NCLAT dismissed recall applications seeking review of impleadment rejection, citing absence of fraud and imposing ₹5 lakh exemplary costs for litigation abuse.
The National Company Law Appellate Tribunal (NCLAT) has dismissed recall applications filed to review its earlier order rejecting a party’s impleadment in an insolvency proceeding, holding that review is impermissible under the Insolvency and Bankruptcy Code (IBC) absent proven fraud.
The tribunal reiterated that IBC does not contemplate a review mechanism akin to civil procedure, and recall is only permissible under exceptional circumstances involving fraud or jurisdictional error. Finding no such grounds, NCLAT concluded that the applications were filed vexatiously and amounted to an abuse of process.
“Recall petitions cannot be used as a substitute for review or appeal where no fraud is pleaded or proved.”
Implication: This discourages frivolous litigation in IBC cases. Practitioners must assess the viability of recall petitions strictly against IBC timelines and limited equity powers, mindful of potential cost consequences.
Citations
- Insolvency and Bankruptcy Code, 2016
