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Corporate Law / NCLT Practice

Recall of NCLT Order: Grounds and Procedure

An analysis of the grounds and procedure for recalling an NCLT order under Rule 11, the exceptional standard, and the distinction between recall and appeal.

29 Oct 20263 min read

The NCLT has the power to recall its own orders under Rule 11 of the NCLT Rules, 2016, which preserves the Tribunal’s inherent power to make such orders as may be necessary for the ends of justice. The power is exceptional, and it is exercised only where the order is vitiated by fraud, suppression of material facts, or a fundamental procedural defect.

The Grounds

The NCLT Chandigarh, in Microtek International, applied the Supreme Court’s formulation in Budhia Swain v. Gopinath Deb and A.R. Antulay v. R.S. Nayak to hold that the power of recall is exceptional and ordinarily exercisable only where the order is obtained by fraud, suppression of material facts, or fundamental procedural defect. The Tribunal also held that a mere disagreement with the order, or a subsequent change in circumstances, is not a ground for recall.

The NCLAT Chennai has held that an order passed on merits cannot be recalled under Rule 11. The power to recall can only be exercised in cases of apparent procedural error, such as a mistake of the court prejudicing the parties.

The Fraud Standard

The applicant for recall must establish intentional concealment of an admitted and undisputed liability, not a mere accounting disagreement. In Microtek, the applicant alleged that the company had understated its debt in the list of creditors. The Tribunal found that the dispute was a reconciliation issue, not a fraud on the Tribunal, and it dismissed the recall application.

The Procedure

The recall application is filed before the same Bench that passed the order, and it must set out the grounds and the evidence. The application is heard by the Bench, and the Bench may recall the order, modify it, or dismiss the application. The recall order does not decide the merits of the underlying dispute; it only re-opens the matter for reconsideration.

The Distinction from Appeal

The recall jurisdiction is not a substitute for an appeal. A party that is aggrieved by an order must use the appellate remedy where it is available, and it cannot invoke the recall jurisdiction to circumvent the appellate process. The NCLAT has held that the power to recall cannot be used to enforce an order or to avoid execution proceedings.

A technically sound recall application identifies the specific fraud, suppression, or procedural defect, and it supports the allegation with evidence. A broad application that seeks a re-hearing on the merits is likely to be dismissed.


Call to Action

Anuj Desai & Associates advises companies and parties on the recall of NCLT orders—from the grounds and the fraud standard to the procedure and the distinction from appeal. If you are considering a recall application or opposing one, we can help you assess the position.

📧 office@anujdesaiassociates.com
📞 9619456656
🌐 https://anujdesaiassociates.com
🔗 linkedin.com/in/ca-anuj-desai-122547230

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