Adisri Commercial Private Limited vs Reserve Bank Of India And Others

[Arising out of Order dated 11.08.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata in IA (IB) No.391/KB/2023]

In the matter of:

Adisri Commercial Pvt. Ltd. ....Appellant Vs. Reserve Bank of India & Ors. ...Respondents For Appellant: Mr. Ranjit Kumar and Mr. Abhijeet Sinha, Sr. Advocates with Mr. Rajarshi Banerjee, Mr. Rishav Banerjee, Mr. Bhavya Sethi, Mr. Chanakya Sharma, Advocates. For Respondents: Mr. Gopal Jain, Sr. Advocate with Mr. Vijayendra Pratap Singh, Mr. Vivek Shetty, Mr. Nishant Upadhyay, Mr. Akhilesh M., Mr. Kushapra Jain, Advocates for R1/RBI. Mr. Krishnendu Datta, Sr. Advocate with Mr. Raghav Shankar, Mr. Navneet R. Mr. Rahul Gupta, Ms. Neha, Advocates for Administrator. Mr. Arun Kathpalia, Sr. Advocate with Mr. Saurav Panda, Mr. Vaijayant Paliwal, Ms. Charu Bansal, Ms. Arushi Chandra, Ms. Mehak Nayak, Ms. Rashi Sharma, Ms. Diksha Gupta, Advocates for CoC. Mr. Raunak Dhillon, Mr. Nihood D., Advocates for SRA.

Company Appeal (AT) (Insolvency) No.1075 of 2023

[Arising out of Order dated 11.08.2023 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata in IA (IB) No. 389/KB/2023]

In the matter of:

Adisri Commercial Pvt. Ltd. ....Appellant Vs. 2

Reserve Bank of India & Ors. ...Respondents For Appellant: Mr. Abhijeet Sinha, Sr. Advocate with Mr. Rajarshi Banerjee, Mr. Rishav Banerjee, Mr. Bhavya Sethi, Mr. Chanakya Sharma, Advocates.

For Respondents: Mr. Gopal Jain, Sr. Advocate with Mr. Vijayendra Pratap Singh, Mr. Vivek Shetty, Mr. Nishant Upadhyay, Mr. Akhilesh M., Mr. Kushapra Jain, Advocates for R1/RBI. Mr. Krishnendu Datta, Sr. Advocate with Mr. Raghav Shankar, Mr. Navneet R. Mr. Rahul Gupta, Ms. Neha, Advocates for Administrator. Mr. Arun Kathpalia, Sr. Advocate with Mr. Saurav Panda, Mr. Vaijayant Paliwal, Ms. Charu Bansal, Ms. Arushi Chandra, Ms. Mehak Nayak, Ms. Rashi Sharma, Ms. Diksha Gupta, Advocates for CoC. Mr. Raunak Dhillon, Mr. Nihood D., Advocates for SRA.

JUDGMENT

(4 April, 2024) th

Ashok Bhushan, J.

These two Appeals by the same Appellant, the Shareholder of the

Corporate Debtor have been filed against the common order dated

11.08.2023 passed by the Adjudicating Authority (National Company Law

Tribunal), Kolkata Bench in IA (IB) No. 389/KB/2023 & IA (IB)

No.391/KB/2023 respectively. The above IAs were filed by the Appellant for

recall of the order dated 08.10.2021 passed by this Tribunal admitting the

Corporate Debtor namely-- 'SREI Infrastructure Finance Limited' (SIFL) and

'SREI Equipment Finance Limited' (SEFL) into CIRP. Both the Applications

i.e. IA No. 391 of 2023 and IA No. 389 of 2023 having been rejected by the

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 3

Adjudicating Authority, these Appeals have been filed challenging the said

order dated 11.08.2023.

2. Brief background facts need to be noted for considering the issue

raised in these Appeals:-

2.1. SIFL and SEFL are financial service providers registered with Reserve

Bank of India (RBI). RBI passed an order dated 01.10.2021 in exercise of

jurisdiction under Section 45- IE of the RBI Act, 1934 superseding the

Board of Directors of SEFL and SIFL. One Mr. Rajneesh Sharma was

appointed as Administrator with immediate effect. The Appellant who is

shareholder of the Corporate Debtor- SIFL filed Writ Petition under Article

226 of the Constitution of India before the High Court of Bombay

challenging the order dated 01.10.2021 passed by the RBI superseding the

Board of Directors of SIFL and SEFL. The Writ Petition filed by the Appellant

was dismissed by the Bombay High Court vide its judgment and order dated

07.10.2021. Challenging the order dated 07.10.2021, a Special Leave

Petition (Diary) No.17275 of 2022 was filed by the Appellant before the

Hon'ble Supreme Court which was subsequently dismissed by the Hon'ble

Supreme Court. The RBI filed CP (IB) No. 295/KB/2021 against SIFL and

CP (IB) No.294/KB/2021 against SEFL under Section 227 of the IBC r/w

Rules 5 & 6 of the Insolvency and Bankruptcy (Insolvency & Liquidation

proceedings of Financial Service Providers and Application to Adjudicating

Authority) Rules, 2019 ("FSP Rules" for short). In the application, RBI before

presenting the application has issued advance notice to the Administrator of

SIFL and SEFL. The Applications were taken by the Adjudicating Authority

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 4

on 08.10.2021. Administrator of SIFL and SEFL was also present before the

Adjudicating Authority. Administrator who was present in the Court gave

his consent to act as Administrator unconditionally. Adjudicating Authority

by order dated 08.10.2021 admitted both the applications filed under

Section 227 and declared the Moratorium in terms of Section 14 of the IBC

in respect of financial service providers. The order dated 08.10.2021 passed

in CP (IB) No.295/KB/2021 and order dated 08.10.2021 passed in CP (IB)

No. 294/KB/2021 was challenged by the Appellant in this Tribunal by filing

Company Appeal (AT) (Insolvency) No.1293 of 2022 and Company Appeal

(AT) (Insolvency) No.1294 of 2022. The memo of appeal was presented in the

office of the Appellate Tribunal on 22.11.2021 and after due scrutiny,

defects were intimated, however, after delay of 321 days, Appellant filed

memo of appeal with an application for condonation of delay of 321 days in

re-filing the Appeal. Application seeking condonation of re-filing delay in

both the above Appeals was heard and dismissed by this Appellate Tribunal

vide its judgment dated 21.12.2022. In view of the dismissal of the

application for condonation of delay in re-filing the Appeals, memo of both

the Appeals were also rejected. Aggrieved by the order dated 21.12.2022,

Appellant filed Civil Appeal No. 473 of 2023 and Civil Appeal No. 486 of

2023 before the Hon'ble Supreme Court. Hon'ble Supreme Court on

30.01.2023 dismissed both the Appeals filed by the Appellant being Civil

Appeal No. 473 of 2023 and Civil Appeal No. 486 of 2023. After dismissal of

Civil Appeals by the Hon'ble Supreme Court upholding the order of this

Tribunal dated 21.12.2022, Appellant filed IA No. 391/KB/2023 as well as

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 5

IA No. 389/KB/2023 on 14.02.2023 praying Adjudicating Authority to recall

the order dated 08.10.2021 in the CIRP of the Corporate Debtor. The

applications filed by the Appellant being IA No. 391/KB/2023 and IA No.

389/KB/2023 were opposed both by the RBI as well as Administrator. CIRP

against the Corporate Debtor proceeded and Resolution Plans were

submitted and received in the CIRP of the Corporate Debtor. CoC on

14.02.2023 approved the Resolution Plan submitted by NARCL. Application

was filed before the Adjudicating Authority for approval of the Resolution

Plan which remain pending. Intervention applications were filed both by the

Consortium of CoC of SIFL and SEFL before the Adjudicating Authority for

intervention. Intervention applications were also filed in IA No.

391/KB/2023 and IA No. 389/KB/2023. Recall applications were opposed

by the RBI, Administrator as well as Consortium of Committee of Creditors

raising various objections regarding the maintainability of the application.

Adjudicating Authority after hearing the parties in the applications as well

as the intervention applications, by impugned order dated 11.08.2023

rejected IA No. 391/KB/2023 and IA No. 389/KB/2023. Aggrieved by the

order dated 11.08.2023, these two Appeals have been filed.

3. We have heard Shri Ranjit Kumar, Senior Advocate and Shri Abhijeet

Sinha, Learned Senior Counsel with Shri Rishav Banerjee for the Appellant.

Shri Gopal Jain, Learned Senior Counsel has appeared for RBI, Shri

Krishnendu Datta, Learned Senior Counsel has appeared on behalf of

Administrator, Shri Arun Kathpalia, Learned Senior Counsel has also

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 6

appeared on behalf of the CoC and Shri Raunak Dhillon, Learned Counsel

has appeared for SRA.

4. By our order dated 16.08.2023, we granted time to the RBI to file a

reply to the application. Reply has been filed by the RBI in pursuance of our

order dated 16.08.2023. Counsel for the Administrator, CoC and SRA has

also advanced submissions objecting entertainment of these Appeals.

5. Shri Ranjit Kumar, Learned Senior Counsel appearing for the

Appellant challenging the order dated 08.10.2021 passed by the

Adjudicating Authority admitting CP (IB) No. 294/KB/2021 and CP (IB) No.

295/KB/2021 filed under Section 227 by the RBI submits that the order

passed by the Adjudicating Authority was order passed in violation of

principal of natural justice and deserves to be recalled. It is further

submitted that the default on the part of UCO Bank which was relied in the

applications filed by the RBI were default during the period of Section 10A

and the application filed by the RBI was barred by Section 10A and could

not have been entertained. Adjudicating Authority committed error of

jurisdiction in admitting the application by order dated 08.10.2021 which

jurisdiction error need to be corrected in the recall application. It is

submitted that an order passed without jurisdiction can be recalled by the

Adjudicating Authority in exercise of its inherent jurisdiction. It is submitted

that on account of default during the period covered by Section 10A, no

application can be filed. It is submitted that as per Financial Service

Providers Rules, 2019, the application under Section 227 has to be in

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 7

accordance with the provisions of the Code. It is submitted that the

Adjudicating Authority committed error in rejecting the recall application. It

is further submitted that the Appeals filed by the Appellant against the order

dated 08.10.2021 was dismissed by this Tribunal on account of rejection of

the application praying for condonation of re-filing delay and the issues

raised by the Appellant were never decided on merits. Order of the Hon'ble

Supreme Court dated 30.01.2023 dismissing Civil Appeals upholding the

order of this Tribunal rejecting the application for condonation of re-filing

delay, hence, neither this Tribunal nor the Hon'ble Supreme Court adverted

to the issue raised on merits by the Appellant for recall of the order dated

08.10.2021. The Adjudicating Authority committed error in observing that

since the similar grounds were raised by the Appellant in this Tribunal and

the Hon'ble Supreme Court, Appellant cannot be allowed to re-agitate the

said ground which observations are erroneous and incorrect. Issues have

never been decided on merits. Principle of res judicata are not attracted.

Appellant being shareholder of the Corporate Debtor had every right to pray

for recall of the order dated 08.10.2021 admitting Section 227 application

filed by the RBI. All the assets and liability of the SIFL were transferred to its

subsidiary SEFL by Business Transfer Agreement dated 16.08.2019. Due to

above, there was no debt in SIFL and the admission of SIFL to the CIRP is

not in accordance with law. No default having been committed by SIFL

towards payment of any debt, admission was wholly illegal and deserves to

be recalled.

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 8

6. Learned Counsel for the RBI refuting the submissions of the Counsel

for the Appellant submits that the applications for recall filed by the

Appellant were not maintainable and deserves to be rejected and has rightly

been rejected by the Adjudicating Authority. It is submitted that the

admission order dated 08.10.2021 was assailed by the Appellant by filing

two appeals in this Tribunal which were dismissed by this Tribunal on

21.12.2022. Against which order, Appellant also filed Civil Appeals in the

Hon'ble Supreme Court which too were dismissed by the Hon'ble Supreme

Court on 30.01.2023. It is submitted that the Appellant having filed the

Appeals unsuccessfully against the order dated 08.10.2021 cannot now

resort to filing of recall application before the Adjudicating Authority after 17

months of order of admission passed on 08.10.2021. It is submitted that

there was no lack of jurisdiction of the Adjudicating Authority in passing of

the impugned order dated 08.10.2021. Application was filed by the RBI, the

sectoral regulator of the financial service providers as per the FSP Rules,

2019, there was material before the Adjudicating Authority. The default

committed by financial service providers in November 2020 and February,

2021 were still continuing. Record of continuous defaults were before the

Adjudicating Authority and the Adjudicating Authority satisfied that it was a

fit case for admission has passed the impugned order. Appellant has filed

the recall application which is nothing but review application disguised as

recall application. Appellant is virtually seeking review of the order dated

08.10.2021 raising various pleas which cannot be entertained. Submission

of the Appellant that there is violation of principle of natural justice has no

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 9

legs to stand. The Board of Directors of the SIFL having been superseded by

the RBI on 01.10.2021, it was Administrator who was representing the

Corporate Debtor and the order dated 08.10.2021 passed by the

Adjudicating Authority was after hearing the Administrator, hence, there

was no question of violation of principle of natural justice. There was no

requirement of law to issue any notice to any shareholder of the Corporate

Debtor. It is further submitted that Section 10A of the IBC shall not apply to

financial service providers. Section 10A is applicable with regard to

application filed under Sections 7, 9 and 10 and there is nothing in Section

10A to indicate that it shall apply to application filed by RBI under Section

227 of the IBC. It is submitted that no debt was owed by the Corporate

Debtor to the RBI who was only sectoral regulator. RBI considered various

factors such as serious deterioration in the Corporate Debtors' financial

position, several supervisory concerns, non-compliances with regulations

etc. hence, the order was passed. In the petition for CIRP, default towards

numerous lenders were also indicated. It is submitted that no grounds have

been made out to recall the judgment dated 08.10.2021 passed by the

Adjudicating Authority and applications are nothing but efforts of Appellant

to obstruct and stall the CIRP and abuse the process of law.

7. Learned Counsel for the SRA has submitted that the Appeals have

become infructuous since Resolution Plan of NARCL which was approved by

the CoC has been subsequently approved by this Tribunal by order dated

05.01.2024. Approval of the Resolution Plan of NARCL was also challenged

before this Tribunal in Company Appeal (AT) (Ins.) No.1072 of 2023 which

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 10

was dismissed on 05.01.2024 and Appeal against the order dated

05.01.2024 of this Tribunal was also being dismissed by the Hon'ble

Supreme Court on 07.03.2024. The Resolution Plan having been approved

and affirmed upto the Hon'ble Supreme Court, Appeals filed by the

Appellant are virtually infructuous and need to be dismissed on this ground

alone. It is submitted that the NARCL has also implemented the Resolution

Plan and Appeals need to be dismissed in limine.

8. Shri Arun Kathpalia, Learned Senior Counsel appearing for the CoC

also contended that there are no grounds made out in the recall applications

filed by the Appellant to recall the judgment dated 08.10.2021. It is

submitted that the prayer made in the recall applications was nothing but

prayer to review the judgment dated 08.10.2021 on merits which is not the

jurisdiction vested with the Adjudicating Authority and the Adjudicating

Authority did not commit any error in rejecting the recall applications. It is

submitted that the recall application which was filed under Section 420 of

the Companies Act, 2013 could not have been entertained since the power

under Section 420(2) was only with rectification of an error apparent on the

face of the record. Further in view of the appeals having been filed against

the order dated 08.10.2021, remedy under Section 420(2) was not available.

The recall application was nothing but the second appeal in disguise against

the CIRP admission order. Appeals were filed by the Appellant against the

order dated 08.10.2021 which stood dismissed up to the Hon'ble Supreme

Court. There is no occasion for permitting the Appellant to indirectly

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 11

challenge an order which was unsuccessful challenge by the Appellant up to

the Hon'ble Supreme Court.

9. We have considered the submissions of the Counsel for the parties

and perused the record.

10. We have already noticed that the Board of Directors of SIFL was

superseded by order dated 01.10.2021 passed by the RBI under Section 45-

IE. Order dated 01.10.2021 passed by the RBI is as follows:-

"CO.DOR.ISG.No. 51467/20.27.007/2021-2022

October 01, 2021

Supersession of the Board of Directors of M/s Srei Infrastructure Finance Limited, Kolkata, West Bengal under Section 45-IE of the Reserve Bank of India Act, 1934

Order

Srei Infrastructure Finance Limited, Kolkata (SIFL) is a Non-Banking Finance Company (CoR No.B.05.02773 dated March 31, 2011), governed by the provisions of the Reserve Bank of India Act, 1934.

2. The statutory inspection of the SIFL conducted by Reserve Bank of India under Section of 45-N of Reserve Bank of India Act, 1934 with reference to its financial position as on March 31, 2020 revealed serious deterioration in its financial position.

3. SIFL has defaulted in its payment obligations in respect of bank borrowings and market borrowings, which reveals serious concerns about the conduct of the affairs of the company.

4. Taking into account the defaults committed by SIFL in meeting various repayment obligations and concerns emanating from the inspection/special audit conducted by the Reserve Bank, in exercise of the

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 12

powers conferred by Section 45-IE of the Reserve Bank of India Act, 1934, the Reserve Bank of India, hereby supersedes the Board of Directors of SIFL and appoints Shri Rajneesh Sharma as its Administrator with immediate effect. The major supervisory concerns constituting the basis of the supersession of the Board of Directors are given in Annex.

The major reasons for supersession of Board of Directors are as follows:

i. As per data submitted by financial institutions, the total borrowings of SIFL stood at Rs.11,746 crore, on June 30, 2021. SIFL has defaulted with 12 lenders aggregating Rs.3,566 crore.

ii. The Board of Directors of SIFL and Srei Equipment Finance Limited (SEFL) had on July 04, 2019 approved transfer of assets and liabilities (including liabilities towards issued and outstanding NCDs) of SIFL by way of slump exchange to SEFL with effect from October 01. 2019. Despite non-receipt of No- objection Certificate (NOC) from majority of the lending institutions, SIFL and SEFL had given effect to the slump exchange.

iii. Several supervisory concerns (e.g. violation of IRACP norms, evergreening of NPA accounts, connected lending, weak corporate governance standards, inadequate systems and control, poor compliance standards, etc.) observed during past inspections by the Reserve Bank have been communicated through supervisory letters, DO letters and also reiterated in the meetings held by the Reserve Bank with the management of the company.

iv. Inspection of SIFL with reference to financial position as on March 31, 2020 revealed that the company is not meeting minimum regulatory CRAR (15%) and NOF (Rs.300 crore). Further, infrastructure loans as a percentage of total assets was assessed at 3.33% as against the regulatory requirement of 75%.

v. Special Audit conducted by the Reserve Bank in December 2020-January 2021 observed that funds disbursed to certain borrowers were received back from such borrowers/ their group companies on the

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 13

same date/dates close to the date of disbursement, which indicated evergreening.

vi. SIFL has remained non-compliant with RBI regulations and supervisory instructions.

Despite continuous engagement and follow up by the Reserve Bank, SIFL has failed to take corrective action on governance, systems and controls, compliance, etc."

11. It is also relevant to notice that the supersession order dated

01.10.2021 indicate that the SIFL has defaulted with 12 lenders aggregating

to Rs.3,566 Crores. Reasons for supersession were noticed in the Annexure

to the order as extracted above.

12. Administrator was appointed by order dated 01.10.2021, Shri

Rajneesh Sharma with immediate effect. The order dated 01.10.2021 was

challenged by the Appellant before the Bombay High Court by Writ Petition

No. 2272 of 2021 which were dismissed by the Bombay High Court by order

dated 07.10.2021. The Bombay High Court while dismissing the Writ

Petition in paragraphs 9.1 and 9.2 noticed as follows:-

"9.1. From a perusal of the order dated 01.10.2021, we find that statutory inspection of respondent No.2 was conducted by Reserve Bank of India under section 45N of the Reserve Bank of India Act, 1934 ('RBI Act' hereinafter) with reference to its financial position as on March 31, 2020. Such inspection revealed serious deterioration in its financial position. Respondent No.2 has defaulted in its payment obligations in respect of bank borrowings and market

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 14

borrowings, which is a matter of serious concern. Because of such defaults, Reserve Bank of India in exercise of powers conferred under section 45IE of the RBI Act has superseded the Board of Directors of respondent No.2 and has appointed Shri. Rajneesh Sharma as its administrator with immediate effect.

9.2. The major reasons for supersession of the Board of Directors are mentioned in the annexure appended to the impugned order dated 01.10.2021. While the total borrowings of respondent No.2 stood at Rs.11,476 crores as on 30.06.2021, it has defaulted with 12 lenders aggregating Rs.3,566 crores. Board of Directors of both respondent Nos.2 and 3 had on 04.07.2019 approved transfer of assets and liabilities of respondent No.2 by way of slump exchange to respondent No.3 with effect from 01.10.2019.

However, despite non-receipt of no objection certificate from majority of the lending institutions, respondent Nos.2 and 3 had given effect to the slump exchange. Respondent No.2 did not maintain minimum regulatory CRAR and NOF. Infrastructure loans as a percentage of total assets was assessed at 3.33% as against the regulatory requirement of 75%. Special audit conducted by Reserve Bank of India during December, 2020 and January, 2021 revealed that funds disbursed to certain borrowers were received back from such borrowers either on the same date or on dates close to the date of disbursement which indicated evergreening.

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 15

Despite continuous engagement and follow up by Reserve Bank of India, respondent No.2 has failed to take corrective steps and remained non- compliant with Reserve Bank of India regulations and supervisory instructions."

13. It is also relevant to notice that the order of the Bombay High Court

was challenged before the Hon'ble Supreme Court by SLP Diary No. 17275

of 2022 also stood dismissed on 03.11.2022. The RBI filed application under

Section 227 of IBC against SIFL and SEFL being CP (IB) No. 294/KB/2021

and CP (IB) No. 295/KB/2021. Section 227 of the IBC provides:-

"227. Power of Central Government to notify financial sector providers etc.- Notwithstanding anything to the contrary [contained in this Code] or any other law for the time being in force, the Central Government may, if it considers necessary, in consultation with the appropriate financial sector regulators, notify financial service providers or categories of financial service providers for the purpose of their insolvency and liquidation proceedings, which may be conducted under this Code, in such manner as may be prescribed.

[Explanation.- For the removal of doubts, it is hereby clarified that the insolvency and liquidation proceedings for financial service providers or categories of financial service providers may be conducted with such modifications and in such manner as may be prescribed.]"

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 16

14. The applications being CP (IB) No. 294/KB/2021 and CP (IB) No.

295/KB/2021 came for consideration before the Adjudicating Authority on

08.10.2021. The Administrator of the Corporate Debtor was present during

the hearing which is noticed in the order. In paragraph 14 of the order dated

08.10.2021, following was observed:-

"14. The RBI vide its notification dated 04/10/2021 has superseded the Board of SIFL and appointed Mr. Rajneesh Sharma, ex-Chief General Manager, Bank of Baroda as the Administrator. The RBI has proposed the name of Mr. Rajneesh Sharma as the Administrator of the Corporate Debtor. He has also filed his written consent in Form 2 to act as such Administrator, which has been placed on record at pages 10-11 of the petition. The Form-2 appears to have been amplified by the Administrator by including certain caveats. Therefore, we were constrained to ask the Administrator whether he was willing to give his consent to act the Administrator unconditionally. Mr Rajneesh Sharma confirmed that he would do so. He is, therefore, hereby directed to file a fresh Form 2 with his unconditional consent to act as Administrator."

15. It is also relevant to notice that the submissions made on behalf of the

RBI were noticed in paragraph 4 of the order dated 08.10.2021, which are

as follows:-

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 17

"4. Mr. Sudipto Sarkar, Learned Senior Counsel appearing on behalf of the Petitioner/Appropriate Regulator submits as follows:-

(a) On the basis of credit information available to it, the Reserve Bank of India (in short "RBI") came to the conclusion that SIFL has committed defaults of significant amount in relation to the financial debt availed by it from various financial creditors:

(b) In particular, UCO Bank has intimated vide its letter dated 07/10/2021 that the amount claimed to be in default in relation to working capital demand loan facility is 165,56,30,967.99. Of this the principal amount due is to the tune of ₹150.00 crore and the interest amount due is to the tune of ₹15,56,30,967,99

(c) Date of default with reference to repayment of principal sum is stated to be 13/02/2021. The default with reference to the interest amount is stated to be 01/11/2020. During the course of hearing. Mr. Sudipto Sarkar, Learned Senior Counsel submitted that this was the earliest date of default, and that there are continuing defaults since then."

16. It is relevant to note that in paragraph 4(c) although it was noticed

that the date of default with respect to UCO Bank was 13.02.2021 and

01.11.2020 but it is also pleaded that the default is continuing since then.

The Adjudicating Authority after a detailed order holding the application to

be complete in all respects and having held that the financial service

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 18

provider is in default of a debt due and payable, admitted Section 7

application and imposed the moratorium.

17. As noted above, against the order dated 08.10.2021 passed in CP (IB)

No. 294/KB/2021 and CP (IB) No. 295/KB/2021, Company Appeal (AT)

(Insolvency) Nos. 1293 of 2022 and 1294 of 2022 were filed by the Appellant

in this Tribunal. Although Appeal was presented initially on 22.11.2021 but

after communication of defects it was not removed and Appeal could be re-

filed after delay of 321 days on 19.10.2022. Both the Appeals were after

detailed hearing dismissed by this Tribunal on 21.12.2022. As the

application praying for condonation of 321 days' delay in re-filing the appeal

was not allowed, consequently memo of appeal is also rejected. Against the

order passed by this Tribunal on 21.12.2022, Civil Appeal No. 473 of 2023

and Civil Appeal No. 486 of 2023 were filed by the Appellant which were

dismissed by the Hon'ble Supreme Court by order dated 30.01.2023 which

is as follows:-

"1 We find no error in the order of the National Company Law Appellate Tribunal dated 21 December 2022 in Company Appeal (AT)(Insolvency) Nos 1293 and 1294 of 2022.

2 The appeals are accordingly dismissed.

3 Pending application, if any, stands disposed of."

18. It was after above prolonged litigation on behalf of the Appellant being

unsuccessful in challenging the order dated 08.10.2021, the recall

applications being IA (IB) No. 389/KB/2023 & IA (IB) No.391/KB/2023 were

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 19

filed on 15.02.2023 before the Adjudicating Authority. It is well settled that

the Tribunal is not vested with any jurisdiction to review its judgment. It is

however well established that the Tribunal has jurisdiction to recall a

judgment. The question as to whether this Tribunal has jurisdiction to

review its order or recall its order arose in large number of cases. A five

Member Bench of this Tribunal in "Union of India (Erstwhile Corporation

Bank) vs. Dinkar T. Venkatasubramanian & Ors.- Company Appeal (AT)

(Ins.) No. 729 of 2020" vide its judgment dated 25.05.2023 has laid down

that the power to review is not conferred upon this Tribunal but power to

recall its judgment is inherent. It was further held that the power of recall is

not power of the Tribunal to rehear the case to find out any apparent error

in the judgment which is the scope of a review of a judgment. After noticing

the judgments of the Hon'ble Supreme Court on the subject, following was

concluded by this Tribunal in paragraph 20 of the Judgment:-

"20. The above judgments of the Hon'ble Supreme Court clearly lays down that there is a distinction between review and recall. The power to review is not conferred upon this Tribunal but power to recall its judgment is inherent in this Tribunal since inherent power of the Tribunal are preserved, powers which are inherent in the Tribunal as has been declared by Rule 11 of the NCLAT Rules, 2016. Power of recall is not power of the Tribunal to rehear the case to find out any apparent error in the judgment which is the scope of a review of a judgment. Power of recall of a judgment can be exercised by this Tribunal when any procedural

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 20

error is committed in delivering the earlier judgment; for example; necessary party has not been served or necessary party was not before the Tribunal when judgment was delivered adverse to a party. There may be other grounds for recall of a judgment. Well known ground on which a judgment can always be recalled by a Court is ground of fraud played on the Court in obtaining judgment from the Court. We, for the purpose of answering the questions referred to us, need not further elaborate the circumstances where power of recall can be exercised."

19. The power of recall can be exercised on limited ground as noticed in

the above Five Members Bench judgment of this Tribunal and other

judgment of the Hon'ble Supreme Court referred therein. The power of recall

can be exercised if there is any procedural error committed by the Court or

order was obtained by playing fraud on the Court. The present is not a case

where any procedural error has been committed by the Adjudicating

Authority by passing the order dated 08.10.2021. Counsel for the Appellant

has advanced submission that order dated 08.10.2021 is in violation of

principle of natural justice which submission is wholly unfounded. As noted

above, the Board of Directors of the Corporate Debtor was superseded by

RBI on 01.10.2021 and Mr. Rajneesh Sharma was appointed as

Administrator with immediate effect, the Corporate Debtor, thus, had to be

represented by the Administrator alone. Administrator was present on the

date when order was passed on 08.10.2021, hence, the submission that the

order was passed in violation of principle of natural justice cannot be

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 21

accepted. There was no requirement of issue any notice to shareholders of

the Corporate Debtor before passing of the order dated 08.10.2021.

20. The next submission which has been much pressed by the Appellant

is bar of Section 10A. The submission is that the application was not

maintainable under Section 10A on account of bar of Section 10A. The

submission is that there is apparent error on the record since default

noticed in the order was during 10A period but the Adjudicating Authority

ignoring the bar of Section 10A has admitted 10A application. What is

contended by the Appellant that the order dated 08.10.2021 be reviewed on

merits. Appellant by recall application is seeking to review the judgment on

merits which is not the scope of a recall application.

21. There can be no dispute that the Adjudicating Authority had

jurisdiction to consider an application filed by the RBI. The sectoral

regulator filed the application under Section 227 which was filed in

accordance with FSP Rules 2019, there was no lack of jurisdiction in the

Adjudicating Authority in passing of the order admitting the applications.

Thus, the order cannot be said to be without jurisdiction. It is relevant to

notice that the Appellant has exercised his right of appeal against order

dated 08.10.2021 by filing Appeals in this Tribunal being Company Appeal

(AT) (Insolvency) Nos. 1293 of 2022 and 1294 of 2022 which Appeals were

dismissed on 21.12.2022 and appeals against order dated 21.12.2022 were

also dismissed by the Hon'ble Supreme Court on 30.01.2023.

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 22

22. The present is a case where Appellant exercised its right of appeal and

failed. Appellant who have challenged the order on merits in which he has

been unsuccessful, cannot be allowed to file an application to recall the

order on the same ground on which the appeal was filed by the Appellant. It

is true that the Appeals filed by the Appellant were dismissed due to

rejection of the application praying for condonation of 321 days' delay in re-

filing the appeal but in the recall application, the ground to challenge the

order on which appeal was founded are now being agitated in the Appeal. As

observed above, the recall applications filed by the Appellant are nothing but

application to review the judgment on merits which power is not vested with

the Adjudicating Authority. The IBC is a statute which prescribes timelines

for completion of the proceedings. The recall applications have been filed

after 17 months of admission of application under Section 227 filed by the

RBI that too after unsuccessful challenge by the Appellant to the order dated

08.10.2021 before this Tribunal as well as before the Hon'ble Supreme

Court. The Adjudicating Authority has correctly observed in the impugned

order that there were no grounds made out in the applications filed by the

Appellant for recall of the judgment dated 08.10.2021. Applications filed by

the Appellant were essentially applications to review the judgment dated

08.10.2021 when appeals filed by the appellant were unsuccessful up to the

Hon'ble Supreme Court. The ground which is urged in applications are

grounds seeking review of the judgment on the merits which jurisdiction is

not vested with the Adjudicating Authority. Furthermore, as noted above,

the Resolution Plan filed by NARCL was approved by the CoC. It is

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023 23

submitted that the Resolution Plan was submitted in the CIRP of the

Corporate Debtor. EOI was invited on 25.02.2022. The Resolution Plans

were submitted in December 2022 and 1st week of January 2023. Challenge

process was undertaken by the CoC on 03.01.2023 and further the plan is

approved by the CoC in voting held on 15.02.2023 and application filed

before the Adjudicating Authority for approval of the plan, the plan was

approved on 11.08.2023 against which Company Appeal (AT) (Ins.) No. 1072

of 2023 was also dismissed on 05.01.2024 which order has also been

affirmed by the Hon'ble Supreme Court. Plan having been approved and

implemented which has also been affirmed by the Hon'ble Supreme Court,

there is substance in the submission of the Counsel for the SRA that the

Appeals are infructuous for all purpose. We, thus, are of the view that no

error was committed by the Adjudicating Authority in rejecting recall

applications being IA No. 391/KB/2023 and IA No. 389/KB/2023 filed by

the Appellant. There is no merit in the Appeals. Appeals are dismissed.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

New Delhi Anjali

Company Appeal (AT) (Insolvency) Nos.1074 & 1075 of 2023