Entegra Limited vs Shree Maheshwar Hydel Power ...

I.A. No. 4038 & 4039 of 2025 in Comp. App. (AT) (Ins) No. 1287 & 1291 of 2022 IN THE MATTER OF: Entegra Ltd. ...Appellant

Versus

Shree Maheshwar Hydel Power Corporation Ltd. ...Respondents Through Interim Resolution Professional & Anr.

Present: For Appellant : Mr. Ajay Awasthi, Adv. For Respondent : Mr. Gajanand Kirodhiwal, Shivam Rajpal, RP Mr. Tushar Mehta, S.G., Mr. Deepak Khurana, Mr. T. Anand, Anurag Vats, Adv. for R2 Mr. Vijender Sharma, RP

ORDER

Per: Justice Rakesh Kumar Jain (Oral)

24.09.2025: This application is filed by the Appellant by invoking Rule

11 of the NCLAT Rules, 2016 for recalling of the order dated 26.11.2024 by

which the appeal filed by the Appellant was dismissed.

2. The Appellant is the promoter of Respondent No. 1, namely, Shree

Maheshwar Hydel Power Corporation Ltd., holding 29,17,20,330 shares of the

face value of Rs. 10 each which constituted 58.43% of the total paid up capital

of Respondent No. 1.

3. Respondent No. 2 i.e. Power Finance Corporation Ltd. filed an

application under Section 7 of the Code for initiation of CIRP in respect of the

alleged default of Rs. 2789.42 Cr. by the CD i.e. Shree Maheshwar Hydel

Power Corporation Ltd. which was ultimately admitted with the ratio of 2:1

vide order dated 27.09.2022.

4. The order dated 27.09.2022 was challenged by the Appellant by way of

appeal under Section 61 of the Code which was dismissed on 26.11.2024. The

order dated 26.11.2024 was challenged by the Appellant by way of an appeal

under Section 62 of the Code before the Hon'ble Supreme Court. The appeal

was filed vide diary no. 2109 of 2025 on 11.01.2025.

5. Counsel for the Appellant has submitted that the appeal was returned

to him by the registry of the Hon'ble Supreme Court on 16.01.2025 indicating

the defects therein. The appeal was not refiled and large of number of

appeals filed by various other Appellants with various diary numbers were

put up for hearing before the Hon'ble Chamber Judge of the Hon'ble Supreme

Court in which an order was passed on 25.04.2025 that "six weeks time

from today is granted to cure the defects noted by the registry, failing which

the matter(s) shall stand dismissed without further reference to the Court"

6. The Appeal filed by the Appellant against the order passed by this

Court on 26.11.2024 was also to be impacted by the order dated 25.04.2025

which means that the Appellant was required to refile the appeal within a

period of six weeks after curing the defects therein, raised by the registry

and in the absence of refiling, as directed, the appeal filed by the Appellant

was to be dismissed automatically without further reference to the Hon'ble

Supreme Court because the order dated 25.04.2025 was a peremptive order.

7. Since, the appeal was not refiled within the time prescribed in the order

dated 25.04.2025, the same was dismissed by the Hon'ble Supreme Court

with the order "dismissed for non-complying conditional order"

8. We have recorded these facts from the orders provided to us by the

Counsel for the RP during the course of hearing.

9. Thus, the order passed by this Court on 26.11.2024 has attained

finality because the appeal filed by the Appellant before the Hon'ble Supreme

Court was dismissed.

10. It appears to us that the Appellant did not pursue the appeal filed vide

diary no. 2109 of 2025 deliberately because the appellant might be knowing

the fate of it's appeal and has rather filed the present application on

18.05.2025, after the order dated 25.04.2025 passed by the Hon'ble

Supreme Court, for recalling of the order dated 26.11.2024 alleging that

after passing of the judgment dated 26.11.2024, the applicant came to know

that the author of the judgment dated 26.11.2024 was a former nominee

director of the Central Government, on the board of Housing and Urban

Development Corporation (HUDCO), from 02nd January, 2013 to May, 3,

2014.

11. It is alleged that HUDCO is one of the primary lenders to CD. It is

also averred in the application that HUDCO has been part of the

management team of the CD since 2005. The board of directors of the CD

consisted of lender appointed chairman, managing director, director finance,

one permanent nominee of PFC, REC, HUDCO, IFCI each, one director

nominated by Govt. of Madhya Pradesh and one non executive promoter

director.

12. It is also averred that HUDCO hold 18.86% of the share in the

consortium of lenders/ creditors, making it a significant financial

stakeholder in the matter in hand. The Member Technical (author of the

judgment) in his capacity as a director on the board of HUDCO was

allegedly involved in decision making processes related to the CD including critical matters concerning the financing of the project and management of

the corporation.

13. It is further averred in the application that the Applicant/Appellant

at the time of hearing of the appeal before this court, never raised the

issue of likelihood of bias on the part of the author of judgment because he

learnt about the said issue afterwards.

14. It is also submitted that the said Technical Member of the Tribunal has

recused from hearing of two connected appeals i.e. CA (AT) (Ins) No. 1496

of 2023 and CA (AT) (Ins) No. 1405-1406 of 2022 on 08.05.2025 and

29.04.2025 respectively.

15. In the end, it is submitted that the Appellant has raised the issue

of likelihood of bias, therefore, this application deserves to be allowed and

the order dated 26.11.2024 deserves to be recalled. In support of his

submissions, he has relied upon a decision of the House of Lords in the

matter of Pinochet, In re (1999) UKHL 1 to contend that "the fundamental

principle is that a man may not be a judge in his own cause. If a judge

is in fact a party to the litigation or has a financial or proprietary interest

in its outcome then he is indeed sitting as a judge in his own cause. The

mere fact that he is a party to the action or has a financial or proprietary

interest in its outcome is sufficient to cause his automatic disqualification."

16. On the other hand, Mr. Tushar Mehta, SGI appearing on behalf of the

Respondent No. 2 has strongly opposed the present application, inter alia,

on the ground that not only the application is an afterthought but also it is

an act of forum shopping and also an abuse of process of law which deserves

to be dismissed with exemplary costs.

17. The SGI has submitted that in this era of Tribunalisation, one of the

member of the bench is a technical member having domain knowledge. It

is further submitted that in the present case the author of the judgment is

a Technical Member having domain knowledge of financial field who was the

former member (Finance)/ Railway Board, Ministry of Railway and Ex-

Officio Secretary to Govt. of India.

18. It is also submitted by the SGI that for the purpose of raising the

issue of likelihood of bias, there has to be specific pleadings to raise the

issue of a reasonable likelihood of bias but in the present case there was

not even a whisper at the time when the matter remained on board for

two years before disposal, at the time when it was heard or even after the

judgment was reserved.

19. It is further submitted by SGI that author of the judgment (Technical

Member) was not the only nominee director on the board of HUDCO but

there were 10 such directors on the board of directors of HUDCO who were

taking decision collectively and there is no isolated decision attributable to

the author of the judgment (Technical Member). The SGI has submitted

that if the argument of the Appellant is accepted then the Technical

Members having domain knowledge will not be in a position to hear any

case in this Tribunal and in this regard, he has given an illustration of

the appointment of the retired finance secretary to the post of Technical

Member of the NCLAT. It is submitted that the Finance Secretary, during the

currency of his service, issues various statutory directions to all the banks

and in that situation it is not possible for him to hear any case in the

NCLAT because most of the cases are being filed either by the bank or against them. It is also submitted that Govt. Nominee Director are not paid

any remuneration by the Company.

20. The SGI for Respondent No. 2 has relied upon two decisions of the

Hon'ble Supreme Court. He has first referred to a decision of Manak Lal

(Shir), Adv. Vs. Prem Chand Singhvi & Ors., 1957 SCC OnLine SC 10 and

has referred to para 8 and 9 of the said judgment which are reproduced

as under:-

"8.The next question which falls to be considered is whether it was open to the appellant to take this objection for the first time before- the High Court. In other words, has he or has he not waived his objection to the presence of Shri Chhangani in the tribunal? Shri Daphtary does not seriously contest the position that the objection could have been effectively waived. The alleged bias in a member of the tribunal does not render the proceedings invalid if it is shown that the objection against the -presence of the member in question had not been their by the party even though the party knew about the circumstances giving rise to the allegations about the alleged bias and was aware of his right to challenge the presence of the member in the tribunal. It is true that waiver cannot always and in every case be inferred merely from the failure of the party to take the objections Waiver can be inferred only if and after it is shown that the party knew about the relevant facts and was aware of his right to take the objection in question. As Sir John Romilly M. R. has observed in Vyvyan v. Vyvyan (1) " waiver or acquiescence, like election, presupposes that the person to be bound is fully cognizant of his rights, and, that being so, he neglects to enforce them, or chooses one benefit instead of another, either, but not both, of which he might claim ". If, in the present case, it appears that the appellant knew all the facts about the alleged disability of Shri Chhangani and was also aware that he could effectively request 'the learned Chief Justice to nominate some other member instead of Shri Chhailgani and yet did not adopt that course, it may well be that he deliberately took a chance to obtain a report in his favour from the tribunal and when he came to know that the report had gone against him he thought better of his rights and raised this point before the High Court for the first time. In other words, though the point of law raised by Shri Daphtary against the competence of the, tribunal be sound, it is still necessary for us to consider whether the appellant was precluded from raising this point before the High Court by waiver or acquiescence.

9. From the record it is clear that the appellant never raised this point before the tribunal and the manner in which this point was raised by him even before the High Court is somewhat significant. The first 'round of objection filed by the appellant against the tribunal's report was that Shri Chhangani had pecuniary and personal interest in the complainant, Dr. Prom Chand. The learned Judges of the High Court have found that the allegations about the pecuniary interest of Shri Chhangani in the present proceedings are wholly unfounded and this finding has not been challenged before us by Shri Daphtary."

21. He has also relied upon another judgment of the Hon'ble Supreme

Court in the case of Supreme Court Adv. On Record Vs. Union of India,

(2016) 5 SCC 808 and has referred to paras 25 to 28 and 30 which are also

reproduced as under:-

"25. From the above decisions, in our opinion, the following principles emerge;

25.1. If a Judge has a financial interest in the outcome of a case, he is automatically disqualified from hearing the case. 25.2. In cases where the interest of the Judge in the case is other than financial, then the disqualification is not automatic but an enquiry is required whether the existence of such an interest disqualifies the Judge tested in the light of either on the principle of "real danger" or "reasonable apprehension" of bias. 25.3. The Pinochet case added a new category i.e that the Judge is automatically disqualified from hearing a case where the Judge is interested in a cause which is being promoted by one of the parties to the case.

26. It is nobody's case that, in the case at hand, Justice Khehar had any pecuniary interest or any other interest falling under the second of the above-mentioned categories. By the very nature of the case, no such interest can arise at all.

27. The question is whether the principle of law laid down in Pinochet case is attracted. In other words, whether Justice Khehar can be said to be sharing any interest which one of the parties is promoting. All the parties to these proceedings claim to be promoting the cause of ensuring the existence of an impartial and independent judiciary. The only difference of opinion between the parties is regarding the process by which such a result is to be achieved. Therefore, it cannot be said that Justice Khehar shares any interest which any one of the parties to the proceeding is seeking to promote.

28. The implication of Shri Nariman's submission is that Justice Khehar would be pre-determined to hold the impugned legislation to be invalid. We fail to understand the stand of the petitioners. If such apprehension of the petitioners comes true, the beneficiaries would be the petitioners only. The grievance, if any, on this ground should be on the part of the respondents.

30. No precedent has been brought to our notice, where courts ruled at the instance of the beneficiary of bias on the part of the adjudicator, that a judgment or an administrative decision is either voidable or void on the ground of bias. On the other hand, it is a well established principle of law that an objection based on bias of the adjudicator can be waived. Courts generally did not entertain such objection raised belatedly by the aggrieved party.

"The right to object to a disqualified adjudicator may be waived, and this may be so even where the disqualification is statutory.[107] The court normally insists that the objection shall be taken as soon as the party prejudiced knows the facts which entitle him to object. If, after he or his advisers know of the disqualification, they let the proceedings continue without protest, they are held to have waived their objection and the determination cannot be challenged."[108] In our opinion, the implication of the above principle is that only a party who has suffered or likely to suffer an adverse adjudication because of the possibility of bias on the part of the adjudicator can raise the objection."

22. Counsel for Respondent No. 2 has also submitted that the decision in

the case of Pinochet (Supra), relied upon by the Appellant is based on different

facts and is not applicable to the present case. In this regard, he has

submitted that Senator Pinochet was the President of Chile who was allegedly

involved in mass killing of innocent people. His case was heard by the

House of Lords on the issue of crime against humanity and an issue was

raised that Justice Hoffman should not hear his case because his wife was

an active member of the Amnesty International Charity Ltd. and leading the

campaign against Senator Pinochet. In this background, it was held in that

case that there could be a personal bias or its likelihood in the mind of

Hoffman because of the active participation of his wife. No such specific

allegation is there in the present case because nothing has been brought

before this Court that Technical Member was instrumental either in grant

of loan or rejecting the grant of loan. It is simply alleged by the Appellant

that author of the judgment/ Technical Member was a nominee director on

the board of HUDCO.

23. We have heard Counsel for the parties and perused the record with

their able assistance.

24. The Appellant has filed this application on 18.05.2025 for recalling of

the order dated 26.11.2024 by which the appeal filed by the Appellant against the admission of the application under Section 7 against it was

dismissed. The appellant challenged the order dated 26.11.2024 by way of

statutory appeal before the Hon'ble Supreme Court vide diary no. 2109 of

2025 on 11.01.2025. The defects in the appeal were not cured and ultimately

the said appeal was taken up in the chamber hearing by the Chamber Judge

of the Hon'ble Supreme Court in which the order was passed on 25.04.2025

that "six weeks time from today is granted to cure the defects noted by the

registry, failing which the matter(s) shall stand dismissed without further

reference to the court" It exactly happened because the appellant did not

pursue the appeal any further and allowed it to be dismissed for non-

complying with the conditional order. Thus, in a way, the order under recall

has become final between the parties on the dismissal of the appeal.

25. Perhaps, the Appellant knew about the fate of the appeal, therefore, it

did not pursue the appeal and rather filed this application on 18.05.2025,

after the order dated 25.04.2025 was passed by the Hon'ble Supreme Court,

before this Court for recalling of the order dated 26.11.2024 on the flimsy

ground that the author of judgment / Technical Member being the then

nominee of the HUDCO had a bias in deciding the appeal against the

Appellant. The Appellant has admitted that this issue was not raised before

the Court at the time of hearing of the appeal or even when the matter was

reserved for orders or during the period when the appeal remained for

orders. The Appellant has also not disclosed as to how they have come to

know about this fact that the Technical Member was the nominee director

of the HUDCO at the time when the application was filed and were not

knowing about it when the appeal was being heard which was pending in this court from last two years whereas the profile of the Technical Member

is available on the website of the NCLAT.

26. In our considered opinion, Mr. Tushar Mehta, SGI has rightly pointed

out that the entire action on the part of the Appellant is an afterthought even

if it is not motivated. The allegation of likelihood of bias not having been raised

at the threshold when the appeal was heard cannot be raised in the hindsight.

27. The judgment relied upon by the Appellant in the case of Pinochet

(Supra) is not applicable to the facts of this case rather the judgment relied

upon by the Respondent No. 2 in the case of Supreme Court Adv. On Record

(Supra) would squarely apply in which parameters have been laid down by

the Hon'ble Supreme Court that "in cases where the interest of the judge in

the case is other than financial, then the disqualification is not automatic

but an enquiry is required whether the existence of such an interest

disqualifies the judge tested in the light of either on the principle of real

danger or reasonable apprehension of bias".

28. In the present case, the enquiry would have been held had the matter

been brought to the notice of this Court and material been placed for the

purpose of discussion as to how there is a likelihood of bias in the mind of

the Appellant.

29. It is also pertinent to mention here that in case of Supreme Court

Adv. on record (Supra) the Hon'ble Judge about for whom the application

was filed for recusal has observed that "a Judge before he assumes his office,

takes an oath to discharge his duties without fear or favour. He would breach

his oath of office, if he accepts a prayer for recusal, unless justified"

30. Thus, in the light of the aforesaid facts and circumstances coupled

with the fact that the appeal filed by the Appellant has already been dismissed

by the Hon'ble Supreme Court, we do not find any merit in the present

application and the same is hereby dismissed. The parties shall bear their

own costs.

[Justice Rakesh Kumar Jain] Member (Judicial)

[Mr. Barun Mitra] Member (Technical)

[Mr. Naresh Salecha] Member (Technical) Sc/RR