Greater Noida Industrial Development … vs Prabhjit Singh Soni on 12 February, 2024

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Supreme Court of India

Greater Noida Industrial Development … vs Prabhjit Singh Soni on 12 February, 2024

Author: Dhananjaya Y. Chandrachud

Bench: Dhananjaya Y. Chandrachud

2024 INSC 102                                                                       REPORTABLE

                                             IN THE SUPREME COURT OF INDIA
                                              CIVIL APPELLATE JURISDICTION

                                         CIVIL APPEAL NOS.7590-7591 OF 2023
                                                 (Arising out of Diary No.3628 of 2023)


                            GREATER NOIDA INDUSTRIAL
                            DEVELOPMENT AUTHORITY                                 …APPELLANT

                                                                     VERSUS


                            PRABHJIT SINGH SONI & ANR.
                                                                                …RESPONDENTS


                                                          JUDGMENT

MANOJ MISRA, J.

1. These appeals under Section 62 of the Insolvency
and Bankruptcy Code, 20161 are directed against the
judgment and order2 of the National Company Law
Appellate Tribunal, Principal Bench, New Delhi3 passed in
Company Appeal (AT) (Ins.) No. 867 of 2021 and I.A. No.
2315 of 2021, whereby the appellant’s appeal against the
order of the National Company Law Tribunal, New Delhi4
dated 05.04.2021 has been dismissed.

Signature Not Verified

Digitally signed by
Sanjay Kumar
Date: 2024.02.12
12:47:30 IST
1

   Reason:                    IBC
                            2
                              Order dated 24.11.2022
                            3
                              NCLAT
                            4
                              NCLT




                                Civil Appeal Nos.7590-7591 of 2023                    Page 1 of 38
2.            By the order dated 05.04.2021, NCLT had

dismissed two applications filed by the appellant under
Section 60(5) of the IBC, namely:

(a) I.A. No.1380/ 2021, inter alia, to recall the order
dated 04.08.2020 passed by NCLT in I.A. No. 2201
(PB)/2020 in Company Petition No. (IB)-272 (ND)/
2019; and

(b) I.A. No.344/ 2021, inter alia, questioning the
decision of the Resolution Professional
(hereinafter referred to as the RP) in treating the
appellant as an operational creditor and not
informing the appellant about the meetings of the
Committee of Creditors5.

Factual Background

3. The appellant being a statutory authority
constituted under Section 3 of the U.P. Industrial Area
Development Act, 19766 acquired land for setting up an
urban and industrial township. On 28.10.2010, one of the
plots of land acquired by it, namely, Plot No. 01-C, Sector
16C, Greater Noida, District Gautam Budh Nagar, U.P.,
was allotted, by way of lease for 90 years, to M/s. JNC
Construction (P) Ltd (the Corporate Debtor7) for a
residential project, by charging premium, payable in
instalments starting from 29.10.2012 up to 29.04.2020,
after initial moratorium of 24 months, albeit subject to

5
COC
6
1976 Act
7
CD

Civil Appeal Nos.7590-7591 of 2023 Page 2 of 38
payment of interest as well as penal interest, while
reserving right to cancel the lease and resume the demised
land, subject to certain conditions. The CD committed
default in payment of instalments and was served with
demand cum pre-cancellation notice.

4. A Company Petition No. (IB) 272 (PB)/ 2019 was
filed against the CD for initiating Corporate Insolvency
Resolution Process8, which was admitted on 30.05.2019.
Consequent thereto, claims were invited through a public
announcement.

5. Pursuant to the public notice, in the month of
January 2020, appellant submitted a claim of Rs.
43,40,31,951, being unpaid instalments payable towards
premium for the lease. The claim was set up by the
appellant as a financial creditor of the CD.

6. However, the RP treated the appellant as an
operational creditor and, vide e-mail dated 04.02.2020,
requested the appellant to submit its claim in Form B, as
an operational creditor of the CD.

7. The appellant did not submit its claim afresh as
an operational creditor. In the meantime, the COC
approved a plan which was presented to the Adjudicating
Authority (NCLT) for approval. The NCLT vide order dated
04.08.2020 approved the same.

8. On getting information through letter dated
24.09.2020 that the plan has been finalised and approved,
on 06.10.2020 the appellant filed I.A. No.344 of 2021

8
CIRP

Civil Appeal Nos.7590-7591 of 2023 Page 3 of 38
questioning, inter alia, the resolution plan, the decision of
the RP to treat the appellant as an operational creditor,
and all actions in pursuance thereof. Another I.A.
No.1380/2021 was filed on 15.03.2021 seeking, inter alia,
recall of the order dated 04.08.2020.

9. In the two applications referred to above, the
appellant pleaded, inter alia, that, —

(a) there was gross error on part of the RP in treating
the appellant as an operational creditor,
particularly, when it had no adjudicatory power
under Regulation 13 of The Insolvency and
Bankruptcy Board of India (Insolvency Resolution
Process for Corporate Persons) Regulations,
20169;

(b) the resolution plan erroneously states that
appellant did not submit a claim when, in fact, it
was submitted;

(c) appellant being owner of the land with statutory
charge over assets of the CD ought to have been
given top priority for its dues as a secured
creditor;

(d) no opportunity of hearing was given to the
appellant by the COC, and the entire process right
up to the approval of the plan by the Adjudicating
Authority was ex parte.

9

CIRP Regulations 2016

Civil Appeal Nos.7590-7591 of 2023 Page 4 of 38
NCLT’s Order

10. The NCLT, vide order dated 5.4.2021, rejected the
aforesaid applications, inter alia, on the ground that,
despite lapse of seven months between the date of filing its
claim in January, 2020 and the date of approval of the
plan in August 2020, the appellant took no steps against
the RP for not taking a decision on its claim, even though
it was aware about initiation of the CIRP, and now it is not
permissible to take a decision on the claim application of
the appellant as the CIRP is complete consequent to
approval of the plan.

Appeal before NCLAT

11. Aggrieved with the order of the NCLT, the
appellant filed an appeal before the NCLAT, inter alia, on
the following grounds:

(i) The appellant was a financial creditor and,
therefore, ought to have been a member of the
COC. On account of absence of the appellant in
the COC, the approval of the resolution plan by
the COC and, thereafter, by the NCLT is rendered
invalid;

Civil Appeal Nos.7590-7591 of 2023 Page 5 of 38

(ii) By virtue of Sections 1310, 13A11 and 1412 of the
1976 Act, the appellant had a charge over the
assets of the CD and was therefore a secured
creditor within the meaning of Section 3(30)13 read
with Section 3(31)14 of the IBC, yet the resolution
plan does not treat the appellant as a secured
creditor;

(iii) The appellant had submitted its claim with proof,
yet the appellant was shown as one who
submitted no claim. Additionally, the appellant
was neither informed of the meetings of the COC
nor adequate amount, commensurate to its status
as a secured creditor and owner of the land with

10
Section 13.- Imposition of penalty and mode of recovery of arrears.- Where any transferee makes any
default in the payment of any consideration money or instalment thereof or any other amount due on account
of the transfer of any site or building by the Authority or any rent due to the Authority in respect of any lease, or
where any transfer or occupier makes any default in payment of any amount of fee or tax levied under this Act
the Chief Executive Officer may direct that in addition to the amount of arrears, a further sum not exceeding that
amount shall be recovered from the transferee or occupier, as the case may be, by way of penalty.

11

Section 13.A- Any amount payable to the Authority under Section 13 shall constitute a charge over
the property and may be recovered as arrears of land revenue or by attachment and sale of property in the
manner provided under Sections 503, 504, 505, 506, 507, 508, 509, 510, 512, 513, and 514 of the Uttar Pradesh
Municipal Corporations Act, 1959 [Act 2 of 1959] and such provisions of the said Act shall mutatis mutandis
apply to the recovery of dues of an authority as they apply to the recovery of a tax due to a Municipal Corporation,
so however, that references in the aforesaid Sections of the said Act to “Municipal Commissioner”, “Corporation
Officer” and “Corporation” shall be construed as references to “Chief Executive Officer” and “Authority”
respectively:

provided that more than one modes of recovery shall not be commenced or continued simultaneously
12
Section 14.- Forfeiture for breach of conditions of transfer.- (1) in the case of non-payment of
consideration money or any installment thereof on account of the transfer by the Authority of any site or building
or in case of breach of any condition of such transfer or breach of any rules or regulations made under this Act,
the Chief Executive Officer may resume the site or building so transferred and may further forfeit the whole or
any part of the money, if any, paid in respect thereof.
(2) Where the Chief Executive Officer orders resumption of any site or building under sub-section (1) the Collector
may, on his own requisition, cause possession thereof to be delivered to him and may for that purpose use or
causes to be used such force as may be necessary
13
Section 3 (30).- “secured creditor” means a creditor in favour of whom a security interest is created.

14

Section 3(31).- “security interest” means right, title or interest or a claim to a property, created in
favour of, or provided for a secured creditor by a transaction which secures payment or performance of an
obligation and includes mortgage, charge, hypothecation, assignment and encumbrance or any other agreement
or arrangement securing payment or performance of any obligation of any person:

Provided that security interest shall not include a performance guarantee.

Civil Appeal Nos.7590-7591 of 2023 Page 6 of 38

statutory rights, was allocated to it in the
resolution plan, which is violative of the
provisions of Section 30(2)15 of the IBC; and

(iv) The NCLT failed to address and appreciate the
grounds taken in the correct perspective.

Findings of NCLAT

12. The appeal preferred by the appellant was
dismissed by observing, inter alia,

15
Section 30. Submission of Resolution Plan. – (1)…………………
(2) The resolution professional shall examine each resolution plan received by him to confirm that
each resolution plan—

(a) provides for the payment of insolvency resolution process costs in a manner specified by
the Board in priority to the payment of other debts of the corporate debtor;

(b) provides for the payment of debts of operational creditors in such manner as may be
specified by the Board which shall not be less than—

(i) the amount to be paid to search creditors in the event of a liquidation of the
corporate debtor under section 53;

(ii) the amount that would have been paid to such creditors, if the amount to be
distributed under the resolution plan had been distributed in accordance with the
order of priority in sub-section (1) of section 53;
whichever is higher, and provides for the payment of debts of financial creditors, who do not
vote in favour of the resolution plan, in such manner as may be specified by the Board, which
shall not be less than the amount to be paid to such creditors in accordance with sub-section
(1) of section 53 in the event of a liquidation of the corporate debtor.
Explanation 1.– For the removal of doubts, it is hereby clarified that a distribution in
accordance with the provisions of this clause shall be fair and equitable to such creditors.
Explanation 2.– For the purposes of this clause it is hereby declared that on and from the date
of commencement of the Insolvency and Bankruptcy Code [Amendment] Act, 2019, the
provisions of this clause shall also apply to the corporate insolvency resolution process of a
corporate debtor—-

(i) where the resolution plan has not been approved or rejected by the
adjudicating authority;

(ii) where an appeal has been preferred under section 61 or section 62 or such
an appeal is not time barred under any provision of law for the time being in
force; or

(iii) where a legal proceeding has been initiated in any court against the decision
of the adjudicating authority in respect of a resolution plan;

(c) provides for the management of the affairs of the corporate debtor after approval of the
resolution plan;

(d) the implementation and supervision of the resolution plan;

(e) does not contravene any of the provisions of the law for the time being in force;

(f) conforms to such other requirements as may be specified by the Board.





                Civil Appeal Nos.7590-7591 of 2023                                           Page 7 of 38
                     (i)     the materials on record reflect that the RP had
                             informed            the      appellant              vide      e-mail         dated

04.02.2020 about its status as an Operational
Creditor and to submit its claim in Form ‘B’, yet
the appellant chose not to file its claim;

(ii) in New Okhla Development Authority vs.
Anand Sonbhadra16, it was held that
disbursement is an indispensable requirement to
constitute a financial debt within the meaning of
Section 5(8)17 of the IBC and, that too, the
disbursement must be from a creditor to a debtor,
and as the lease executed by the appellant was
not a financial lease or capital lease, the appellant
does not qualify as a financial creditor;

16

(2023) 1 SCC 724
17
Section 5(8).—“financial debt” means a debt along with interest, if any, which is disbursed against the
consideration for the time value of money and includes –

(a) money borrowed against the payment of interest;

(b) any amount raised by acceptance under any acceptance credit facility or its dematerialised equivalent;

(c) any amount raised pursuant to any note, purchase facility or the issue of bonds, notes, debentures,
loan stock or any similar instrument;

(d) the amount of any liability in respect of any lease or higher purchase contract which is deemed as a
financial or capital lease under the Indian Accounting Standards or such other accounting standards as
may be prescribed;

(e) receivables sold or discounted other than any receivables sold on non-recourse basis;

(f) any amount raised under any other transaction, including any forward sale or purchase agreement,
having the commercial effect of a borrowing;
Explanation.– For the purposes of this sub clause,–

(i) any amount raised from an allottee under a real estate project shall be deemed to be an amount
having the commercial effect of a borrowing; and

(ii) the expressions, “allottee” and “real estate project” shall have the meanings respectively assigned
to them in clauses (d) and (zn) of Section 2 of the Real Estate (Regulation and Development Act,
2016 (16 of 2016);

(g) any derivative transaction entered into in connection with protection against or benefit from fluctuation
in any rate or price and for calculating the value of any derivative transaction, only the market value of
such transaction shall be taken into account;

(h) any counter indemnity obligation in respect of a guarantee, indemnity bond, documentary letter of
credit or any other instrument issued by a bank or financial institution;

(i) the amount of any liability in respect of any of the guarantee or indemnity for any of the items referred
to in sub-clauses (a) to (h) of this clause;

Civil Appeal Nos.7590-7591 of 2023 Page 8 of 38

(iii) the resolution plan was approved by the
Adjudicating Authority on 04.08.2020, and the
successful resolution applicant (SRA) seeking
implementation of the plan informed the appellant
vide letter dated 24.09.2020 about the plan, yet
I.A. No.344/ 2021 was not filed before 06.10.2020
and I.A. No. 1380/2021, seeking recall, was filed
only on 15.03.2021, which shows that the
appellant had not been diligent in pursuing its
right, if any, therefore the challenge, post approval
of the resolution plan, is liable to be rejected; and

(iv) there appears no material irregularity in the
approval of the Resolution Plan, particularly,
when the commercial wisdom of the COC is not
justiciable.

13. We have heard Sri Ravindra Kumar, learned
senior counsel, for the appellant; Dr. Abhishek Manu
Singhvi, learned senior counsel, for respondent no.2
(Resolution Applicant); and Sri V.M. Kannan for
respondent no.1 (Resolution Professional).

Submissions on behalf of the appellant

14. The learned counsel for the appellant, inter alia,
submitted:

(a) There is no dispute that appellant had submitted
its claim with proof on 30.01.2020 as a financial
creditor having security interest over the assets of
the CD. Even if the appellant was not a financial

Civil Appeal Nos.7590-7591 of 2023 Page 9 of 38
creditor, the resolution plan ought to have noticed
its claim as a secured creditor whereas the order
of approval dated 4.8.2020 describes the
appellant as one who did not submit its claim.

(b) The meetings of the COC were not notified to the
appellant to enable its participation. In absence
thereof, the resolution plan stood vitiated.

(c) At the time of approving the resolution plan, the
adjudicating authority failed to consider whether
the plan had made provisions commensurate to
appellant’s claim, and the statutory charge which
the appellant enjoyed over the assets of the CD.

Not only that, it overlooked the ownership and
statutory rights of the appellant over the land and
thereby failed to consider whether the plan was
feasible and viable. In absence of such
consideration, the order of approval stood vitiated.

(d) The finding that there had been a delay on part of
the appellant in pursuing its remedies is
misconceived, particularly when it was
established on record that I.A. No.344/ 2021 was
filed promptly on 6.10.2020 upon getting
information on 24.09.2020 from the monitoring
agency regarding approval of the plan. Likewise,
I.A. No.1380/ 2021 was filed immediately on
15.03.2021 when suspension of the period of
limitation for any suit, appeal, application or
proceeding, imposed between 15.03.2020 and

Civil Appeal Nos.7590-7591 of 2023 Page 10 of 38
14.03.2021, was lifted in terms of this Court’s
order dated 8.03.2021 in RE: Cognizance For
Extension of Limitation18.

Submissions on behalf of the respondents

15. Dr. Abhishek Manu Singhvi, leading the
arguments on behalf of the respondents, submitted that
the issue as to whether dues payable to an Industrial Area
Development Authority, like the appellant, towards lease/
allotment premium / rental, would be a financial debt or
not is no longer res integra, as it stands settled by a
decision of this Court in Anand Sonbhadra (supra),
wherein it has been held that it is not a financial debt.
Therefore, the appellant had no voting right in the COC.
And since the appellant pressed its case only on the
ground that it is a financial creditor, its challenge to the
order of approval had no basis. More so, when the
commercial wisdom of the COC is not justiciable. Further,
once the resolution plan, which makes a provision for the
appellant, is approved by the Adjudicating Authority, it
cannot be questioned through a recall application.

Analysis

16. Before we proceed to test the correctness of the
impugned order against the weight of rival submissions, it
would be useful to have a look at the statutory provisions

18
(2021) 5 SCC 452

Civil Appeal Nos.7590-7591 of 2023 Page 11 of 38
of the IBC and the Regulations framed thereunder with
reference to the corporate insolvency resolution process.

17. As per the provisions of the IBC, on admission of
a petition, and declaration of a moratorium under Section
13, a public announcement is made inviting claims
against the CD by a specified date. The manner in which
a public announcement is to be made and claims are to be
submitted, is described in the CIRP Regulations 2016.

18. Regulation 719 of CIRP Regulations, 2016 deals
with submission of a claim by a person who claims himself
to be an operational creditor. Such claim is to be
submitted in Form B specified in the Schedule. Whereas
Regulation 820 deals with submission of a claim by a

19

7. Claims by operational creditors.—(1) A person claiming to be an operational
creditor, other than workman or employee of the corporate debtor, shall submit claim with
proof to the interim resolution professional in person, by post or by electronic means in Form
B of the Schedule:

Provided that such person may submit supplementary documents or clarifications in
support of the claim before the constitution of the committee.
(2) The existence of debt due to the operational creditor under this regulation may be
proved on the basis of—

(a) the records available with an information utility, if any; or

(b) other relevant documents, including—

(i) a contract for the supply of goods and services with corporate debtor;

(ii) an invoice demanding payment for the goods and services supplied to the corporate
debtor;

(iii) an order of a court or tribunal that has adjudicated upon the non-payment of a debt,
if any; or

(iv) financial accounts.

8. Claims by financial creditors.—(1) A person claiming to be a financial creditor, other
20

than a financial creditor belonging to a class of creditors, shall submit claim with proof to the
interim resolution professional in electronic form in Form C of the Schedule:

Provided that such person may submit supplementary documents or clarifications in
support of the claim before the constitution of the committee.

(2) The existence of debt due to the financial creditor may be proved on the basis of—

Civil Appeal Nos.7590-7591 of 2023 Page 12 of 38
person who claims himself to be a financial creditor. Such
a claim is to be submitted in Form C. Regulations 8-A, 9
and 9-A deal with other classes of creditors with which we
are not concerned here.

19. Regulation 1221 mandates submission of proof of
the claim by the date specified. Whereas, Regulation 1322

(a) the records available with an information utility, if any; or

(b) other relevant documents, including—

(i) a financial contract supported by financial statements as evidence of the
debt;

(ii) a record evidencing that the amounts committed by the financial creditor to
the corporate debtor under a facility has been drawn by the corporate debtor;

(iii) financial statements showing that the debt has not been paid; or

(iv) an order of a court or tribunal that has adjudicated upon the non-payment
of a debt, if any.

12. Submission of proof of claims.—(1) Subject to sub-regulation (2), a creditor shall
21

submit claim with proof on or before the last date mentioned in the public announcement.
(2) A creditor, who fails to submit claim with proof within the time stipulated in the
public announcement, may submit the claim with proof to the interim resolution
professional or the resolution professional, as the case may be, on or before the ninetieth
day of the insolvency commencement date.

(3) Where the creditor in sub-regulation (2) is a financial creditor under Regulation 8,
it shall be included in the committee from the date of admission of such claim:

Provided that such inclusion shall not affect the validity of any decision taken by the
committee prior to such inclusion.

22

13. Verification of claims.—(1) The interim resolution professional or the resolution
professional, as the case may be, shall verify every claim, as on the insolvency
commencement date, within seven days from the last date of the receipt of the claims,
and thereupon maintain a list of creditors containing names of creditors along with the
amount claimed by them, the amount of their claims admitted and the security interest, if
any, in respect of such claims, and update it.
(2) The list of creditors shall be—

(a) available for inspection by the persons who submitted proofs of claim;

(b) available for inspection by members, partners, directors and guarantors of the
corporate debtor or their authorised representatives;

(c) displayed on the website, if any, of the corporate debtor;
(ca) filed on the electronic platform of the Board for dissemination on its website:

Provided that this clause shall apply to every corporate insolvency resolution
process ongoing and commencing on or after the date of commencement of the

Civil Appeal Nos.7590-7591 of 2023 Page 13 of 38
speaks of verification of claims by the interim resolution
professional (IRP) or the RP, as the case may be.
Regulation 1423 provides for determination of amount of
claim where the amount claimed is not precise.

20. The use of the words “a person claiming to be an
operational creditor” in the opening part of Regulation 7,
and the words “a person claiming to be a financial creditor”
in Regulation 8, indicate that the category in which the
claim is submitted is based on the own understanding of
the claimant. Thus, there could be a situation where the
claimant, in good faith, may place itself in a category to
which it does not belong. However, what is important is,
the claim so submitted must be with proof. As to what
could form proof of the debt/ claim is delineated in sub-

regulation (2) of Regulations 7 and 8 of the CIRP
Regulations, 2016.

21. Once a claim is submitted with proof under any of
the Regulations (i.e., Regulations 7, 8, 8-A, 9 and 9-A), the

Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for
Corporate Persons) (Fifth Amendment) Regulations, 2020;

(d) filed with the adjudicating authority; and

(e) presented at the first meeting of the committee.

23

14. Determination of amount of claim.—(1) Where the amount claimed by a creditor
is not precise due to any contingency or other reason, the interim resolution professional
or the resolution professional, as the case may be, shall make the best estimate of the
amount of the claim based on the information available with him.
(2) The interim resolution professional or the resolution professional, as the case may
be, shall revise the amounts of claims admitted, including the estimates of claims made
under sub-regulation (1), as soon as may be practicable, when he comes across additional
information warranting such revision.”

Civil Appeal Nos.7590-7591 of 2023 Page 14 of 38
IRP or the RP, as the case may be, as per Regulation 13,
has to verify the claim, as on the insolvency
commencement date, and thereupon maintain a list of
creditors containing names of creditors along with the
amount claimed by them, the amount of their claims
admitted and the security interest, if any, in respect of
such claims, and update it in terms of Regulation 12 A24.

22. As it could be noticed from the CIRP Regulations,
2016, on submission of a claim with proof, the IRP or the
RP, as the case may be, has to verify the claim and prepare
a list of creditors containing names of creditors along with
the amount claimed by them and security interest, if any,
the logical conclusion derivable from the provisions
analysed above would be that the Form in which a claim
is to be submitted under the CIRP Regulations 2016 is
directory and not mandatory. What is important is, the
claim must be supported by proof.

23. On collation of claims received against the CD, the
IRP has to constitute a COC. As per Section 21 (2) of the
IBC, subject to other provisions of Section 21, the COC
must comprise all financial creditors of a CD. Under
Section 22 of the IBC, the COC appoints an RP in its first
meeting. It may, however, resolve to appoint the IRP as
the RP, subject to confirmation by the Board.

24. The RP has many important duties. Some of the
duties which an RP has to perform, under Section 25 of

24
!2 A. Updation of claim. — A creditor shall update its claim as and when the claim is
satisfied, partly or fully, from any source in any manner, after the insolvency commencement
date.

Civil Appeal Nos.7590-7591 of 2023 Page 15 of 38

the IBC, are to: (a) take immediate custody and control of
all the assets of the CD, including the business records of
the CD; (b) maintain an updated list of claims; (c) convene
and attend all meetings of the COC; (d) prepare
information memorandum in accordance with Section 29
read with Regulation 36 of the CIRP Regulations 2016 25;

(e) invite prospective resolution applicants to submit a
resolution plan or plans; and (f) present all resolution
plans at the meetings of the COC.

25

Regulation 36. Information memorandum. – (1) Subject to sub regulation [4], the resolution professional shall
submit the information memorandum in electronic form to each member of the committee within 2 weeks of
his appointment, but not later than 54th day from the insolvency commencement date, whichever is earlier.

(2) the information memorandum shall contain the following details of the corporate debtor–

[a] assets and liabilities with such description, as on the insolvency commencement date, as
are generally necessary for ascertaining their values.
Explanation.- Description includes the details such as date of acquisition cost of acquisition,
remaining useful life identification number, depreciation charged, book value, and any other
relevant details.

(b) the latest annual financial statements;

(c) financial statements of the corporate debtor for the last 2 financial years and provisional
financial statements for the current financial year made up to a date not earlier than 14 days
from the date of the application;

(d) a list of creditors containing the names of creditors, the amounts claimed by them, the
amount of their claims admitted and the security interest, if any, in respect of such claims;

(e) particulars of a debt due from or to the corporate debtor with respect to related parties;

(f) details of guarantees that have been given in relation to the debts of the corporate debtor
by other persons, specifying which of the guarantors is a related party;

(g) the names and addresses of the members or partners holding at least 1% stake in the
corporate debtor along with the size of stake;

(h) details of all material litigation and an ongoing investigation or proceeding initiated by
Government and statutory authorities;

(i) the number of workers and employees and liabilities of the corporate debtor towards them;

(j) *******omitted

(k)*******omitted

(l) other information, which the resolution professional deems relevant to the committee.
(3) A member of the committee may request the resolution professional for further information of the
nature described in this regulation and the resolution professional shall provide such information to all
members within reasonable time if such information has a bearing on the resolution plan.
(4) The resolution professional shall share the information memorandum after receiving an undertaking
from a member of the committee to the effect that such member or resolution applicant shall maintain
confidentiality of the information and shall not use such information to cause an undue gain or undue
loss to itself or any other person and comply with the requirements under subsection [2] of section 29.

Civil Appeal Nos.7590-7591 of 2023 Page 16 of 38

25. The meetings of the COC are to be conducted by
the RP. Sub section (3) of Section 2426, inter alia, provides
that the RP shall give notice of each meeting of the COC to
the operational creditors or their representative(s) if the
amount of their aggregate dues is not less than ten percent
of the debt. Regulation 19 of the CIRP Regulations, 2016
further mandates the RP to ensure that notice of the
meeting is given to every participant. “Participant” is
defined in Regulation 2 (l) of the CIRP Regulations 2016 as
a person who is entitled to attend a meeting of the COC
under Section 24 of the IBC or any other person
authorised by the COC to attend the meeting.

26. Based on the information memorandum, when a
resolution plan is submitted by a resolution applicant,
eligible under Section 29-A of the IBC, the RP is under an
obligation to examine whether the resolution plan(s)
received by him conform(s) to the conditions referred to in

26
“Section 24. Meeting of committee of creditors.— (1)………
(2)…………..

(3) The resolution professional shall give notice of each meeting of the committee of creditors to—

(a) members of committee of creditors, including the authorized representatives referred to in
sub-sections (6) and (6A) of section 2 and sub-section (5);

(b) members of the suspended Board of Directors or the partners of the corporate persons, as
the case may be;

(c). operational creditors or their representatives if the amount of their aggregate dues is not
less than ten percent of the debt

Civil Appeal Nos.7590-7591 of 2023 Page 17 of 38
sub-section (2) of Section 30 of the IBC as elaborated in
Regulations 3727 and 3827A of the CIRP Regulations 2016.

27. The resolution plan that conforms to the
conditions referred to in sub-section (2) of Section 30 is to
be presented by the RP to the COC for its approval.
Thereafter, under sub-section (4) of Section 3028, the COC

27
Regulation 37. Resolution Plan.– A resolution plan shall provide for the measures as may be necessary, for
insolvency resolution of the corporate debtor for maximization of value of its assets including but not limited to
the following:-

[a] transfer of all or part of the assets of the corporate debtor to one or more persons;

(b) sale of all or part of the assets whether subject to any security interest or not;

[ba] restructuring of the corporate debtor, by way of merger, amalgamation and demerger;
[c] the substantial acquisition of shares of the corporate debtor or the merger or consolidation of
the corporate debtor with one or more persons;
[ca] cancellation or delisting of any shares of the corporate debtor if applicable;
[d] satisfaction or modification of any security interest;
[e] curing or waving of any breach of the terms of any debt due from the corporate debtor;
[f] reduction in the amount payable to the creditors;
[g] extension of a maturity date or change in interest rate or other terms of a debt due from the
corporate debtor;

[h] amendment of the constitutional documents of the corporate debtor;
[i] issuance of securities of the corporate debtor for cash, property, securities, or in exchange for
claims or interest, or other appropriate purpose;
[j] change in portfolio of goods or services produced or rendered by the corporate debtors;
[k] change in technology used by the corporate debtor; and
[l] obtaining necessary approvals from the central and state governments and other authorities.
27A
Regulation 38. Mandatory contents of the resolution plan.—(1) The amount payable under a resolution plan-

—-

(a) to the operational creditors shall be paid in priority over financial creditors; and

(b) to the financial creditors, who have a right to vote under sub- section (2) of Section 21 and did not
vote in favour of the resolution plan, shall be paid in priority over financial creditors who voted in favour of the
plan.

(1A) A resolution plan shall include a statement as to how it has dealt with the interests of all
stakeholders including financial creditors and operational creditors, of the corporate debtor.

(1B) A resolution plan shall include a statement giving details if the resolution applicant or any of its
related parties has failed to implement or contributed to the failure of implementation of any other resolution
plan approved by the adjudicating authority at any time in the past.

(2) A resolution plan shall provide:

[a] the term of the plan and its implementation schedule;
[b] the management and control of the business of the corporate debtor during its term; and
[c) adequate means for supervising its implementation.
(3) A resolution plan shall demonstrate that—-

[a] it addresses the cause of the fault;

[b] it is feasible and viable;

[c] it has provisions for its effective implementation;

(d) it has provisions for approvals required and the timeline for the same; and
[e] the resolution applicant has the capability to implement the resolution plan.

28

Section 30 (4). The committee of creditors may approve a resolution plan by a vote of not less than sixty six
percent of voting share of financial creditors, after considering its feasibility and viability, the manner of

Civil Appeal Nos.7590-7591 of 2023 Page 18 of 38
may approve the plan after considering its feasibility and
viability, the manner of distribution proposed, which may
take into account the order of priority amongst creditors
as laid down in sub-section (1) of Section 53, including the
priority and value of security interest of a secured creditor
and such other requirements as may be specified by the
Board.

28. Once the plan is approved by the COC, the RP has
to submit it for approval of the Adjudicating Authority. As
per sub-section (1) of Section 3129 of the IBC, if the
Adjudicating Authority is satisfied that the resolution plan
as approved by the COC under sub-section (4) of Section
30 meets the requirements of sub-section (2) of Section 30,
it has to approve the resolution plan. On its approval, the
plan becomes binding on the CD and its employees,
members, creditors, including the Central Government,
any State Government or any local authority to whom a
debt in respect of the payment of dues arising under any
law for the time being in force, such as authorities to
whom statutory dues are owed, guarantors and other
stakeholders involved in the resolution plan. But where

distribution proposed, which may take into account the order of priority amongst creditors as laid down in sub-
section (1) of section 53, including the priority and value of the security interest of secured creditor and such
other requirements as may be specified by the Board:

………………”

29
“Section 31. Approval of resolution plan.- (1) If the Adjudicating Authority is satisfied that the resolution plan
as approved by the committee of creditors under sub-section (4) of section 30 meets the requirements as
referred to in sub-section (2) of section 30, it shall by order approve the resolution plan which shall be binding
on the corporate debtor and its employees, members, creditors, including the Central Government, any State
Government or any local authority to whom a debt in respect of the payment of dues under any law for the time
being in force, such as authorities to whom statutory dues are owed, guarantors and other stakeholders involved
in the resolution plan:

………….”.

Civil Appeal Nos.7590-7591 of 2023 Page 19 of 38

the Adjudicating Authority is satisfied that the resolution
plan does not conform to the requirements referred to in
sub-section (1), it may, in exercise of power under sub-
section (2) of Section 31, by an order, reject the resolution
plan.

29. Explaining the scheme of the CIRP under the IBC,
in Ghanashyam Mishra & Sons (P) Ltd. vs. Edelweiss
Asset Reconstruction Co. Ltd.30, a three-Judge Bench of
this Court observed that one of the principal objects of the
IBC is to provide for revival of the CD and to make it a
going concern. The RP on commencement of CIRP is
required to issue a publication inviting claims from all the
stakeholders; thereafter, on basis of claims received, the
RP is required to collate the information and submit
necessary details in the information memorandum; the
resolution applicant(s) submit their plan(s) on the basis of
the details provided in the information memorandum; the
resolution plan(s) undergo deep scrutiny by RP as well as
COC; in the negotiations that may be held between COC
and the resolution applicant, various modifications may
be made so as to ensure that while paying part of the dues
of financial creditors as well as operational creditors and
other stakeholders, the CD is revived and is made an on-

going concern; after COC approves the plan, the
adjudicating authority is required to arrive at a subjective
satisfaction that the plan conforms to the requirements as
are provided in sub-section (2) of Section 30 of IBC; and

30
(2021) 9 SCC 657 (paragraph 93)

Civil Appeal Nos.7590-7591 of 2023 Page 20 of 38
only thereafter, the adjudicating authority can grant its
approval to the plan.

30. What is clear from the provisions of the IBC and
the Regulations noticed above is, that the RP is under a
statutory obligation to collate the data obtained from (a)
the claim(s) made before it and (b) information gathered
from the records including those maintained by the CD.
The data so collated forms part of the information
memorandum. Based on that information, the resolution
applicant(s) submit(s) plan. In consequence, even if a
claim submitted by a creditor against the CD is in a Form
not as specified in the CIRP Regulations, 2016, the same
has to be given due consideration by the IRP or the RP, as
the case may be, if it is otherwise verifiable, either from the
proof submitted by the creditor or from the records
maintained by the CD. A fortiori, if a claim is submitted by
an operational creditor claiming itself as a financial
creditor, the claim would have to be accorded due
consideration in the category to which it belongs provided
it is verifiable.

31. On submission of the plan by a resolution
applicant, the RP examines it to confirm whether it meets
the requirements of sub-section (2) of Section 30 and, if it
conforms to the conditions referred to therein, present the
plan to the COC for its approval. After the plan is
presented to the COC for its approval, the COC, under
sub-section (4) of Section 30, has to consider its feasibility
and viability, the manner of distribution proposed,

Civil Appeal Nos.7590-7591 of 2023 Page 21 of 38
including the priority and value of the security interest of
a secured creditor and such other requirements as may be
specified by the Board. Once that exercise is over, the plan
is submitted for approval of the Adjudicating Authority,
which must, under sub-section (1) of Section 31, satisfy
itself as to whether the plan approved by COC under sub-
section (4) of Section 30 meets the requirements as
referred to in sub-section (2) of Section 30 of IBC.

32. In Jaypee Kensington Boulevard Apartments
Welfare Association vs. NBCC (India) Ltd.,31 a three-
Judge Bench of this Court had occasion to examine the
scope of judicial review exercisable by: (a) the Adjudicating
Authority, under Section 31 (1), over a resolution plan
approved by the COC; and (b) the Appellate Authority
exercising its power under Section 32 read with Section 61
(3) of the IBC. After examining the relevant provisions of
the IBC and the Regulations framed thereunder, and upon
a survey of various judicial pronouncements on the
subject, the scope of judicial review was summarised as
follows:

“108. To put in a nutshell, the adjudicating
authority has limited jurisdiction in the matter
of approval of a resolution plan, which is well-
defined and circumscribed by Sections 30(2) and
31 of the Code read with the parameters
delineated by this Court in the decisions above-

referred. The jurisdiction of the appellate
authority is also circumscribed by the limited
grounds of appeal provided in Section 61 of the
Code. In the adjudicatory process concerning a

31
(2022) 1 SCC 401

Civil Appeal Nos.7590-7591 of 2023 Page 22 of 38
resolution plan under IBC, there is no scope for
interference with the commercial aspects of the
decision of the CoC; and there is no scope for
substituting any commercial term of the
resolution plan approved by the CoC. Within its
limited jurisdiction, if the adjudicating authority
or the appellate authority, as the case may be,
would find any shortcoming in the resolution
plan vis-à-vis the specified parameters, it would
only send the resolution plan back to the
Committee of Creditors, for re-submission after
satisfying the parameters delineated by the Code
and exposited by this Court.

(Emphasis supplied)

33. In light of the analysis of the provisions of the IBC
and the Regulations framed thereunder, in our view,
though commercial wisdom of the COC in approving a
resolution plan may not be justiciable in exercise of the
power of judicial review, the Adjudicating Authority can
always take notice of any shortcoming in the resolution
plan in terms of the parameters specified in sub-section
(2) of Section 30 of the IBC coupled with Regulations 37
and 38 of the CIRP Regulations 2016. If any such
shortcoming appears in the resolution plan, it may send
the resolution plan back to the COC for re-submission
after satisfying the parameters so laid down. Likewise, the
appellate authority can also interfere upon noticing any
shortcoming in the resolution plan while exercising its
powers under Section 3232 read with Section 61 (3)33 of the
IBC.

32

Section 32. Appeal. – Any appeal from an order approving the resolution plan shall be in the manner and on
the grounds laid down in sub-section (3) of Section 61.

33

Section 61. Appeals and Appellate Authority. – (1)…………
(2)………….

Civil Appeal Nos.7590-7591 of 2023 Page 23 of 38

34. In the instant case, a perusal of the approval order
dated 04.08.2020 would reveal that the resolution plan
put forth by the resolution applicant refers to the appellant
as a creditor who had not submitted its claim. Further,
the dues shown payable to the appellant are Rs.
13,47,40,819/- when, according to the appellant, its claim
was for Rs. 43,40,31,951/- Not only that, the amount
proposed to be paid is just Rs.1,34,74,082/-, that too,
payable by conversion of dues into square feet of area to
be completed and payment to be made, on square feet
basis, at the time of registration of each of the units.

35. However, what is important is that neither NCLT
nor NCLAT rejected the assertion of the appellant that on
30.01.2020, in response to the public announcement, the
appellant had submitted with proof a claim of
Rs.43,40,31,951/- before the RP, being the amount
payable to it by the CD towards unpaid premium including
interest payable thereon for the lease/allotment of land
owned by the appellant.

36. According to the appellant, the resolution plan
fails to take into account the following: (a) the appellant

(3) An appeal against an order approving resolution plan under Section 31 may be filed on the
following grounds, namely:-

[i] the approved resolution plan is in contravention of the provisions of any law for
the time being in force;

(ii) there has been material irregularity in exercise of the powers by the resolution
professional during the corporate insolvency resolution period;

(iii) the debts owed to operational creditors of the corporate debtor have not been
provided for in the resolution plan in the manner specified by the Board;

(iv) the insolvency resolution process costs have not been provided for repayment in
priority to all other debts; or

(v) the resolution plan does not comply with any other criteria specified by the
Board.

Civil Appeal Nos.7590-7591 of 2023 Page 24 of 38

had submitted its claim with proof for Rs. 43,40,31,951/-
; (b) the appellant had a statutory charge over the assets
of the CD; (c) the entire land over which the project has
been conceived is owned by the appellant; (d) a notice to
cancel the lease for non-payment of dues had already been
served on the CD; and (e) without approval of the
appellant, the plan was not feasible. Further, according to
the appellant, the plan did not conform to the conditions
referred to in sub-section (2) of Section 30 of the IBC read
with Regulations 37 and 38 of the CIRP Regulations 2016;
and that the entire process of preparing the resolution
plan and approving the same had been ex parte, thereby
seriously prejudicing the interest of the appellant. It is the
case of the appellant that neither NCLT nor NCLAT
accorded due consideration to the above aspects while
rejecting the application/ appeal of the appellant.

37. Per contra, on behalf of the respondents, it was
urged that,- (a) the appellant had pressed its case only on
the ground that it was a financial creditor, once this plea
is found unsustainable, no relief can be granted to the
appellant, as commercial wisdom of the COC is not
justiciable; (b) NCLT has no power to recall its order of
approval, the remedy for the appellant was to file an appeal
within the time provided by the statute; and (c) there has
been inordinate delay on the part of the appellant in
questioning the order of approval.

38. At this stage, we may put on record that the
appellant had set up its claim as a financial creditor.

Civil Appeal Nos.7590-7591 of 2023 Page 25 of 38

However, the appellant was found to be an operational
creditor. Though a challenge to this finding has been laid
but, during the course of arguments, the learned counsel
for the appellant failed to demonstrate as to how could the
appellant be considered a financial creditor. In view
thereof, taking notice of the decision in Anand
Sonbhadra (supra), we do not propose to deal with the
submission that the appellant was a financial creditor.

39. Upon consideration of the rival submissions,
following issues arise for our consideration in this appeal:

(i) Whether in exercise of powers under sub-section
(5) of Section 60, the Adjudicating Authority (i.e.,
NCLT) can recall an order of approval passed
under sub-section (1) of Section 31 of the IBC?.

(ii) Whether the application for recall of the order was
barred by time?

(iii) Whether the resolution plan put forth by the
resolution applicant did not meet the
requirements of sub-section (2) of Section 30 of
the IBC read with Regulations 37 and 38 of the
CIRP Regulations, 2016?

(iv) As to what relief, if any, the appellant is entitled
to?

Recall Application is maintainable.

40. Section 60 of the IBC specifies that the
Adjudicating Authority in relation to insolvency resolution
and liquidation for corporate persons including corporate

Civil Appeal Nos.7590-7591 of 2023 Page 26 of 38
debtors and personal guarantors thereof shall be the NCLT
having territorial jurisdiction over the place where the
registered office of the corporate person is located. Sub-
section (5) of Section 60 provides that notwithstanding
anything to the contrary contained in any other law for the
time being in force, the NCLT shall have jurisdiction to
entertain or dispose of: (a) any application or proceeding
by or against the corporate debtor or corporate person; (b)
any claim made by or against the corporate debtor or
corporate person, including claims by or against any of its
subsidiaries situated in India; and (c) any question of
priorities or any question of law or facts, arising out of or
in relation to the insolvency resolution or liquidation
proceedings of the corporate debtor or corporate person
under the IBC.

41. The NCLT has been constituted by the Central
Government in exercise of power under Section 408 of the
Companies Act, 2013. Section 408 of the Companies Act
is in following terms:

“The Central Government shall, by notification,
constitute with effect from such date as may be
specified therein, a tribunal to be known as the
National Company Law Tribunal consisting of a
President and such number of judicial and
technical members as the Central Government
may deem necessary, to be appointed by it by
notification to exercise and discharge such
powers and functions as are, or may be,
conferred on it by or under this Act or any other
law for the time being in force.”

42. Rule 11 of the National Company Law Tribunal
Rules, 2016, framed under Section 469 of the Companies

Civil Appeal Nos.7590-7591 of 2023 Page 27 of 38
Act 2013, which is in pari materia with Section 15134 of
Code of Civil Procedure, 190835, preserve the inherent
powers of the Tribunal in the following terms:

“Nothing in these rules shall be deemed to limit
or otherwise affect the inherent powers of the
Tribunal to make such orders as may be
necessary for meeting the ends of justice or to
prevent abuse of the process of the Tribunal.”

43. In Manohar Lal Chopra vs. Rai Bahadur Rao
Raja Seth Hiralal35 a four-Judge Bench of this Court in
the context of powers vested in the Court, while
interpreting Section 151 CPC, observed:

“23… The Section itself says that nothing in the
Code shall be deemed to limit or otherwise affect
the inherent power of the Court to make orders
necessary for the ends of justice. In the face of
such a clear statement, it is not possible to hold
that the provisions of the Code control the
inherent power by limiting it or otherwise
affecting it. The inherent power has not been
conferred upon the court; it is a power inherent
in the Court by virtue of its duty to do justice
between the parties before it.”
(Emphasis supplied)

44. In Grindlays Bank Ltd. vs. Central Govt.

Industrial Tribunal36 a question arose whether Central
Government Industrial Tribunal has power to recall/ set
aside an ex parte award when the party aggrieved had been
prevented from appearing by a sufficient cause. Holding

34
Section 151.- Saving of inherent powers of Court. – Nothing in this Code shall be deemed to limit or
otherwise affect the inherent power of the Court to make such orders as may be necessary for the ends of
justice or to prevent abuse of the process of the Court
35
CPC
35
AIR 1962 SC 527
36
1980 Supp SCC 420

Civil Appeal Nos.7590-7591 of 2023 Page 28 of 38
that such power inheres in a Tribunal, this Court
observed:

“6. We are of the opinion that the Tribunal had
the power to pass the impugned order if it
thought fit in the interest of justice. It is true that
there is no express provision in the Act or the
rules framed thereunder giving the Tribunal
jurisdiction to do so. But it is a well-known rule
of statutory construction that a Tribunal or body
should be considered to be endowed with such
ancillary or incidental powers as are necessary
to discharge its functions effectively for the
purpose of doing justice between the parties. In
a case of this nature, we are of the view that the
Tribunal should be considered as invested with
such incidental or ancillary powers unless there
is any indication in the statute to the contrary.
We do not find any such statutory prohibition.
On the other hand, there are indications to the
contrary.”
(Emphasis Supplied)

In addition to above, recognising the difference
between a procedural review and a review on merits, it was
observed:

13…………The expression “review” is used in the
two distinct senses, namely (1) a procedural
review which is either inherent or implied in a
court or Tribunal to set aside a palpably
erroneous order passed under a
misapprehension by it, and (2) a review on merits
when the error sought to be corrected is one of
law and is apparent on the face of the record.
…………. Obviously when a review is sought due
to a procedural defect, the inadvertent error
committed by the Tribunal must be corrected ex
debito justitiae to prevent the abuse of its
process, and such power inheres in every court
or Tribunal.”

Civil Appeal Nos.7590-7591 of 2023 Page 29 of 38

45. In State of Punjab vs. Davinder Pal Singh
Bhullar37, while considering the bar imposed on a Court
by Section 362 of the Criminal Procedure Code, 1973 on
review of a judgment or final order disposing of a case, it
was observed:

“46. If a judgment has been pronounced without
jurisdiction or in violation of principles of natural
justice or where the order has been pronounced
without giving an opportunity of being heard to
a party affected by it or where an order was
obtained by abuse of the process of court which
would really amount to its being without
jurisdiction, inherent powers can be exercised to
recall such order for the reason that in such an
eventuality the order becomes a nullity and the
provisions of Section 362 CrPC would not
operate. In such an eventuality, the judgment is
manifestly contrary to the audi alteram partem
rule of natural justice. The power of recall is
different from the power of altering/reviewing the
judgment. However, the party seeking
recall/alteration has to establish that it was not
at fault.”

46. The above passage was cited and approved by a
three-Judge Bench of this Court in New India Assurance
Co. Ltd. vs. Krishna Kumar Pandey38.

47. In Budhia Swain vs. Gopinath Deb39, after
considering a number of decisions, a two-Judge Bench of
this Court observed:

“8. In our opinion a tribunal or a court may recall
an order earlier made by it if

(i) the proceedings culminating into an order
suffer from the inherent lack of jurisdiction and
such lack of jurisdiction is patent,

(ii) there exists fraud or collusion in obtaining the
judgment,
37
(2011) 14 SCC 770
38
(2021) 14 SCC 683
39
(1999) 4 SCC 396

Civil Appeal Nos.7590-7591 of 2023 Page 30 of 38

(iii) there has been a mistake of the court
prejudicing a party, or

(iv) a judgment was rendered in ignorance of the
fact that a necessary party had not been served
at all or had died and the estate was not
represented.

The power to recall a judgment will not be
exercised when the ground for reopening the
proceedings or vacating the judgment was
available to be pleaded in the original action but
was not done or where a proper remedy in some
other proceeding such as by way of appeal or
revision was available but was not availed. The
right to seek vacation of a judgment may be lost
by waiver, estoppel or acquiescence.”

48. The law which emerges from the decisions above
is that a Tribunal or a Court is invested with such ancillary
or incidental powers as may be necessary to discharge its
functions effectively for the purpose of doing justice
between the parties and, in absence of a statutory
prohibition, in an appropriate case, it can recall its order
in exercise of such ancillary or incidental powers.

49. In a recent decision (i.e., Union Bank of India
vs. Dinakar T. Vekatasubramanian & Ors.), a five-
member Full Bench of NCLAT held that though the power
to review is not conferred upon the Tribunal but power to
recall its judgment is inherent in the Tribunal and is
preserved by Rule 11 of the NCLT Rules, 2016. It was held
that power of recall of a judgment can be exercised when
any procedural 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. It was
observed that there may be other grounds for recall of a

Civil Appeal Nos.7590-7591 of 2023 Page 31 of 38
judgment one of them being where fraud is played on the
Court in obtaining a judgment. This decision of NCLAT
was upheld by a two-Judge Bench of this Court vide order
dated 31.07.2023 in Civil Appeal No.4620 of 2023
(Union Bank of India vs. Financial Creditors of M/s
Amtek Auto Ltd. & Ors.).

50. In light of the discussion above, what emerges is,
a Court or a Tribunal, in absence of any provision to the
contrary, has inherent power to recall an order to secure
the ends of justice and/or to prevent abuse of the process
of the Court. Neither the IBC nor the Regulations framed
thereunder, in any way, prohibit, exercise of such inherent
power. Rather, Section 60(5)(c) of the IBC, which opens
with a non-obstante clause, empowers the NCLT (the
Adjudicating Authority) to entertain or dispose of any
question of priorities or any question of law or facts,
arising out of or in relation to the insolvency resolution or
liquidation proceedings of the corporate debtor or
corporate person under the IBC. Further, Rule 11 of the
NCLT Rules, 2016 preserves the inherent power of the
Tribunal. Therefore, even in absence of a specific provision
empowering the Tribunal to recall its order, the Tribunal
has power to recall its order. However, such power is to be
exercised sparingly, and not as a tool to re-hear the
matter. Ordinarily, an application for recall of an order is
maintainable on limited grounds, inter alia, where (a) the
order is without jurisdiction; (b) the party aggrieved with
the order is not served with notice of the proceedings in

Civil Appeal Nos.7590-7591 of 2023 Page 32 of 38
which the order under recall has been passed; and (c) the
order has been obtained by misrepresentation of facts or
by playing fraud upon the Court /Tribunal resulting in
gross failure of justice.

51. In the case on hand, the recall application was
filed by claiming that,- (a) the appellant was not informed
of the meetings of the COC; (b) the proceedings up to the
stage of approval of the resolution plan by the Adjudicating
Authority were ex parte; (c) the RP misrepresented that the
appellant had submitted no claim when, otherwise, a
claim was submitted of an amount higher than what was
shown outstanding towards the appellant; and (d) there
was gross mistake on part of the Adjudicating Authority in
approving the plan which did not fulfil the conditions laid
down in sub-section (2) of Section 30 of the IBC.

52. In our view, the grounds taken qualify as valid
grounds on which a recall of the order of approval dated
04.08.2020 could be sought. We thus hold that the recall
application was maintainable notwithstanding that an
appeal lay before the NCLAT against the order of approval
passed by the Adjudicating Authority.

The Recall Application was not barred by time.

53. As regards the plea that the recall application was
barred by time, suffice it to say that I.A. No.344/ 2021 was
filed on 6.10.2020 upon getting information on
24.09.2020 from the monitoring agency regarding
approval of the plan. Likewise, I.A. No.1380/ 2021 was

Civil Appeal Nos.7590-7591 of 2023 Page 33 of 38
filed on 15.03.2021 immediately when suspension of the
period of limitation for any suit, appeal, application or
proceeding, between 15.03.2020 and 14.03.2021, was
lifted in terms of this Court’s order dated 8.03.2021 in RE:

Cognizance For Extension of Limitation (supra). We,
therefore, find no substance in the plea that the
applications were barred by limitation.

The Resolution Plan did not meet the requirements of
Section 30 (2) of the IBC read with Regulations 37 and
38 of the CIRP Regulations, 2016

54. In our view the resolution plan did not meet the
requirements of Section 30(2) of the IBC read with
Regulations 37 and 38 of the CIRP Regulations, 2016 for
the following reasons:

a. The resolution plan disclosed that the appellant
did not submit its claim, when the unrebutted
case of the appellant had been that it had
submitted its claim with proof on 30.01.2020 for
a sum of Rs.43,40,31,951/- No doubt, the record
indicates that the appellant was advised to submit
its claim in Form B (meant for operational
creditor) in place of Form C (meant of financial
creditor). But, assuming the appellant did not
heed the advice, once the claim was submitted
with proof, it could not have been overlooked
merely because it was in a different Form. As
already discussed above, in our view the Form in
which a claim is to be submitted is directory. What

Civil Appeal Nos.7590-7591 of 2023 Page 34 of 38
is necessary is that the claim must have support
from proof. Here, the resolution plan fails not only
in acknowledging the claim made but also in
mentioning the correct figure of the amount due
and payable. According to the resolution plan, the
amount outstanding was Rs. 13,47,40,819/-
whereas, according to the appellant, the amount
due and for which claim was made was Rs.

43,40,31,951/- This omission or error, as the case
may be, in our view, materially affected the
resolution plan as it was a vital information on
which there ought to have been application of
mind. Withholding the information adversely
affected the interest of the appellant because,
firstly, it affected its right of being served notice of
the meeting of the COC, available under Section
24 (3) (c) of the IBC to an operational creditor with
aggregate dues of not less than ten percent of the
debt and, secondly, in the proposed plan, outlay
for the appellant got reduced, being a percentage
of the dues payable. In our view, for the reasons
above, the resolution plan stood vitiated. However,
neither NCLT nor NCLAT addressed itself on the
aforesaid aspects which render their orders
vulnerable and amenable to judicial review.

b. The resolution plan did not specifically place the
appellant in the category of a secured creditor
even though, by virtue of Section 13-A of the 1976

Civil Appeal Nos.7590-7591 of 2023 Page 35 of 38
Act, in respect of the amount payable to it, a
charge was created on the assets of the CD. As per
Regulation 37 of the CIRP Regulations 2016, a
resolution plan must provide for the measures, as
may be necessary, for insolvency resolution of the
CD for maximization of value of its assets,
including, but not limited to, satisfaction or
modification of any security interest. Further, as
per Explanation 1, distribution under clause (b) of
sub-section (2) of Section 30 must be fair and
equitable to each class of creditors. Non-

placement of the appellant in the class of secured
creditors did affect its interest. However, neither
NCLT nor NCLAT noticed this anomaly in the
plan, which vitiates their order.

    c.    Under Regulation 38 (3) of the CIRP Regulations,
          2016,       a    resolution    plan    must,     inter     alia,

demonstrate that (a) it is feasible and viable; and

(b) it has provisions for approvals required and the
time-line for the same. In the instant case, the
plan conceived utilisation of land owned by the
appellant. Ordinarily, feasibility and viability of a
plan are economic decisions best left to the
commercial wisdom of the COC. However, where
the plan envisages use of land not owned by the
CD but by a third party, such as the appellant,
which is a statutory body, bound by its own rules
and regulations having statutory flavour, there

Civil Appeal Nos.7590-7591 of 2023 Page 36 of 38
has to be a closer examination of the plan’s
feasibility. Here, on the part of the CD there were
defaults in payment of instalments which,
allegedly, resulted in raising of demand and
issuance of pre-cancellation notice. In these
circumstances, whether the resolution plan
envisages necessary approvals of the statutory
authority is an important aspect on which
feasibility of the plan depends. Unfortunately, the
order of approval does not envisage such
approvals. But neither NCLT nor NCLAT dealt
with those aspects.

Relief

55. As we have found that neither NCLT nor NCLAT
while deciding the application /appeal of the appellant
took note of the fact that,- (a) the appellant had not been
served notice of the meeting of the COC; (b) the entire
proceedings up to the stage of approval of the resolution
plan were ex parte to the appellant; (c) the appellant had
submitted its claim, and was a secured creditor by
operation of law, yet the resolution plan projected the
appellant as one who did not submit its claim; and (d) the
resolution plan did not meet all the parameters laid down
in sub-section (2) of Section 30 of the IBC read with
Regulations 37 and 38 of the CIRP Regulations, 2016, we
are of the considered view that the appeals of the appellant
are entitled to be allowed and are accordingly allowed. The

Civil Appeal Nos.7590-7591 of 2023 Page 37 of 38
impugned order dated 24.11.2022 is set aside. The order
dated 04.08.2020 passed by the NCLT approving the
resolution plan is set aside. The resolution plan shall be
sent back to the COC for re-submission after satisfying the
parameters set out by the Code as exposited above. There
shall be no order as to costs.

……………………………………..CJI.
(Dr. Dhananjaya Y. Chandrachud)

………………………………………..J.
(J. B. Pardiwala)

…………………………………………J.
(Manoj Misra)

New Delhi;

February 12, 2024

Civil Appeal Nos.7590-7591 of 2023 Page 38 of 38

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