NCLT Has Inherent Power To Recall Order Approving Resolution Plan Which Is Not Submitted As Per IBC

Posted On - 30 March, 2024 • By - King Stubb & Kasiva


[1] A three (3) Judges Bench of the Hon’ble Supreme Court held that that the Adjudicating Authority under Insolvency and Bankruptcy Code, 2016 (“IBC”) i.e., the National Company Law Tribunal (“NCLT”) has the power to recall its order approving the resolution plan if the resolution plan is not submitted as per the mandate of the Code. The Hon’ble Court also went on to hold that claim submitted by a claimant under the Corporate Insolvency Resolution Process (“CIRP”) of the Corporate Debtor (“CD”) cannot be rejected/overlooked merely on the fact that the claim submitted appears to be in a different form other than the form in which the claim needs to be submitted.


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 plots of land acquired by it was allotted to JNC Construction Ltd., the CD, by way of lease for 90 years charging a premium which was payable in instalments. The CD committed a default in payment of instalments and was served with demand cum pre-cancellation notice.

CIRP was initiated against the Corporate Debtor vide order dated 30.05.2019. Pursuant to the same, public notice was issued in the month of January 2020, wherein GNIDA submitted a claim of Rs. 43,40,31,951, being unpaid instalments payable towards the premium for the lease. The claim was set up by the GNIDA as a financial creditor of the CD. However, the RP treated it 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

The GNIDA 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.

On being intimated of the NCLT’s Order, the GNIDA on 06.10.2020 filed IA No. 344/2021 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.

The NCLT vide order dated 5.4.2021, rejected the recall application on a note that it is impermissible for it to decide on the recall application of the Resolution Applicant consequent to the approval of the resolution plan. The NCLAT vide its impugned order dated 24.11.2022 (“Impugned Order”) also affirmed the view taken by the NCLT while dismissing the appeal against the NCLT’s order. It is against the Impugned Order of the NCLAT that the instant appeal was preferred by the Resolution Applicant before the Supreme Court.


The following issues were framed for consideration of the three (3) Judge Bench:

  • 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?
  • Whether the application for recall of the order was barred by time?
  • 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?
  • As to what relief, if any, the appellant is entitled to?


The Supreme Court held that any Court or Tribunal has the 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 the exercise of such inherent power, rather Section 60(5)(c) of the IBC empowers the 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 the inherent power of the Tribunal. The Court laid down the limited grounds on which the power to recall has to be used i.e., where:

  1. order is without jurisdiction; or
  2. party has not been served with notice; or
  3. 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 and there was misrepresentation on the Part of the RP and the NCLT erred in approving the Resolution Plan. On the basis 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.

The Bench also held that the Form in which a claim has to be submitted is directory. What is necessary is that the claim should have support with proof Further, the Bench observed that where the land of the Corporate Debtor belongs to a statutory body, a closer examination of Resolution Plan’s feasibility has to be undertaken

Observing that all of the above aspects were not deliberated by NCLT or NCLAT, the Appeal was allowed and the Court sent back the Resolution Plan to CoC for resubmission after satisfying the parameters provided under the Code.


In conclusion, the Supreme Court’s verdict underscores the importance of equitable treatment and due process in insolvency proceedings. It clarifies that adherence to procedural formalities should not overshadow the substantive rights of creditors. The judgment reaffirms the judiciary’s role in ensuring the integrity and fairness of the resolution process. This decision sets a precedent for future insolvency cases, emphasizing the need for meticulous adherence to statutory provisions and principles of fairness.

This case analysis sheds light on the complexities of insolvency law and underscores the significance of legal scrutiny in resolving disputes. It serves as a guiding beacon for stakeholders navigating the intricate landscape of corporate insolvency, emphasizing the primacy of justice and fairness in the resolution process.


CIVIL APPEAL NOS.7590-7591 OF 2023

Judgment dated 12th February, 2024