NCLAT Dismisses Appeal, Clarifies Inherent Powers Under Rule 11 Cannot Recall Orders Passed By Fraud Or Without Jurisdiction

NCLAT Dismisses Appeal, Clarifies Inherent Powers Under Rule 11 Cannot Recall Orders Passed By Fraud Or Without Jurisdiction

Introduction

The National Company Law Appellate Tribunal (NCLAT), Chennai Bench, has dismissed an appeal filed by the former managing director of M/s. Platino Classic Motors (India) Private Limited, upholding that inherent powers under Rule 11 can only be used to fill procedural gaps and cannot override the statutory appeal process.

Factual Background

The appellant had filed a recall application under Rule 11 read with Rule 32 of the NCLT Rules, 2016, seeking to recall an order dated December 11, 2024, which had been rejected by the NCLT Kochi Bench by its order dated February 14, 2025. The NCLT rejected the application, and the appellant approached the NCLAT.

Procedural Background

The appellant argued that the proceedings were vitiated by fraud or decided by a tribunal that lacked jurisdiction, and therefore, the order could be recalled under Rule 11. The appellant also contended that the NCLT wrongly recorded that the order was passed on consent.

Contentions of the Parties

Appellant’s Contentions:

• The NCLT’s order was passed without jurisdiction or was vitiated by fraud.
• The NCLT wrongly recorded that the order was passed on consent.
• The recall application should be allowed under Rule 11 read with Rule 32 of the NCLT Rules.

Respondent’s Contentions:

• The recall application was rightly rejected by the NCLT.
• The appellant should have resorted to the appropriate recourse available under the law.

Reasoning and Analysis

The bench of Justice Sharad Kumar Sharma (Member-Judicial) and Jatindranath Swain (Member-Technical) observed that the aspect of jurisdiction and the wrongful recording of consent involve mixed questions of fact and law, which can only be tested when a party approaches a forum with the power to test evidence. The bench noted, “the inherent power provided under Rule 11 does not include within itself a power to override a statutory provision or a field which is already covered under law. Inherent powers can only be utilized to fill up the vacuums that are prevailing in the given procedural law, but they cannot act as a substitute for the process of law, which could have been exercised by the appellate forum.”

Implications

The NCLAT’s decision clarifies the limitations of inherent powers under Rule 11 of the NCLT Rules and emphasizes that such powers cannot be used to bypass the statutory process of appeal.

Outcome

The NCLAT dismissed the appeal, upholding the rejection of the recall application. The tribunal observed that the power to recall cannot be exercised in the given set of circumstances, and the appellant should have resorted to the appropriate recourse available under the law.

In this case, the appellant was represented by Mr. Arjun Suresh and Ms. Aarthi Rao, Advocates.