Adjudicating Authority under IBC: Section 60 and 60(5)

Every insolvency process needs a single forum that can decide disputes quickly and keep the process moving. For corporate persons, the Code gives this role to the NCLT, with a wide jurisdiction in section 60(5) that overrides other laws. But a wide jurisdiction invites overreach, and the Supreme Court has drawn its limits in a series of decisions. This note explains the NCLT's jurisdiction, its relationship with personal guarantor proceedings and other forums, and the tests the courts have laid down.

1. The Adjudicating Authority

• Section 5(1). For Part II, the Adjudicating Authority is the National Company Law Tribunal constituted under section 408 of the Companies Act, 2013.
• Section 60(1). It is the NCLT having territorial jurisdiction over the place where the registered office of the corporate person is located, for insolvency resolution and liquidation of corporate persons, including corporate debtors and their personal guarantors.
• Individuals and firms. For other individuals and partnership firms, the Debts Recovery Tribunal is the Adjudicating Authority under section 179, though that part of the Code is not yet in force (Topic 65)

Figure 1: Heads of the NCLT's jurisdiction under section 60

2. Personal Guarantors, Section 60(2) to (4)

• Same bench. Where a CIRP or liquidation of a corporate debtor is pending before an NCLT, an application relating to the insolvency resolution, liquidation or bankruptcy of its corporate guarantor or personal guarantor must be filed before that NCLT (section 60(2))
• Transfer. Proceedings concerning the personal guarantor pending in any court or tribunal stand transferred to the NCLT dealing with the corporate debtor's process (section 60(3))
• Powers. For this purpose, the NCLT is vested with all the powers of the Debts Recovery Tribunal under Part III (section 60(4))

3. Section 60(5)

• Text. Notwithstanding anything to the contrary in any other law, the NCLT has jurisdiction to entertain or dispose of (a) any application or proceeding by or against the corporate debtor or corporate person; (b) any claim made by or against the corporate debtor or corporate person, including claims by or against its subsidiaries situated in India; and (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings.
• Purpose. To ensure that disputes connected with the insolvency are decided in one forum, without parallel litigation that would delay the time-bound process.
• Supporting bars. No civil court has jurisdiction over matters the NCLT or NCLAT is empowered to decide (sections 63 and 231), and no injunction may be granted against actions taken under the Code.

4. The Supreme Court's Limits

Figure 2: When may the NCLT decide a dispute under section 60(5)?

• Embassy Property Developments v State of Karnataka, 2019. The NCLT cannot decide disputes over decisions of governments or statutory authorities in the realm of public law, such as the refusal to extend a mining lease; such decisions must be challenged in writ proceedings before the High Court.
• Gujarat Urja Vikas Nigam v Amit Gupta, 2021. The NCLT may, under section 60(5)(c), set aside the termination of a power purchase agreement made solely because of the corporate debtor's insolvency, where the contract was central to its survival as a going concern; but the residuary jurisdiction must be exercised only where the dispute arises solely from or relates to the insolvency, and not to defeat other legitimate rights.
• Tata Consultancy Services v Vishal Ghisulal Jain, 2021. Where a contract was terminated for the corporate debtor's breach, independently of its insolvency, the NCLT has no jurisdiction to interfere; the Gujarat Urja exception is narrow.
• The resulting test. The dispute must have a nexus with the insolvency; public law matters go to writ courts, and ordinary contractual disputes to their usual forums.

Figure 3: Matters within and outside the NCLT's jurisdiction

5. Limitation and Speed

• Section 60(6). In computing the period of limitation for any suit or application by or against a corporate debtor for which a moratorium has been ordered, the period of the moratorium is excluded.
• Section 64. Where an application is not disposed of within the specified time, the NCLT or NCLAT must record reasons, and the President or Chairperson may extend the period by up to ten days; no court may grant an injunction against action taken by the NCLT or NCLAT under the Code.
• 2026 timelines. The 2026 Amendment set further time limits for admission and approval orders, requiring reasons to be recorded for delay (Topic 32)

6. Frequently Asked Questions

Can the NCLT direct a State Government to renew a mining lease of the corporate debtor?

No. In Embassy Property Developments (2019), the Supreme Court held that decisions of governments under public law statutes are outside the NCLT's jurisdiction and must be challenged by writ.

Can the NCLT stop a supplier from terminating a contract during the CIRP?

Only if the termination is solely because of the insolvency and the contract is central to the corporate debtor's survival (Gujarat Urja, 2021). If the termination is for an independent breach, the NCLT cannot interfere (TCS, 2021).

Where must a bank file an insolvency application against a personal guarantor whose company is already in CIRP?

Before the NCLT dealing with the company's CIRP, under section 60(2).

Does a moratorium affect the limitation period for the corporate debtor's own suits?

Yes. Under section 60(6), the period of the moratorium is excluded in computing limitation for suits or applications by or against the corporate debtor.

7. Related Topics

• Topic 10: Institutional Framework. IBBI, NCLT, NCLAT and IPs.
• Topic 23: Essential Supplies, Licences and Ipso Facto Clauses. Termination of contracts.
• Topic 73: Appeals. Sections 61 and 62.