBC or the NCLT Rules, the dismissal of the recall application by the Adjudicating Authority was upheld.
Mr. Shobit Phutela, Advocate, represented the Appellant.
For the Respondent/ Defendant: Mr. P. Elayarajkumar, Advocate, appeared for Respondent Nos. 1 to 6.
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