NCLT Jurisdiction under Section 60(5) IBC: Case Studies

Section 60(5) gives the NCLT a wide jurisdiction so that disputes connected with an insolvency are decided in one place, quickly. But it does not make the NCLT a general court for every dispute involving a company in insolvency. Questions test the line: is there a nexus with the insolvency, is the challenge to a public law decision, and is a civil court or another forum the right place? Each answer below applies that test.

1. The Law in Brief

Figure 1: The three limbs of section 60(5)

• Section 60(5). Notwithstanding anything in any other law, the NCLT may entertain (a) any application or proceeding by or against the corporate debtor, (b) any claim by or against it, including priority claims, and (c) any question of priorities or of law or fact arising out of or in relation to its insolvency resolution or liquidation.
• Limits. The dispute must arise out of or relate to the insolvency (Gujarat Urja, 2021; TCS, 2021); public law decisions of governments and statutory authorities are for the High Court in writ (Embassy Property, 2019)
• Bars. Civil courts have no jurisdiction over matters the NCLT may decide (sections 63 and 231), and no injunction may be granted against action taken under the Code by the NCLT or NCLAT (section 64(2))

Figure 2: Choosing the forum

2. Can the NCLT Review a State's Refusal of a Lease?

• Issue. Whether the NCLT can review a State's statutory decision on a lease under section 60(5)
• Law. In Embassy Property Developments v State of Karnataka (2019), the Supreme Court held that decisions of a government or statutory authority in the realm of public law, such as a refusal to extend a mining lease under statute, are subject to judicial review by the High Court under Article 226, and do not fall within the NCLT's jurisdiction under section 60(5). The Explanation to section 14(1) separately bars suspension or termination of licences on the ground of insolvency alone.
• Application. The refusal is based on the State's statutory powers and alleged violations, not on insolvency. It is a public law decision.
• Conclusion. The NCLT has no jurisdiction. The resolution professional should challenge the decision before the High Court in writ proceedings. If the refusal had been based only on the insolvency, the Explanation to section 14(1) could be relied on.

3. Can a Civil Court Decide a CIRP Claim?

• Issue. Whether a civil court may decide the status of a claim in a CIRP, or restrain the committee.
• Law. Section 60(5)(b) and (c) give the NCLT jurisdiction over claims by or against the corporate debtor and questions arising in relation to its insolvency. Section 63 bars civil courts from entertaining any suit or proceeding in respect of matters within the NCLT's jurisdiction, and section 64(2) bars any court from granting an injunction in respect of action taken under the Code by the NCLT or NCLAT.
• Application. The classification of EF Ltd's claim arises directly from the CIRP. The injunction would interfere with the process the NCLT supervises.
• Conclusion. The civil court must reject the plaint for want of jurisdiction and cannot grant the injunction. EF Ltd should apply to the NCLT under section 60(5)

4. Which Disputes Have a Nexus with the Insolvency?

• Issue. Whether each dispute has a sufficient nexus with the insolvency to fall within section 60(5)
• Law. In Gujarat Urja Vikas Nigam v Amit Gupta (2021), the Supreme Court upheld the NCLT's power under section 60(5)(c) to restrain termination of a contract made solely because of insolvency where the contract was central to the debtor's survival, while warning that the residuary jurisdiction must be used sparingly. In TCS v Vishal Ghisulal Jain (2021), it held that disputes arising independently of the insolvency fall outside the NCLT's jurisdiction. Tribunals have generally declined to treat section 60(5) as a forum for ordinary recovery claims of the corporate debtor against third parties.
• Application. The termination arises solely from the CIRP and concerns GH Ltd's only contract. The distributor dispute is an ordinary commercial claim about the quality of goods sold before the CIRP.
• Conclusion. The NCLT may restrain the termination. The recovery claim should be pursued by the resolution professional in the ordinary civil court or arbitration, with the moratorium period excluded from limitation under section 60(6)

5. Which NCLT Bench Has Territorial Jurisdiction?

• Issue. Which bench of the NCLT has territorial jurisdiction over a CIRP.
• Law. Section 60(1) provides that the adjudicating authority for insolvency resolution and liquidation of corporate persons is the NCLT having territorial jurisdiction over the place where the registered office of the corporate person is located. The place where the cause of action arose is not the test.
• Application. JK Ltd's registered office is in Kolkata.
• Conclusion. The NCLT Chennai Bench lacks jurisdiction, and the application should be returned for presentation before the NCLT Kolkata Bench. Any application against JK Ltd's personal guarantors must then also be filed in Kolkata under section 60(2)

6. Frequently Asked Questions

Can the High Court entertain writs in IBC matters?

Yes, in appropriate cases, especially public law matters, but it will usually decline where an effective remedy lies before the NCLT or NCLAT.

Does section 60(5) cover claims against subsidiaries?

Clause (b) refers to claims by or against the corporate debtor, including claims by or against any of its subsidiaries situated in India.

Does the NCLT decide disputes about priority among creditors?

Yes. Section 60(5)(c) expressly includes questions of priorities.

7. Related Topics

• Topic 72: Adjudicating Authority. Section 60 and 60(5)
• Topic 107: Essential Supplies and Contract Termination. Supplies and termination.
• Topic 136: IBC Appeals. Sections 61 and 62.