Greater NOIDA Industrial Development Authority Vs. Prabhjit Singh Soni : Supreme Court observes that NCLT has inherent power to recall an order

The Supreme Court in Greater NOIDA Industrial Development Authority Vs. Prabhjit Singh Soni (Civil Appeal No. 7590 -7591 of 2023) has held that NCLT has inherent power to recall an order. The Supreme Court also held that Form prescribed under Code to submit claims is directory in nature and what is necessary is that claim should be supported by proof.

Facts of the Case

The Greater NOIDA Industrial Development Authority (GNIDA) being a statutory authority acquired land for setting up an urban and industrial township. On 28.10.2010 one of the plot of land acquired by it was allotted to JNC Construction Ltd. (Corporate Debtor) by way of lease for 90 years charging premium which was payable in installments. The Corporate Debtor committed default in payment of premium and was served with demand-cum-cancellation notice. CIRP was initiated against the Corporate Debtor vide order dated 30.05.2019. GNIDA filed claim of Rs. 43,40,31,951/- in the category of Financial Creditor. The RP treated GNIDA as operational creditor and requested to file claim in category of Operational Creditor. The GNIDA did not file fresh claim and in the meantime Resolution Plan was approved by the NCLT on 04.08.2020. GNIDA filed an application bearing No. 344 /2021 against its treatment as operational creditor and IA  1380/2021 for recall of order approving Resolution Plan. NCLT rejected the applications of the GNIDA and Appeal filed before NCLAT was also rejected.

Findings of the Supreme Court

The Supreme Court observed that a Court or a Tribunal has inherent power to recall an order to secure ends of justice or to prevent abuse of process of the Court. IBC or regulations framed thereunder do not prohibit exercise of such inherent power. Section 60 (5) (c) of the IBC empowers NCLT to entertain or dispose of any questions 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 IBC. Rule 11 of NCLT rules preserves inherent power of the Tribunal. The Supreme Court observed that even without empowering provision a Tribunal has power to recall. Power to recall has to be used sparingly on limited grounds i.e. where order is without jurisdiction, party has not been served with notice or order has been received on misrepresentation of facts or playing fraud on court.

The Supreme Court held that Application filed by the GNIDA for recall was maintainable as it was not informed about meeting of the CoC, the proceeding was ex parte, there was misrepresentation on the Part of the RP and the NCLT erred in approving the Resolution Plan.

The Supreme Court held that the Resolution Plan did not meet the requirements of Section 30 (2) of IBC R/w Regulations 37 and 38 of CIRP Regulations, 2016. It was undisputed fact that claim of Rs. 43,40,31,951 /- has been filed. GNIDA was advised to file claim Form B in category of Operational Creditor rather than in Form C meant for Financial Creditors. Assuming that GNIDA did not heed the advice, once the claim has been filed with proof the same could not have been overlooked. Form in which a claim has to be submitted is directory. What is necessary is that the claim should have support with proof. Resolution Plan has not only failed in acknowledging the claim made but also in mentioning the correct figure of the amount due and payable. Resolution Plan mentions figure at Rs. 13,47,40,819/- whereas according to GNIDA amount due was  Rs. 43,40,31,951/-. These aspects have not been considered by NCLT and NCLAT.

The Resolution Plan also did not put GNIDA in the category of secured creditors although by virtue of Section 13A of 1976 Act, charge was created in favour of  GNIDA. Non-placement of secured creditor in category of secured creditor has affected adversely interest of GNIDA.

Regulation 38 (3) of CIRP Regulations, 2016 provides that Resolution Plan should demonstrate that it is feasible and viable and it has provisions for approvals required. When land of the Corporate Debtor belongs to a statutory body, a closer examination of Resolution Plan’s feasibility has to be undertaken This aspect was also not deliberated by NCLT or NCLAT.

Appeal was allowed and the Supreme Court sent back the Resolution Plan to CoC for resubmission after satisfying the parameters provided under the Code.

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