In Review Petition (Civil) No. 1620 Of 2023 -SC- ‘Passing reference to impugned judgment by bench of equal strength not a ground for review’: Supreme Court clarifies scope of review petitions
Justice A.S. Bopanna & Justice Bela M. Trivedi [31-10-2023]

Read Order: Sanjay Kumar Agarwal & Anr V. State Tax Officer (1) & Anr

Chahat Varma

New Delhi, November 3, 2023: The Supreme Court has dismissed five review petitions challenging its earlier judgment on the priority of claims in insolvency proceedings. The Court also clarified the scope of review petitions, holding that a passing reference to the impugned judgment made by a bench of equal strength cannot be a ground for review.

In the case at hand, in a judgment and order dated 06.09.2022, this court had allowed appeals concerning the Gujarat Value Added Tax Act (GVAT Act) and the Insolvency and Bankruptcy Code (IBC). It had concluded that Section 48 of the GVAT Act did not contradict the IBC's Section 53, establishing that debts owed to a secured creditor, including the State under the GVAT Act, ranked equally with specified debts. The judgment stated that the State qualified as a secured creditor under the GVAT Act, and the delay in filing a claim should not be the sole reason for rejection. As a result, the appeals were allowed, and the Resolution plan approved by the Committee of Creditors (CoC) was set aside, allowing a fresh Resolution Plan. The Review Petitioners subsequently filed five Review Petitions challenging this judgment.

The senior counsels for the Review Petitioners/ Intervenors submitted that the court in the impugned judgment had failed to consider the waterfall mechanism contained in Section 53, as also failed to consider other provisions of the IBC.

The division bench of Justice A.S. Bopanna and Justice Bela M. Trivedi clarified the scope of review petitions. They emphasized the following key points in their judgment:

• A judgment is open to review if there is a mistake or an error apparent on the face of the record.
• A judgment pronounced by the Court is final, and departure from that principle is justified only when circumstances of a substantial and compelling character make it necessary to do so.
• 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.
• In exercise of the jurisdiction under Order 47 Rule 1 CPC, it is not permissible for an erroneous decision to be ‘reheard and corrected’.
• A Review Petition has a limited purpose and cannot be allowed to be ‘an appeal in disguise’.
• Under the guise of review, the petitioner cannot be permitted to reagitate and reargue the questions which have already been addressed and decided.
• 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 any long-drawn process of reasoning on the points where there may conceivably be two opinions.
• Even the change in law or subsequent decision/ judgment of a co-ordinate or larger Bench by itself cannot be regarded as a ground for review.

The bench firmly rejected the submissions of the review petitioners, asserting that a passing reference to the impugned judgment by a Bench of equal strength is not a valid ground for review. They emphasized the principle that a co-ordinate Bench should not comment on the discretion or judgment of another Bench of equal strength. If one Bench disagrees with the decision of another Bench on a legal question, the proper course is to refer the matter to a larger Bench for an authoritative decision to avoid conflicting decisions and legal uncertainty.

The bench also clarified that the arguments presented by the counsel for the Review Petitioners, claiming that the court in the impugned decision failed to consider the Waterfall mechanism in Section 53 and other IBC provisions, were factually incorrect.

The bench noted that after a thorough examination of the Waterfall mechanism and other IBC provisions, it concluded in the impugned order that the NCLAT had erred in asserting that Section 53 of the IBC overrides Section 48 of the GVAT Act. They explained that Section 48 of the GVAT Act did not contradict or conflict with Section 53 or any other IBC provisions.

Ultimately, the bench determined that the judgment being reviewed did not fall within the scope of a review. The counsel for the Review Petitioners failed to demonstrate any mistake or error apparent on the face of the record in the impugned judgment, and they did not meet the criteria for reviewing the judgment. As a result, the Review Petitions were dismissed.