SC on Rainbow paper case Review.

The Supreme Court has dismissed the review petition filed in the batch of matters wherein the petitioner sought the review of Supreme Court judgement in the case of Rainbow Paper Ltd.

In the Rainbow Paper Ltd. The Supreme Court by going through various provision of Section 53 of the IBC and Section 48 of the Gujarat VAT has confirmed the following propositions:

(A)?? Section 53 of the IBC starts with “Notwithstanding anything contrary contain in any other law enacted by the Parliament or any state legislature for the time being in force”. The Section 48 of the Gujarat Vat Act also states that notwithstanding anything to any other law for the time being in force.

(B)?? Section 48 of Gvat Act is not contrary or inconsistent with Section 53 or any other provision for IBC.? By virtue of Section 48 the state become the secured creditor of the corporate debtor and it is covered u/s 53 (1)(b)(ii) i.e., debt on to a secured creditor.? Therefore debt shall rank equally with the workmen dues for a period of 24 months proceeding the liquidation commencement data.

(C)?? As per Section 48 of the GVAT Act the state is the secured creditor and read with Section 3 (30) of the IBC Act.? Such security interest has been created by the operation of Law and secured creditor does not exclude the Central or State Government or any Governmental Authority.

While disposing the review petition the Supreme Court has discussed the following proposing of Law:

(1)?? The review petition before the Supreme Court can be filed under article 137 and in terms of order XLVII Rule 1 of Supreme Court Rules. As per this ?rule review petition can be filed by any person who is aggrieved by the order, and it is not necessary that he should be party in the main appeal.? Therefore, complying ?the Supreme Court rules any aggrieved person can file the review petition.? The review petition has to be filed as per order XLVII of the CPC.? Thus the review was maintainable on this ground.

(2)?? However, the review was not maintainable on the other ground which the Supreme Court has laid down in the case of Beghar Foundation vs Justice K. S. Puttaswamy (Retired) and Ors.? In this case Supreme Court by following the Article 137 of the constitution the following law has been leg down:

(i)????????????? A judgement is open to review inter alia if there is a mistake or an error apparent on the face of the record.

(ii)??????????? A judgement pronounced by the Court is final, and departure from that principle is justified only when circumstances of the substantial and compelling character make it necessary to do so.

(iii)?????????? An error which is not self-evident and has to be detected by a process of reasoning, can hardly be said to be an error apparent on the face of record justifying the court to exercise its power of review.

(iv)?????????? In exercise of the jurisdiction under Order 47 Rule 1 CPC, it is not permissible for an erroneous decision to be “reheard and corrected.”

(v)??????????? A Review Petition has a limited purpose and cannot be allowed to be “an appeal is disguise.”

(vi)?????????? Under the guise of review, the petitioner cannot be permitted to reagitate and reargue the questions which have already been addressed and decided.

(vii)????????? An error on the face of record must be such an error which, mere looking at the record should strike and it should not require a long-drawn process of reasoning on the points where there may conceivably be two opinions.

(viii)???????? Even the change in law or subsequent decision/judgement of a co-ordinate or larger Bench by itself cannot be regarded as a ground for review.

?

The Supreme court further held that any passing reference on the impugned judgement made by the Bench of equal strength could not be a ground for review . The court reiterated the settled proposition of law that of law that coordinate bench cannot comment upon the discretion exercised or judgement rendered by another coordinate bench of the same strength . If the Bench does not accept as correct the decision on a question of law of another bench of equal strength , the only proper course to adopt would be to refer the matter to a larger bench, for authoritative decision, otherwise the law would be thrown into the state of uncertainty by reason of conflicting decision .

On the merit , the court held that it is well settled position that coordinate bench cannot comment upon the judgement rendered by another coordinate bench of equal strength and that subsequent judgement of a coordinate bench or larger bench by itself cannot be regarded as ground for review . Further the court rejected the submission of the petitioner counsel that impugned decision has failed to consider the waterfall mechanism as contained in section 53 and failed to consider the other provisions of IBC . In fact, the court considered not only waterfall mechanism under section 53 of IBC but also considered the other provision of IBC for deciding the priority for the purpose of distributing the proceeds from the sale as liquidation assets .

Therefore the court dismissed the review petition.

Naman Kapoor

Final Year Law Student

1 年

Great case review, Sir.

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