Insolvency and Bankruptcy Code, 2016 – ss. 30(2), 31(1), 60(5) – The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 – National Company Law Tribunal Rules, 2016 – r.11 – Inherent power of the Tribunal – Recall of the order of approval passed u/s.31(1) – Maintainability of application for recall – Resolution plan put forth by the resolution applicant, if met the requirements of s.30(2) r/w Regulations 37 and 38 of the CIRP Regulations, 2016:

Held: 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, s.60(5) (c) 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, r.11 of the NCLT Rules, 2016 preserves the inherent power of the Tribunal – In the present case, the grounds taken in the recall application qualified as valid grounds on which a recall of the order of approval could be sought– Thus, the recall application was maintainable notwithstanding that an appeal lay before the NCLAT against the order of approval passed by the Adjudicating Authority – Neither NCLT nor NCLAT while deciding the application/ appeal of the appellant took note of the fact that the appellant was not served notice of the meeting of the Committee of Creditors (COC); the entire proceedings up to the stage of approval of the resolution plan were ex-parte to the appellant; 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 the resolution plan did not meet all the parameters laid down in s.30(2) read with Regulations 37 and 38 of the CIRP Regulations, 2016 – Also, the Recall Application was not barred by time – Impugned order set aside – Resolution plan be sent back to the COC for re-submission after satisfying the parameters set out by the Code. [Para 50, 52 and 55]

Insolvency and Bankruptcy Code, 2016 – The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 – Claim submitted with proof could not be overlooked merely because it is in a different Form:

Held: Even if a claim submitted by a creditor against the Corporate Debtor (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 – The resolution plan disclosed that the appellant did not submit its claim, when the unrebutted case of the appellant was that it had submitted its claim with proof – Though, 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 – The Form in which a claim is to be submitted is directory and not mandatory – What is necessary is that the claim must have support from proof – The resolution plan failed not only in acknowledging the claim made but also in mentioning the correct figure of the amount due and payable. [Paras 30, 54]

Insolvency and Bankruptcy Code, 2016 – Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 – Regulation 7, 8, 8-A, 9, 9-A, 12-14, 12A – Corporate insolvency resolution process under – Discussed. National Company Law Tribunal Rules, 2016 – r.11 – Inherent power of the Tribunal – Exercise of – Application for recall, maintainable on limited grounds:

Held: r.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 – 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 – Ordinarily, an application for recall of an order is maintainable on limited grounds, inter alia, where the order is without jurisdiction; the party aggrieved with the order is not served with notice of the proceedings in which the order under recall has been passed; and the order has been obtained by misrepresentation of facts or by playing fraud upon the Court /Tribunal resulting in gross failure of justice. [Paras 48, 50]

Insolvency and Bankruptcy Code, 2016 – s.30(2) – The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 – Regulations 37 and 38 – Resolution plan put forth by the resolution applicant did not meet the requirements of s.30(2) of the IBC read with Regulations 37 and 38 of the CIRP Regulations, 2016 – Reasons stated. [Para 54] Insolvency and Bankruptcy Code, 2016 – s.60 – Companies Act, 2013 – ss.408, 409 – National Company Law Tribunal Rules, 2016 – r.11 – Code of Civil Procedure, 1908 – s.151:

Held: s.60 specifies that the Adjudicating Authority in relation to insolvency resolution and liquidation for corporate persons including corporate 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 – s.60(5) 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 any application or proceeding by or against the corporate debtor or corporate person; 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 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 – r.11 of the 2016 Rules, framed u/s.469 of the Companies Act 2013, which is in pari materia with s.151 of CPC, 1908, preserves the inherent powers of the Tribunal. [Paras 40-42]

Insolvency and Bankruptcy Code, 2016 – Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 – Duties performed by Resolution Professional – Discussed.

Words and Phrases – Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 – “a person claiming to be an operational creditor” in Regulation 7; “a person claiming to be a financial creditor” in Regulation 8:

Held: Indicate that the category in which the claim is submitted is based on the own understanding of the claimant – 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. [Para 20].