Entegra Ltd. Vs Shree Maheshwar Hydel Power Corporation Ltd. Through Interim Resolution Professional & Anr. (NCLAT Delhi)
Conclusion: Technical Member’s prior role as HUDCO nominee director did not establish real danger or reasonable apprehension of bias. Tribunal held that the recall application lacked merit and was a belated attempt to reopen a matter that had already attained finality. Allegations of bias were unsubstantiated and speculative, with no proof of personal or pecuniary interest. Accordingly, the application to challenge admission of a Section 7 application was dismissed, and the order dated 26.11.2024 stood affirmed.
Held: Appellant, a promoter of Shree Maheshwar Hydel Power Corporation Ltd., the Corporate Debtor, challenged the admission of a Section 7 application initiated by Power Finance Corporation Ltd. (Respondent No. 2) for an alleged default of ₹2,789.42 Crores. NCLAT had dismissed appellant’s appeal which was further challenged before the Supreme Court. The Supreme Court appeal was later dismissed for non-compliance with a conditional order to cure defects. Appellant argued that Technical Member was biased, as he had previously served as a nominee director of HUDCO (a lender to the Corporate Debtor holding an 18.86% stake in the creditor consortium) from 2013–2014. It was alleged that HUDCO’s involvement in the Corporate Debtor’s management since 2005 created a reasonable apprehension of bias. Appellant contending that a judge could not adjudicate a matter in which he had a financial or proprietary interest. Solicitor General of India, appearing for Respondent No. 2, opposed the application, terming it an afterthought and abuse of process. He pointed out that the bias issue was never raised during the two-year pendency of the appeal before the NCLAT, despite the Technical Member’s profile being publicly available. The Technical Member’s role as a nominee director was collective, with no specific decision attributed to him. It was held that Appellant filed the recall application on 18.05.2025—after the Supreme Court dismissed its appeal—indicating it was a tactical afterthought. Tribunal noted the Appellant failed to explain why the bias issue was not raised earlier. The Pinochet precedent was inapplicable, as it involved direct personal interest (the judge’s wife’s role in a campaign against the litigant). Technical Member’s prior role as a government nominee director (without remuneration) did not establish bias under the “real danger” test. NCLAT held that the Appellant’s conduct amounted to forum shopping and abuse of process. The application was dismissed with costs borne by the parties, upholding the finality of the order dated 26.11.2024.
