The Insolvency and Bankruptcy Code, 2016 (IBC) is a game-changer for how India handles insolvency, aiming to streamline and update laws for resolving financial troubles of companies, partnerships and individuals quickly. The National Company Law Tribunal (NCLT) is at the core of this system, acting as the main authority for company insolvency cases. The jurisdiction of NCLT under IBC decides what kinds of disputes, claims, or issues it can handle during insolvency processes. This article explains the jurisdiction of NCLT under IBC, focusing on Section 60(5), its scope, how the Supreme Court has shaped it, and what it means for those involved in insolvency.
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NCLT and Its Role in IBC
The NCLT was set up under the Companies Act, 2013 and is a special court-like body that deals with company matters like mergers, amalgamations, and, since the IBC came into play, insolvency cases. The IBC names the NCLT as the Adjudicating Authority (AA) for companies in financial distress, creating a focused place to sort out these issues efficiently. Section 60 of IBC spells out the jurisdiction of NCLT under IBC, giving it the power to manage the Corporate Insolvency Resolution Process (CIRP) and liquidation.
The jurisdiction of NCLT under IBC aims to keep all related disputes in one place, avoiding confusion across different courts and supporting the IBC’s goals of saving asset value and encouraging business growth. However, this power isn’t limitless it’s shaped by the law and court decisions to prevent the NCLT from stepping into areas it shouldn’t.
Jurisdiction of NCLT under Section 60(5) of IBC
Section 60(5) is the key rule defining the jurisdiction of NCLT under IBC. It says that, despite any other law, the NCLT can handle:
(a) Any application or case involving the company in trouble (corporate debtor);
(b) Any claims made by or against the company, including those involving its Indian subsidiaries; and
(c) Any questions about priorities, laws, or facts tied to the insolvency or liquidation process of the company.
This rule gives the NCLT wide powers to tackle various issues that pop up during insolvency. For example, it can decide whether a claim is financial or operational, who gets to join the Committee of Creditors (CoC), or even settle disputes involving contracts or third parties if they’re linked to the insolvency process.
The wording of Section 60(5) is broad to ensure all insolvency matters are covered, but this has led to debates about how far this power goes. Early on, the NCLT and the National Company Law Appellate Tribunal (NCLAT) saw it as a very powerful tool, like a “super gauntlet” from the Avengers movies. But the Supreme Court stepped in to set clearer boundaries, ensuring the NCLT doesn’t overstep.
Read about NCLT in Company Law.
Supreme Court’s Interpretation on Jurisdiction of NCLT under IBC, 2016
The Supreme Court has been key in explaining the jurisdiction of NCLT under IBC, making it clear that while the NCLT has wide powers, these are limited to insolvency-related matters. In Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta (2021), the Court looked at a case where a power purchase agreement was canceled because the company was insolvent. Using Section 238 of the IBC, which says the IBC trumps other laws, the Court ruled that the jurisdiction of NCLT under IBC covers disputes directly tied to insolvency. However, it warned that the NCLT shouldn’t take on cases unrelated to insolvency, like contract disputes that happened before the insolvency process started.
This decision clarified that Section 60(5)(c) isn’t a free pass for the NCLT to handle every dispute involving a company. It only applies to issues directly connected to the insolvency process. For example, if a contract is canceled because of insolvency, the NCLT can step in; but if it’s about earlier breaches unrelated to insolvency, other courts, like civil courts, handle it.
In Tata Consultancy Services Ltd. v. Vishal Ghisulal Jain (2020), the Supreme Court overturned NCLT and NCLAT orders that tried to stop a contract termination, saying the issue came from pre-insolvency problems and wasn’t part of the jurisdiction of NCLT under IBC. The Court emphasized that the NCLT can’t act like a general court for all company disputes, it must stick to the IBC’s rules.
On the other hand, in Alok Kaushik v. Bhuvaneshwari Ramanathan (2021), the Court upheld the NCLT’s power to handle claims about a valuer’s fees after a CIRP was canceled, calling it part of the insolvency process. This shows a careful balance: the NCLT can deal with issues closely tied to insolvency but must leave unrelated matters to other courts.
These rulings also tackle overlaps with other courts. For example, High Courts can still review cases under Article 226 of the Constitution, and the NCLT’s role doesn’t block that. Also, under Section 231 of the IBC, civil courts can’t handle cases that fall under the jurisdiction of NCLT under IBC.
Key Case Laws on Jurisdictional Boundaries
Other cases help show the edges of the jurisdiction of NCLT under IBC. In Avil Menezes v. Shah Coal (P) Ltd. (2021), the NCLAT supported the NCLT’s ability to reclassify claims under Section 60(5), ensuring creditors are treated fairly. Similarly, in 9M Corpn. v. Naresh Verma (2021), the NCLT used its broad powers to settle disputes about who could join the CoC.
A key pattern is that the NCLT can’t handle disputes without a clear insolvency connection. In Anamika Singh v. Shinhan Bank (2020), the NCLAT backed the NCLT’s power to reject unfair transactions, but later Supreme Court rulings made it clear these decisions need a strong insolvency link.
Recent cases, like those about recovering money owed for services during CIRP, show that Section 60(5) lets the NCLT handle such issues to keep the company running smoothly. However, for personal guarantors without an active CIRP against the company, the NCLT’s jurisdiction is limited, as clarified in 2025 cases.
The NCLT’s role also interacts with other laws, like the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI). In Celir LLP v. Bafna Motors (Mumbai) Pvt. Ltd. (2023), the Supreme Court said the jurisdiction of NCLT under IBC takes priority for insolvency issues, but other legal processes can continue if they don’t clash.
Read about Voluntary Liquidation under Insolvency and Bankruptcy Code.
Implications for Insolvency Practice
The clear jurisdiction of NCLT under IBC has big effects. It makes things more efficient by keeping insolvency disputes in one place, cutting down on delays and costs from multiple lawsuits. This fits with the IBC’s goal of resolving cases within 330 days, helping save asset value quickly.
However, the limits stop parties from dragging unrelated disputes to the NCLT just to get a faster resolution. This balance protects the NCLT’s role while respecting other courts or bodies like the Debt Recovery Tribunal (DRT).
For lawyers and insolvency experts, understanding the jurisdiction of NCLT under IBC is vital. Operational creditors need to show a clear insolvency connection when making claims under Section 60(5). Resolution Professionals can ask the NCLT for guidance on tricky issues but must avoid stepping into non-insolvency areas.
Some critics say the Supreme Court’s strict approach might split up cases, going against the IBC’s one-stop resolution goal, as seen in Arcelormittal India (P) Ltd. v. Satish Kumar Gupta (2019). Still, recent trends suggest the courts are clarifying, not shrinking, the NCLT’s powers.
Summary
The jurisdiction of NCLT under IBC, set out in Section 60(5), gives it strong tools to handle insolvency cases, but the Supreme Court keeps it in check to avoid overreach. Through cases like Gujarat Urja and Tata Consultancy, the Court ensures the focus stays on insolvency-related issues, creating a fair system. For lawyers, stakeholders, and policymakers, understanding these details is key to working with the IBC. Ultimately, the jurisdiction of NCLT under IBC highlights the Code’s role in transforming India’s insolvency system, favoring resolution and fairness over liquidation and disorder.
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Jurisdiction of NCLT under IBC: FAQs
Q1. What is the residuary jurisdiction of NCLT?
The residuary jurisdiction of NCLT under IBC, as per Section 60(5), allows it to handle any disputes, claims, or legal questions directly related to a company's insolvency or liquidation process.
Q2. What is the jurisdiction of the insolvency petition court?
The NCLT, as the insolvency petition court, has the power to accept, process, and decide applications for starting the Corporate Insolvency Resolution Process (CIRP) or liquidation under the IBC.
Q3. What is the pecuniary jurisdiction of NCLT?
For insolvency matters under IBC, the NCLT handles cases where the default amount is ₹1 crore or more, as set by the central government.
Q4. Do NCLT and NCLAT have the same jurisdiction? If yes, state?
No, NCLT and NCLAT do not have the same jurisdiction; NCLT is the primary court for insolvency cases, while NCLAT hears appeals against NCLT’s decisions.
