The Delhi High Court in Always Remember Properties Private Limited V Reliance Home Finance Ltd. [I.A. 12978/2022 in ARB. P. 305/2020 decided on 07.12.2022] held that the Court while exercising power under Section 11 of the A&C Act performs judicial function and hence review of an order passed under Section 11 of the A&C Act is permissible.
Always Remember Properties Private Limited (hereinafter referred to as the “Applicant”) filed an application under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the “A&C Act”) in the present petition ARB. P. 305/2020. The Delhi High Court passed an interim order dated 25.07.2022 (hereinafter referred to as the “Impugned Order”) stating that as the Corporate Insolvency Resolution Process (hereinafter referred to as the “CIRP”) had been initiated against Reliance Home Finance Limited (hereinafter referred to as the “Respondent”), the moratorium period would come into effect and consequently all the proceedings against the Respondent will be interdicted. Being aggrieved and dissatisfied by the Impugned Order, the Applicants have sought the review of the Impugned Order.
ISSUE BEFORE THE HIGH COURT
Whether the Court has the power to review an order passed under Section 11 of the A&C Act?
CONTENTIONS OF THE PARTIES
The Applicant submitted that no CIRP had been initiated against the Respondent and hence, the impugned order suffers from a patent and manifest error apparent on the face of the record.
It was further submitted that the power exercised by the Court under Section 11 of the A&C Act is not merely an administrative power. Moreover, the power exercised by the Court is judicial in nature.
The Respondent relied on the Antikeros Shipping vs. Adani Enterprises Ltd., (2020 SCC OnLine Bom 277) and submitted that the Section 11 of the A&C Act does not confer the power of substantive review to the Court.
DECISION AND FINDINGS
The High Court relied on United India Insurance Company Limited vs. Antique Art Exports Private Ltd., [(2019) 5 SCC 362] and observed that the power exercised by the Court under Section 11 of the A&C Act is not merely administrative but judicial. It was held that the Court does not cease to be a Court of Record while exercising the power under Section 11 of the A&C Act.
The High Court further held that the review was not sought on merits of power exercised under Section 11 of the A&C Act, but on the evident factual error in the impugned order. The Court allowed the application of review as the Impugned Order suffered from an evident factual error.
The Delhi High Court upheld the judicial character of Court when while exercising the power under Section 11 of the A&C Act and allowed the review of an order facing evident factual error. The position regarding the scope and extent of judicial review of orders passed under Section 11, is no longer res integra. It has conclusively been held that courts have the inherent power to examine and review orders that include any factual mistake. Hence, this would prevent an illegality being continued and errors being made.
–Team AMLEGALS assisted by Mr. Vinay Sachdev (Intern)
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