The Supreme Court has reaffirmed that the dismissal of a Special Leave Petition cannot be reopened through a miscellaneous application based on subsequent developments in a parallel insolvency proceeding. This judgment underscores the finality of appellate disposal and the non-justiciability of commercial decisions made by Committees of Creditors under the Insolvency and Bankruptcy Code.
Background & Facts
The Dispute
The dispute originated from an Agreement to Sell dated 13.08.2021 between M/s Lamba Exports Pvt. Ltd. (petitioner) and M/s Dhir Global Industries Pvt. Ltd. (respondent no. 1) concerning property bearing UV-375, Udyog Vihar, Phase-IV, Gurugram. The petitioner claimed rights under the agreement, alleging payment of Rs.30,00,000 as earnest money, Rs.1,20,00,000 to Respondent No. 4 Bank towards a proposed One Time Settlement (OTS), and Rs.30,00,000 to Respondents No. 1 to 3. The total sale consideration was Rs.21,00,00,000.
Key Facts
- The suit property was mortgaged to Respondent No. 4 Bank, which was not a party to the Agreement to Sell.
- The petitioner filed Civil Suit No. 1248 of 2022 seeking specific performance, declaration, and injunction.
- An interim injunction was granted by the Civil Judge (Junior Division), Gurugram on 19.07.2022.
- The Additional District Judge, Gurugram set aside the interim order on 06.09.2022.
- The High Court of Punjab and Haryana dismissed the petitioner’s Civil Revision No. 3916 of 2022 on 06.05.2024, holding the Agreement to Sell was contingent upon Bank’s approval of the OTS.
- The petitioner filed Special Leave Petition (Civil) No. 12264 of 2024 before the Supreme Court.
- On 04.06.2024, the Supreme Court directed deposit of Rs.13,00,00,000 immediately and another Rs.13,00,00,000 upon Respondent No. 4’s appearance.
- The petitioner deposited Rs.26,00,00,000 in compliance.
- The SLP was dismissed on 25.02.2025.
Procedural History
- 13.08.2021: Agreement to Sell executed.
- 25.03.2022: Respondents issued legal notice rescinding the Agreement citing non-acceptance of OTS by Bank.
- 19.07.2022: Trial Court granted interim injunction.
- 06.09.2022: Additional District Judge set aside injunction.
- 06.05.2024: High Court dismissed Civil Revision No. 3916 of 2022.
- 04.06.2024: Supreme Court issued notice and directed deposit of Rs.26,00,00,000.
- 25.02.2025: Supreme Court dismissed SLP (Civil) No. 12264 of 2024.
- 14.02.2025: Respondent No. 1 proposed OTS to Bank under IBC.
- 21.03.2025: OTS concluded for Rs.34.85 crore.
- 05.04.2025: Committee of Creditors approved withdrawal of CIRP under Section 12A of IBC.
- 14.05.2025: National Company Law Tribunal passed order permitting withdrawal under Section 12A.
- 23.03.2025: Petitioner emailed Resolution Professional expressing willingness to participate.
- 25.02.2026: Miscellaneous Application No. 1256 of 2025 filed seeking recall of SLP dismissal.
The Parties' Positions
The petitioner contended that the subsequent OTS and withdrawal of CIRP rendered the earlier dismissal of the SLP unjust, as the property’s encumbrance was now resolved, making specific performance feasible. It alleged suppression of material facts and fraud on the Court.
The respondents argued that the insolvency proceedings were entirely separate from the civil suit, that the SLP dismissal was final, and that the MA was not maintainable under settled law.
Relief Sought
The petitioner sought recall of the Supreme Court’s order dated 25.02.2025 dismissing the SLP, and restoration of the right to pursue specific performance in light of the OTS and CIRP withdrawal.
The Legal Issue
Can a miscellaneous application seeking recall of a dismissed Special Leave Petition be entertained on the ground of subsequent developments in a parallel insolvency proceeding under the Insolvency and Bankruptcy Code, 2016?
Arguments Presented
For the Petitioner
The petitioner relied on the principle that fraud vitiates all proceedings and argued that the Court was misled by non-disclosure of the OTS proposal and its eventual approval. It contended that the resolution of the mortgage through Section 12A IBC fundamentally altered the factual matrix underlying the High Court’s decision, thereby justifying reconsideration. It cited the deposit of Rs.26 crore as evidence of its bona fides and urged the Court to recognize the practical impossibility of enforcing the Agreement prior to CIRP withdrawal.
For the Respondent
The respondents argued that the SLP dismissal was a non-speaking order on the merits of the civil revision, and that subsequent events in a separate statutory regime (IBC) could not be collaterally invoked to reopen a concluded proceeding. They emphasized that the IBC process was governed by commercial wisdom of the CoC, which is non-justiciable, and that the petitioner’s remedy, if any, lay in the NCLT or the pending civil suit - not in a recall application.
The Court's Analysis
The Court began by affirming the settled doctrine that once a matter is disposed of, the Court becomes functus officio and loses jurisdiction to entertain applications unless they fall within narrow exceptions: clerical errors or impossibility of implementing an executory order. The order dated 25.02.2025 was a non-executory, non-speaking dismissal of the SLP, and thus did not qualify for recall.
"The settled position is that a post-disposal miscellaneous application can be entertained only in rare situations of that nature. The present case does not fall within that limited class."
The Court rejected the petitioner’s claim of fraud, noting that the dismissal order did not hinge on any specific representation now alleged to have been suppressed. The subsequent OTS and CIRP withdrawal, even if true, were events occurring in a different legal domain governed by the IBC and did not render the earlier adjudication legally flawed.
The Court further emphasized the non-justiciability of commercial decisions under Section 12A IBC, citing K. Sashidhar v. Indian Overseas Bank, Essar Steel v. Satish Kumar Gupta, and Vallal RCK v. Siva Industries. It held that the CoC’s approval of the OTS was a final commercial determination, immune from judicial review on grounds of financial superiority.
"The mere assertion by the applicant that its offer was higher would not, by itself, furnish a ground to reopen the dismissal of the SLP or to unsettle steps taken in a separate insolvency framework."
The Court clarified that while statutory illegality or jurisdictional error in insolvency proceedings may be challenged in appropriate forums, such scrutiny cannot be imported into a dismissed civil appeal. The petitioner’s remedy, if any, remained in the pending Civil Suit No. 1248 of 2022 or through proper IBC channels.
The Verdict
The Miscellaneous Application No. 1256 of 2025 was dismissed. The Court held that the dismissal of the SLP on 25.02.2025 could not be recalled on the basis of subsequent developments under the IBC. MA No. 1257 of 2025 for ad-interim relief was rendered infructuous. The Court explicitly clarified that no opinion was expressed on the merits of the IBC proceedings or the pending civil suit, and all rights of the parties in those proceedings were left open.
What This Means For Similar Cases
Finality of Dismissed SLPs Is Absolute
- Practitioners must treat dismissal of an SLP as a final adjudication on the record before the Court at that time.
- Subsequent events in unrelated proceedings, even if materially significant, cannot be invoked to reopen the case via miscellaneous applications.
- Applications for recall must strictly satisfy the narrow exceptions: clerical error or impossibility of executing a prior order.
Commercial Wisdom of CoC Is Non-Justiciable
- Courts will not substitute their view for the commercial decision of the Committee of Creditors under Section 12A IBC.
- A higher bid by a third party does not invalidate an approved OTS unless statutory illegality or procedural fraud is proven in the insolvency forum.
- Civil litigants must pursue remedies in the appropriate forum - NCLT for IBC matters, civil courts for contractual disputes.
Parallel Proceedings Require Separate Channels
- A party cannot use one proceeding (e.g., civil suit) to challenge outcomes in another (e.g., insolvency resolution).
- Evidence or developments from parallel proceedings may form the basis of a new cause of action but not a recall of a concluded appeal.
- Legal strategy must be aligned with the correct forum: IBC for insolvency, civil court for specific performance, writ for constitutional remedies.
