Agarwal Coal Corporation Private ... vs Sun Paper Mill Limited & Anr

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH NEW DELHI I.A. No.265/2019 in Company Appeal (AT)(Ins.) No.412/2019 [Application filed by the Applicant/Appellant to Recall the judgment dated 16.10.2019 passed by the National Company Law Appellate Tribunal, New Delhi in Company Appeal (AT)(Ins.) No.412/2019]

In the matter of : Agarwal Coal Corporation Pvt Ltd. Regd. Office: Matra Kripa, Chameli Park Near Goyal Nagar, Indore, Madhya Pradesh - 452001. Applicant/Appellant

Vs. Sun Paper Mill Ltd. Regd. Address At: Survey No.-11/6, Ratnapuri, 2nd Street, Koyambedu, Chennai, Tamil Nadu - 600107. Respondent No. 1

Mrs. J. Karthiga Resolution Professional Sun Paper Mill Ltd. Srinivas, Old No. 1052, New No. 1, 41st Street, Korattur, Chennai, Tamil Nadu - 600080. Respondent No. 2

Present: For Appellant: Mr.V.N. Dubey, Mr. Amit Dubey and Mr Rohit Dubey, Advocates and Mr. Alam Khan, PCS For Respondent: Mr. E. Om Prakash, Sr. Advocate with Ms Madhusmita Bora and Mr. G. Ashokpathy, Advocates for R1. Ms Pratishtha Vij, Advocate for R2(IRP).

ORDER

(Virtual Mode) Background:

The 'Applicant/Appellant'' has preferred the instant 'I.A. No.265/ 2019'

in 'Comp. App. (AT)(Ins) No.412/2019' seeking to place on record the

IA No.265/2019 in Company Appeal(AT)(Insolvency) No.412/2019 1 submissions relating to the ''fraudulent acts'' of the ''Respondents'' and prays

for an exercise of an ''inherent power'' by this Tribunal in allowing the

''Application''.

2. Earlier, this Tribunal, in its Judgement dated 16.10.2019 in Comp.

App. (AT)(Ins) No.412/2019 (filed by the Appellant/Operational Creditor) at

paragraph 10 and 11 had observed the following:-

"10. The only question arises for consideration

is as to how Section 9 application was

admitted if the amount is found to be Rs.2173

which is much less than Rupees One Lakh.

11. In this regard we may only mention that at

the stage of admission of application under

Section 9, the Adjudicating Authority is

required to notice whether the record is

complete and there is a 'debt' and 'default' as

per decision of the Hon'ble Supreme Court in

'Innoventive Industries Ltd. v. ICICI Bank;

(2018) 1 SCC 407). Even if the claim amount

is disputed and is more than Rupees One Lakh,

it is to be admitted, the Adjudicating Authority

is not required to go into the details of

verification of the claim which is required to be

made by the 'Resolution Professional' and

IA No.265/2019 in Company Appeal(AT)(Insolvency) No.412/2019 2 therefore, even if some record shows that claim

amount is Rupees One Lakh, it is always open

to the 'Resolution Professional' to collate the

claim."

and had not interfered with the impugned order dated 14.03.2021 passed by

the Adjudicating Authority (National Company Law Tribunal, Division Bench,

Chennai) and dismissed the 'Appeal' without costs.

Applicant/Appellant's submissions:

3. According to the Learned Counsel for the Applicant/Appellant the

Respondents had submitted before this Tribunal that the claim amount of the

Applicant was verified by the 2nd Respondent, based on the 'Report' of one

independent Chartered Accountant and on record, the said ''Report'' was also

placed. In fact, the said Report provides that all the invoices relating to the

year 2013-2014 were paid and a sum of Rs. 2173/- was outstanding. Besides

this, the said 'Report' mentioned that the 1st Respondent had withheld the

payment for the invoices of the year 2012-2013 and for which alleged three

'Debit Notes' No.126, 127 and 128 were issued. However, the independent

'Chartered Accountant' had not examined the validity of the aforesaid three

'Debit Notes' and the purported letter dated 06.07.2013.

4. The stand of the Applicant/Appellant is that in order to play 'Fraud' for

securing favourable order had submitted the cooked up, frivolous 'Debit

Notes'. As a matter of fact, the Applicant at all forum had explained the fraud

played by the 1st Respondent (including to the 2nd Respondent). But the 2nd

IA No.265/2019 in Company Appeal(AT)(Insolvency) No.412/2019 3 Respondent had not listened to the submissions of the 'Applicant', but

accepted the erroneous 'Report' of the 'Chartered Accountant'.

5. The Learned Counsel for the Applicant points out that the 1st

Respondent was engaged in manipulation of 'Books of Accounts' by means of

fraudulent practices. Apart from this, the alleged custom duty obligation

based on which alleged ''Debit Notes'' were purportedly issued was never

reported even as the contingent liability in the 'Audited Financial Accounts' of

the 1st Respondent furnished to the ''Ministry of Corporate Affairs'' for the year

2013-2014 or even thereafter till the last 'Annual Report' available on 'MCA

Portal'.

6. It is represented on behalf of the Applicant that the independent

'Chartered Accountant' and the 2nd Respondent had ignored the aforesaid

'Annual Financial Statements' of the 1st Respondent available with Ministry

of Corporate Affairs. Apart from this, the Applicant/Appellant has suspicion

that the ''CIRP'' in the matter was never conducted in actual and the 2nd

Respondent had only attempted to create an illusion, thereby playing fraud.

Added further, notwithstanding the moratorium imposed by the Adjudicating

Authority on 15.11.2017 under the I&B Code, the Suspended Board had

mortgaged the Assets of the 1st Respondent/Company and created ''Charge''

in favour of the ''Consortium of Banks'' consisting of one Bank of Maharashtra

(2) Allahabad Bank and (3) Union Bank of India (Charge ID No.100191948)

created on 26.8.2018 (coming under the strict moratorium period and during

'CIRP') in order to obtain the loan of Rs.1,01,05,00,000/-.

IA No.265/2019 in Company Appeal(AT)(Insolvency) No.412/2019 4

7. The Learned Counsel for the Applicant/Appellant submits that the

Suspended Board of Directors of the 1st Respondent/Company in violation of

law held a Board Meeting on 15.06.2018 at the Registered Office of the 1st

Respondent/Company and resolved for mortgaging the land of Respondent

No.1 admeasuring 10.10 acres situated at Aralvaimozi, Nagercoil on NH-

4TB (Chennai Nagercoil Highway), Kanyakumari Registration District,

Thovalai Taluk, Thovalai Sub-registrar's Saragam, Aralvaimozhi Village,

Tamil Nadu. Indeed, the 2nd Respondent had not objected to the conduct of

''Suspended Board of Directors' and passing of such 'Resolution'.

8. The plea of the Applicant is that one of the Directors of the ''Suspended

Board of Directors'' of the 1st Respondent/Company pursuant to the aforesaid

Resolution dated 15.06.2018 of the ''Suspended Board of Directors'' had

executed the Mortgage Deed dated 28.06.2018 for mortgaging the said land

of 1st Respondent.

9. The core contention advanced on behalf of the Applicant/Appellant is

that the Suspended Board of Directors of 1st Respondent/Company had

continued to hold the Management of the affairs of the Company and carried

out its functions and decision making process, during the course of CIRP and

illegally took each and every decision during CIRP in regard to the 1st

Respondent/Company and executed them.

10. Further, on behalf of the Applicant, it is brought to the notice of this

'Tribunal' that Mr. Pratik Mahendra Mewada, Company Secretary of the 1st

Respondent/Company had addressed his resignation letter dated 30.04.2018

IA No.265/2019 in Company Appeal(AT)(Insolvency) No.412/2019 5 to the Suspended Board of Directors of the 1st Respondent/Company, and

pursuant to that, the Suspended Board of Directors had conducted an illegal

Board Meeting dated 30.04.2018 had considered and allowed the same.

Moreover, Mr. Chandrahas Moolya, Member of the Suspended Board of

Directors had signed the appointment letter dated 01.06.2018, for the

appointment of Ms Kalpana Jhalani as Company Secretary of the 1st

Respondent/Company in pursuance to the illegal Board Resolution passed by

the Suspended Board of Directors in their illegal Meeting held on 28.05.2018.

11. The Learned Counsel for the Applicant proceeds to point out that Ms.

Kalpana Jhalani had addressed the resignation letter dated 30.08.2018 to the

Suspended Board of Directors of the 1st Respondent/Company and pursuant

to this, the Suspended Board of Directors held an illegal Board Meeting on

30.08.2018, considered and allowed the same. Apart from that, Mr.

Vaithyalingam Anbalagan, Member, of the Suspended Board of Directors of

1st Respondent/Company filed Form No.DIR-11 at the MCA Portal on

03.08.2018 together with his resignation letter dated 28.07.2018 addressed

to the Suspended Board of Directors of 1st Respondent/Company.

12. The pivotal submission made on behalf of the Applicant/Appellant is

that 'Fraud' vitiates the 'entire judicial proceedings' and that if such

fraudulent acts of the Respondents are permitted and the order dated

16.10.2019 passed by this Appellate Tribunal is not recalled and if the

'Appeal' is not set for 'Hearing' it will cause a huge irreparable loss not only to

the Applicant but also to the whole structure established through the I&B

Code.

IA No.265/2019 in Company Appeal(AT)(Insolvency) No.412/2019 6

13. The Learned Counsel for the Applicant/Appellant while rounding up

prays for allowing of IA No.265/2019 in Comp App (AT)(Ins) No.412/2019, by

this Appellate Tribunal, in exercise of its inherent power, to recall the

judgment dated 16.10.2019 passed by this 'Tribunal' in Comp App (AT)(Ins)

No.412/2019 and to set down the 'Appeal' for fair 'Hearing' on merits.

First Respondent's Contentions:

14. The Learned Counsel for the 1st Respondent submits that the main

Comp App (AT)(Ins) No.412/2019 on the file of National Company Law

Appellate Tribunal, New Delhi was disposed of on 16.10.2019 whereby and

where under the 'Appeal' was dismissed and the same had attained finality,

without there being no further proceedings against the order dated

16.10.2019.

15. The Learned Counsel for the 1st Respondent contends that the

Appellant/Applicant's original claim before the Resolution Professional was

allowed only to an extent of Rs.2173/-, as against the false claim of

Rs.2,39,33,935/-. In reality, the Applicant/Appellant had preferred an MA

No. 677/2018 on the file of the National Company Law Tribunal, Chennai

against the said rejection of its claim and the said MA No.677/2018 was

dismissed on 14.03.2019, against which Comp App (AT)(Ins) No.412/2019

was filed by the Appellant/Applicant and the same came to be dismissed on

16.10.2019, resting on the reason that the Applicant's claim of

Rs.2,39,33,935/- was not related to the period of transaction between

November, 2013 to February, 2014, and on other grounds, affirmed after

IA No.265/2019 in Company Appeal(AT)(Insolvency) No.412/2019 7 going through the 'Auditors' Report that Rs. 2173/- was alone payable to the

Applicant/Appellant.

16. The Learned Counsel for the First Respondent points out that the 'IBC

proceedings' had culminated in an 'Approval of the Resolution Plan' and the

same was complied with. Further, throughout the proceedings, the Corporate

Debtor was maintained as a 'going concern' and the acts as a 'going concern'

are alleged as fraudulent by way of re-agitation.

17. The Learned Counsel for the 1st Respondent refers to the decision of the

Hon'ble Supreme Court in K.N. Rajkumar Vs V. Nagarajan and Ors

(15.09.2021) reported in MANU/SC/0648/2021 wherein the applicability

of the 'Doctrine of Functus Officio' to the IBC proceedings was upheld.

18. The Learned Counsel for the 1st Respondent points out that after the

claim of the Applicant/Appellant was admitted to an extent of Rs.2173/-, MA

No.677/2018 and Comp/1/2019 in CP/616/IB/CB/2018 (under Section 425

of the Companies Act, 2013) were filed. In fact, Comp/1/2019 was preferred

by the Applicant as regards the purported fraud/contempt which was

dismissed by the Adjudicating Authority on 14.3.2019, which had become

final.

19. The Learned Counsel for the 1st Respondent submits that IA No.

265/2021 in Comp App (AT)((Ins) No.412/2019 filed by the

Applicant/Appellant is not maintainable either in 'Law' or on 'Facts' and' that

the Applicant/Appellant falls back upon the 'inherent powers' of the 'Appellate

Tribunal'.

IA No.265/2019 in Company Appeal(AT)(Insolvency) No.412/2019 8 Second Respondent's Pleas

20. The Learned Counsel for the 2nd Respondent contends that IA

No.265/2019 filed by the Applicant/Appellant is indeed a ''Review Applicant''

which is not maintainable ex facie before this 'Tribunal'. Also that, the

allegations projected in the Application against the 2nd Respondent were

earlier dismissed by IBBI.

21. The Learned Counsel for the 2nd Respondent submits that the

Applicant/Appellant has not preferred any Appeal before the Hon'ble Supreme

Court of India as against the order dated 16.10.2019 passed by this Tribunal

in Comp App (AT)(Ins) No.412/2019 whereby, the Appeal was dismissed and

that the Applicant is indulging in 'Forum Shopping' and litigating with an

'ulterior motive' and prays for the dismissal of the Application with exemplary

costs.

Assessment

22. The Applicant/Appellant in IA No.265/2019 in Comp App (AT)(Ins)

No.412/2019, has prayed for an exercise of inherent powers by this 'Tribunal'

and to recall (Simpliciter) of the order dated 16.10.2019 pass by this Tribunal

in Comp App (AT)(Ins) No.412/2019, on the ground of 'Fraud' played by the

Respondents. Apart from this, a relief is sought for by the ''Applicant'' for

setting down the Appeal for 'Hearing' on its merits, after allowing of the

''Application''.

23. It comes to be known that the Applicant/Appellant in IA No. 265/2019

Comp App (AT)(Ins) No.412/2019 on the file of this 'Tribunal' has sought (a)

IA No.265/2019 in Company Appeal(AT)(Insolvency) No.412/2019 9 the relief to place on record the submissions pertaining to the fraudulent acts

of the Respondents, besides other reliefs as mentioned Supra.

24. The Applicant/Appellant has preferred IA No.265/2019 in Comp App

(AT)(Ins) No.412/2019 seeking necessary reliefs as referred to earlier

obviously under Rule 11 ''Inherent Powers'' of National Company Law

Appellate Rules, 2016 (although the relevant Rule was not mentioned by the

Applicant/Appellant at the time of filing of the Application).

In this connection, it is useful to refer to Rule 11 of NCLAT Rules which runs

to the following effect:-

"11. Inherent powers- Nothing in these rules shall be deemed to limit or otherwise affect the inherent powers of the Appellate Tribunal to make such orders or give such directions as may be necessary in meeting the ends of justice or to prevent above of the process of the Appellate Tribunal."

Ambit of Review:

25. It is to be noted, the dictionary meaning of the term 'Review' is the act

of looking, offer something again with a view to correction or improvement as

the case may be. It must be borne in mind that the ''Power of Review'' is a

creature of Statute and it is not an 'inherent power' as per decision of the

Hon'ble Supreme Court in Lily Thomas V. Union of India reported in AIR

2000 Supreme Court Page 1650 at Special Page 1652. In fact, "Review" is

not an 'Appeal' in disguise. In "Review" re-appraisal of materials is

IA No.265/2019 in Company Appeal(AT)(Insolvency) No.412/2019 10 impermissible as per decision in Jiura Oraon V. The State of Jharkhand,

2014 (3)JCR 100 (Jhar).

26. Resting upon 'Review' the ''Tribunal'' would not rehear the parties on

'Facts' and 'Law. No wonder, a re-appraisal of evidence on record for

unearthing an error will amount to an exercise of 'Appellate Jurisdiction"

which is not permitted in Law. A ''Review'' is not to be sought for a 'Fresh

Hearing' or 'Arguments' or 'Correction of an erroneous view' taken earlier. To

put it precisely, the contentions raised and determined in main proceedings

are not to be reopened/re-agitated under the garb of ''Review Petition'' as per

decision Sharada Bai V. Padamlal, 2003 All India High Court Cases 1756

(1757) (Andhra Pradesh). Also for correcting an erroneous decision, "Review"

will not lie, as opined by this "'Tribunal''. Further, the Hon'ble Supreme Court

in Patel Narshi Thakershi vs. Pradyumansinghji Arjunsinghji reported in

AIR 1970 Supreme Court 1273 had observed and held that 'power of Review'

is not an 'inherent power'.

Power to Recall

27. It is the well laid down proposition of law that 'in the absence of any

power of 'Review' or 'Recall' vested with the 'Adjudicating Authority' -

'Appellate Authority', an order/ judgment passed by it cannot be either

Reviewed or Recall as opined by this Tribunal.

28. As far as the present case is concerned, it is to be pointed out

pertinently that the Applicant/Appellant filed MA No.677/2018 on the file of

the National Company Law Tribunal, Chennai against the rejection of it claim.

As a matter of fact, before the Resolution Professional the

IA No.265/2019 in Company Appeal(AT)(Insolvency) No.412/2019 11 Appellant/Applicant's claim was permitted to a sum of Rs.2173/- as against

the claim of Rs.2,39,33,935/- and that the said MA No.677/2018 came to be

dismissed on 14.03.2019, as against the said dismissal order, Comp App

(AT)(Ins) No.412/2019 was preferred by the Appellant before this Tribunal,

which resulted in dismissal on 16.10.2019.

29. It is not in dispute that as against the judgment dated 16.10.2019 in

Comp App (AT)(Ins) No.412/2019 (in the matter of Agarwal Coal Corporation

Pvt Ltd V Sun Paper Ltd & Anr) passed by this ''Appellate Tribunal'' dismissing

the Appeal, the Applicant/Appellant has not preferred an ''Appeal'' to the

Hon'ble Supreme Court of India as per Section 62 of the I&B Code, 2016.

Therefore, it is crystalline and clear that the judgment dated 16.10.2019

passed by this Tribunal in Comp. Appl. (AT)(Ins) No.412/2019 between the

parties inter se has become 'conclusive', 'final' and 'binding'.

30. A mere reading of the contents of IA No.265/2021 in Comp App.

(AT)(Ins) 412/2019 indicates latently and patently that although in the

preamble it is mentioned as ''Recall Application'' yet it is only an ''Application''

praying for ''Review'' of the Order dated 16.10.2019 passed in Comp App

(AT)(Ins) No.412/2019 by this Tribunal, in stricto sense of the term.

31. It cannot be gainsaid that there is no express provision for ''Review''

under the National Company Law Appellate Tribunal Rules, 2016. Moreover,

the Applicant/Appellant cannot fall back upon Rule 11 of the NCLAT Rules,

2016 which provides for "inherent powers''. In fact, Rule 11 of NCLAT Rules,

2016 is not a substantive Rule which showers any power or jurisdiction upon

IA No.265/2019 in Company Appeal(AT)(Insolvency) No.412/2019 12 the ''Tribunal''. Undoubtedly, the 'Tribunal'' has no power to perform an act

which is prohibited by Law.

32. In view of the upshot, this Tribunal taking note of the prime fact that

the Applicant/Appellant has sought for "recalling" the judgement dated

16.10.2019 passed by this Appellate Tribunal in Comp App (AT)(Ins)

No.412/2019 etc., which is impermissible in Law and that this 'Tribunal' is

of the earnest opinion that the appropriate course of action open to the

Applicant / Appellant is to approach the Hon'ble Supreme Court of India as

against the judgement in Comp App (AT)(Ins) No.412/2019 dated 16.10.2019

passed by this "Tribunal" if it so desires/advised. Looking at from that

perspective, the I.A. No.265/2019 in Comp App (AT)(Ins) No.412/2019 is

devoid of merits and it fails.

Conclusion:

In fine, the IA No.265/2019 in Comp App (AT)(Ins) No.412/2019 is

dismissed. No order as to costs.

[Justice M. Venugopal] Acting Chairperson

[Mr. V.P. Singh] Member (Technical)

[Dr. Ashok Kumar Mishra] Member (Technical) 25th October, 2021 Shashi

IA No.265/2019 in Company Appeal(AT)(Insolvency) No.412/2019 13