Case Note & Summary
The appellant, RCC E-Construct Pvt. Ltd., filed a Company Appeal before the National Company Law Appellate Tribunal (NCLAT), Chennai, challenging the order dated 28.04.2025 passed by the National Company Law Tribunal (NCLT), Division Bench-1, Chennai, in IA(IBC)/660/(CHE)/2025. The NCLT had dismissed the appellant's application under Rule 11 of the NCLT Rules, 2016 seeking recall of its earlier order dated 24.03.2025, by which the corporate debtor (M/s. P Dot G Constructions Pvt Ltd) was admitted into Corporate Insolvency Resolution Process (CIRP). The appellant, a financial creditor, contended that the NCLT had erred in admitting the CIRP application and sought recall of that order on grounds that the debt was not due and that the application was premature. The NCLT dismissed the recall application, holding that the grounds raised pertained to the merits of the case and could not be agitated through a recall application under Rule 11, which is an inherent power provision akin to Section 151 CPC, meant only for correcting clerical errors, fraud, or lack of jurisdiction. Aggrieved, the appellant appealed to the NCLAT. The NCLAT, after hearing both sides, upheld the NCLT's decision, holding that the recall application was not maintainable as it sought to re-agitate the merits of the case, which could only be done through a statutory appeal. The NCLAT further observed that the appellant had already filed an appeal against the order dated 24.03.2025, which was pending, and thus the recall application was an abuse of process. The appeal was dismissed with no order as to costs.
Headnote
A) Insolvency Law - Recall of Order - Rule 11 of NCLT Rules, 2016 - Inherent Powers - The appellant filed an application under Rule 11 of the NCLT Rules, 2016 seeking recall of an order dated 24.03.2025 admitting the corporate debtor into CIRP. The NCLT dismissed the application holding that recall is not maintainable as the grounds raised pertained to merits and not to any clerical error, fraud, or lack of jurisdiction. The NCLAT upheld this decision, holding that Rule 11 cannot be used to circumvent the statutory remedy of appeal and that inherent powers cannot be exercised to re-agitate merits. (Paras 1-19) B) Insolvency Law - Inherent Powers - Rule 11 of NCLT Rules, 2016 - Scope - The NCLAT held that Rule 11 of the NCLT Rules, 2016 is akin to Section 151 of the Code of Civil Procedure, 1908 (CPC) and can only be invoked for correcting clerical errors, fraud, or lack of jurisdiction, not for reviewing the merits of a case. The appellant's attempt to re-argue the case on merits through a recall application was held to be an abuse of process. (Paras 12-18)
Issue of Consideration
Whether an application under Rule 11 of the NCLT Rules, 2016 for recall of an order admitting a company into Corporate Insolvency Resolution Process (CIRP) is maintainable when the grounds raised pertain to merits of the case and not to any clerical error, fraud, or lack of jurisdiction.
Final Decision
The NCLAT dismissed the appeal, upholding the NCLT order dated 28.04.2025, and held that the recall application under Rule 11 was not maintainable as it sought to re-agitate merits. No order as to costs.
Law Points
- Recall of order under Rule 11 of NCLT Rules
- 2016 is not maintainable to re-agitate merits
- Inherent powers cannot be used to circumvent statutory remedies
- Rule 11 is akin to Section 151 CPC and cannot be used for review
- Recall is limited to clerical errors
- fraud
- or lack of jurisdiction
