NCLAT dismissed applications seeking recall of its order rejecting impleadment, finding no fraud, and imposed exemplary costs of ₹5 lakh for misuse of legal process.
NCLAT Dismisses Recall Petitions, Imposes ₹5 Lakh Costs for Abuse of Process
The National Company Law Appellate Tribunal (NCLAT) has dismissed multiple recall applications seeking review of its earlier order that refused to implead certain parties in an insolvency proceeding. The applicants alleged procedural injustice and non-consideration of vital submissions, but NCLAT held that no fraud had been established on record to justify recall under Section 423 of the Companies Act, 2013 or inherent powers.
The tribunal reiterated that recall petitions are extraordinary remedies, permissible only in cases of fraud, miscarriage of justice, or discovery of new evidence. It observed that the applications were filed with oblique motives and caused unnecessary delay. Accordingly, it imposed exemplary costs of ₹5 lakh to deter frivolous litigation.
This ruling signals NCLAT’s increasing intolerance toward litigants misusing recall mechanisms. Practitioners must ensure that recall applications are based on strong legal grounds and supported by evidence of fraud or procedural illegality, or risk adverse cost consequences.
Citations
- Companies Act, 2013, Section 423
