NCLT Cannot Recall Order Passed On Merits Under Rule 11 Of NCLT Rules 2016: NCLAT Chennai

Background

The CIRP of the corporate debtor was initiated, and the appellant turned out to be the successful resolution applicant (SRA). Six homebuyers filed applications before the NCLT seeking execution of their sale deed, and the NCLT directed the SRA to act in accordance with the approved resolution plan.

Later on, the appellant filed an application under rule 11 of the NCLT Rules, 2016, seeking recall of the order, citing the reason that its reply was not permitted, thereby causing injustice. However, the NCLT passed the order rejecting the recalled application, saying that the orders passed on merit cannot be recalled. Against the impugned order, the present appeal was preferred by the SRA.

Contention of the Parties

The appellant submitted that the NCLT erred in disposing of the homebuyer's application without considering its reply. It further argued that Rule 11 of the NCLT Rules empowers the tribunal to recall its order in exercise of its inherent power.

Per contra, the respondent homebuyers argued that the order was passed on merit and rule 11 cannot be exercised as a substitute for statutory review, which doesn't exist under IBC.

Observations of the NCLAT

The tribunal observed that the grounds referred to by the appellant would entail the reconsideration of the order afresh on the merit and will amount to the review of the order.

The bench referred to the decision of Aircastle (Ireland) Ltd. v. Mr. Ashish Chawchharia, RP of Jet Airways (India) Ltd. and Ors. (Comp. App. (AT) (Ins) No.1178/2024), where it was clarified that the power to recall can only be exercised in the cases of apparent procedural error, such as the mistake of the court prejudicing the parties, fraud, or collusion in obtaining the judgment, etc. In the judgment, the tribunal clarified that Rule 11 cannot be invoked to reopen the case and to re-examine the findings. For the same observations, the bench also referred to the rulings of Union Bank of India v. Dinkar T. Venkatasubramanian and Ors (I.A. No.3961 of 2022 in Company Appeal (AT) (Ins.) No.729 of 2020).

Accordingly, the bench observed that none of the grounds taken by the appellant fall within the ambit of recall. Therefore, the NCLT's order has rightly rejected the recall application.

Case Name: RCC E-Construct Pvt. Ltd. v. J. Ramkumar & Ors.

Case No.: Company Appeal (AT) (CH) (Ins) No. 446 of 2025 (IA No. 1280 of 2025)

Coram: Justice Sharad Kumar Sharma (Member-Judicial) and Jatindranath Swain (Member-Technical)

For Appellant: Mr. Shobit Phutela, Advocate

For Respondents: Mr. P. Elayarajkumar, Advocate for R1 to R6

Judgment Date: 15.10.2025