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Synopsis

The Supreme Court has on October 31, 2023 said that a party cannot take recourse to observations made by a bench of equal strength to seek review of a judgment.

"Any passing reference of the impugned judgment made by the bench of the equal strength could not be a ground for review," a bench of Justices A S Bopanna and Bela M Trivedi said.

The bench further said that it is well-settled proposition of law that a co-ordinate bench cannot comment upon the discretion exercised or judgment rendered by another co-ordinate bench of the same strength. 

"If a 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 the larger bench, for authoritative decision, otherwise the law would be thrown into the state of uncertainty by reason of conflicting decisions," the bench said. 

The apex court dismissed a batch of review petitions against September 6, 2022 judgment, passed by a two-judge bench, which held that a definition of a secured creditor under the Insolvency and Bankruptcy Code included the government.

Counsels for the review petitioners asked the court to review the impugned judgment. Under IBC, secured creditors such as banks and financial institutions get priority in getting repaid through the resolution process, however unpaid dues to vendors, suppliers and government dues are treated as operational credit, and they fall lower in the so-called waterfall mechanism.

The counsel for the review petitioners/ intervenors placing heavy reliance on the observations made by a two-judge bench of the apex court in 'Paschim Anchal Vidyut Vitran Nigam Limited vs Raman Ispat Private Limited and Others' of July 17 2023, 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 bench, however, said, "The submissions made that the court in the impugned decision had failed to consider the waterfall mechanism as contained in Section 53 and failed to consider other provisions of IBC, are factually incorrect."

"As evident from the bare reading of the impugned judgment, the Court had considered not only the Waterfall mechanism under Section 53 of IBC but also the other provisions of the IBC for deciding the priority for the purpose of distributing the proceeds from the sale as liquidation assets," the bench said.

The bench said it was of the opinion that the well-considered judgment sought to be reviewed does not fall within the scope and ambit of the review.

"The counsels for the review petitioners have failed to make out any mistake or error apparent on the face of record in the impugned judgment, and have failed to bring the case within the parameters laid down by this Court in various decisions for reviewing the impugned judgment," the bench said.

The court also pointed out that it is also well settled that a party is not entitled to seek a review of a judgment delivered by this court merely for the purpose of a rehearing and a fresh decision of the case. “The normal principle is that 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,” it said. 

"Since we are not inclined to entertain these Review Petitions, we do not propose to deal with the other submissions made by the counsels for the parties on merits," the bench said. 

Case Title: Sanjay Kumar Agarwal Vs State Tax Officer (I) and Anr and connected matters