Jun 22, 2022

To Adjudicate or Not Adjudicate: Conflict of Jurisdiction between NCLT and Civil Courts


The National Company Law Tribunal (NCLT) has been granted extensive powers to adjudicate issues linked to the corporate insolvency resolution processes (CIRP) of corporate debtors. This Paper seeks to analyse the position with respect to the residuary jurisdiction of the NCLT under the Insolvency & Bankruptcy Code, 2016 (IBC).

The IBC has a non-obstante clause and confers jurisdiction to the NCLT to deal with – (a) any applications by or against the corporate debtor / corporate person; (b) claim by or against the corporate debtor / corporate person, including claims by / against any of its subsidiaries in India; and (c) any question of priorities or of law or facts, in relation to the CIRP. Further, the IBC bars the ordinary jurisdiction of civil courts to entertain any suit / proceedings in respect of any matter over which NCLT has jurisdiction.

Conjunctively read, these provisions grant the NCLT with exclusive jurisdiction over all proceedings / claims by or against a corporate debtor. However, various court orders have led to conflicting interpretations as to the extent of these sections, which we have sought to analyse.

In the Research Paper, we have identified the approaches adopted in certain foreign jurisdictions, such as the United Kingdom and the United States of America, and also contrasted with the approaches of the Indian courts. We have evaluated the strengths and weaknesses of these approaches and concluded with the approach which may be considered for India.


This paper aims to explore the width of the jurisdiction of the National Company Law Tribunal (NCLT) with respect to matters connected with the corporate insolvency resolution process (CIRP) of a corporate debtor (CD), including its assets, etc. This paper also reviews the extant legal position in India in comparison with the position in foreign jurisdictions of US, UK and the position adopted by the United Nations Commission on International Trade Law (UNCITRAL), with the aim to understand the contours of such jurisdiction.


The Companies Act, 2013 (Companies Act) vests with the NCLT, the exclusive right to exercise and discharge such powers and functions conferred to it under the Companies Act or any other law, including the Insolvency and Bankruptcy Code, 2016 (IBC).[1] Explicit provisions in regard to the same can be seen in sections 430 and 408 of the Companies Act. Section 430 of the Companies Act, in line with which section 63 of the IBC stands, bars the jurisdiction of civil courts regarding subject matters that come within the purview of adjudication by the NCLT and the National Company Law Appellate Tribunal  (NCLAT), and section 408 of the Companies Act vests the NCLT with the right to exercise and discharge such powers and functions conferred to it under the Companies Act or any other law, including the IBC.

Specific provisions in regard to the exclusive jurisdiction of benches of the NCLT are enlisted in sections 60(1) and 60(5) of the IBC. With regard to the territorial jurisdiction of the NCLT, section 60(1) of the IBC provides that, the relevant bench of the NCLT, where the registered office of the corporate person is located, shall have territorial jurisdiction in regard to insolvency resolution and liquidation.

Further, the NCLT also has residuary jurisdiction under section 60(5) of the IBC, which allows it to consider ‘all questions of law or fact arising out of or in relation to the corporate debtor’s insolvency resolution or liquidation under IBC’.[2] The court also observed that section 60(5), starting with a non-obstante provision, ensures that the NCLT alone has jurisdiction to decide applications and procedures by or against a CD, indicating that no other body has the power to hear such applications or processes.

The Bankruptcy Law Reforms Committee (BLRC) in its November, 2015 Report delineated its vision of the jurisdiction of courts with regard to issues arising out of and relating to insolvency. The BLRC referred to the NCLT as the forum with jurisdiction over the winding up and liquidation of companies and recommended that original jurisdiction over all matters vis-à-vis insolvency should vest with the NCLT.  The recommendation of the BLRC was based upon concerns of maintaining the sanctity of the bankruptcy process and to maintain efficiency. The BLRC was also of the opinion that all fresh suits and petitions, ranging from questions of priorities to questions of laws and facts, wherever concerned with the bankruptcy process against the CD must exclusively be entertained by the NCLT.  With the overriding effect of the IBC via sections 14 and 238, the recommendation of the BLRC effectively gave a clear mandate to the NCLT via sections 60(3) and 60(5) of the IBC.


The Supreme Court, in Gujarat Urja Vikas Nigam Limited v. Mr. Amit Gupta[3] (Gujarat Urja case), while upholding the decision of the NCLT, held that the residuary powers of the NCLT under the IBC are limited, and it can adjudicate on disputes arising out of contractual matters solely if it is in relation to the resolution process of the CD.[4] The dispute therein was pertaining to an ipso facto provision (for termination of the contract on an event of default, which included the admission to insolvency).  

Gujarat Urja had entered into a power purchase agreement (PPA) with Astonfield Solar Field (Gujarat) Pvt. Ltd. (Astonfield) for developing a photovoltaic based power project in Gujarat. Soon after the commencement of the project, it was paused multiple times temporarily on account of heavy rain and turbulence. Hit by this, Astonfield incurred heavy losses and was forced into insolvency. Thereafter, Gujarat Urja issued notices for termination of the contract on failure of Astonfield to remedy the occurred default as a result of the admission of CIRP.

The NCLT allowed the application for injunction on the issued notices, which was allowed by the NCLAT as well. The matter went up in appeal to the Supreme Court wherein the primary issue of jurisdiction of the NCLT / NCLAT subsequent to contractual obligations and its regulation under the IBC was discussed.

Striking a balance between the rescue of the debtor on one hand and that of contractual freedom on the other, the  Apex Court opined that the powers of the tribunal must be derived from the text of the legislation and words cannot be added for that purpose. In that context, section 60(5) of the IBC has vested enormous power in the NCLT / NCLAT in relation to the CIRP.

Relying on the powers under section 60(5) of IBC, the Apex Court held that the NCLT / NCLAT had jurisdiction to restrain the termination notices arising out of contract obligations. The point of caution marked is the fact that such a decision was arrived at relying on the centrality of the PPA agreement to the CIRP of the corporate debtor. The court clarified that such wide discretionary powers can only be granted in terms of matters which are intrinsically related to the CIRP and no other unrelated grounds shall qualify for such invocation. The Court also noted that it was not laying down a general principle on the contours of the exercise of residuary power by the NCLT under section 60(5) of the IBC. The Court further observed that the NCLT cannot exercise its jurisdiction over matters dehors the insolvency proceedings since such matters would fall outside the realm of IBC.

Distinguishing this case, the Supreme Court in Tata Consultancy Services v. SK Wheels (P) Ltd. (Resolution Professional)[5](TCS case), reiterated that in the Gujarat Urja case, the NCLT was granted wide ranging powers solely because the insolvency itself constituted an event of default and there was no other default committed by the CD. [6]  In the TCS case however, pursuant to the facilities agreement between Tata Consultancy Services Private Limited (TCS) and SK Wheels Pvt. Ltd. for conducting examinations in educational institutions, termination notices were issued by TCS on account of multiple breaches of the facilities agreement by the corporate debtor. Subsequent to the admission of the CIRP, the termination notices were stayed by the NCLT under section 14 of the IBC, to ensure that the debtor remains a ‘going concern’.

It was clarified by the court that that since the termination of the facilities on ground was not connected with the CIRP, the precedent in Gujarat Urja case cannot be applied to the facts of the TCS case. Unless the termination of a contract is central to the process and would ultimately lead to the death of the CD, such termination should not be interfered with by the NCLT in any case.

In the Gujarat Urja case, the Supreme Court also relied on the judgement in Embassy Property Developments (Private) Limited v. State of Karnataka [7](Embassy case). [8] In this case, the CD held a mining lease which was granted by the state of Karnataka. Upon being admitted to insolvency, the RP sought an extension from the government for the lease. The proposal for extension was rejected primarily on the ground of violations by the CD.

An application was filed before the NCLT seeking quashing of the government order and allowing extension of the lease, which application was allowed by the NCLT. An appeal was filed before the High Court wherein the matter was remanded back to the NCLT for fresh consideration.

The primary issue of contention was the jurisdiction of the High Court to interfere with the order of the NCLT in the matter. It was held that the contractual agreement was between the state and the CD, which is a matter of public interest governed by the relevant statute. Consequently, only a court of appropriate authority would have adequate jurisdiction to decide the matter. The NCLT, being a quasi-judicial body, which is a creation of statute, cannot be elevated to the status of a superior court vested with the power of judicial review. It is considered well settled that a quasi-judicial body cannot have jurisdiction over matters governed by public law.

In summary, current jurisprudence recognises the residuary powers of the NCLT to extend over disputes  (a) arising pursuant to admission of insolvency proceedings against a CD; and/or (b) central to the insolvency resolution of a CD (for instance, where the outcome of the dispute could lead to the death of the CD). On the other hand, the NCLT is devoid of jurisdiction over matters which do not fulfil the above criteria or matters which relate to public policy, or such other matters which fall exclusively within the jurisdiction of special fora. This latter position, especially, would need to be evolved further considering the numerous special fora which have already been established in India for special matters (such as for mortgage suits, disputes under trust laws, arbitration matters, etc.), and overlap of such matters with pending corporate insolvency resolution of a CD.



Bankruptcy courts are set up as a division of federal district courts and adjudicate on matters involving Title 11 of the US Code (Bankruptcy Code). Title 28, section 1334 of the US Code gives federal district courts jurisdiction over all cases arising under the Bankruptcy Code or in a bankruptcy case, as well as proceedings related to a case under Title 11. Generally, the jurisdiction of bankruptcy courts rests on whether a particular proceeding or case is a core proceeding under Title 28, section 157(b)(2) (non-exhaustive list), or a non-core but related proceeding or a completely non-core proceeding. A core proceeding would be one which is integral to the restructuring of the debtor-creditor relationship[9].

By way of illustration, under Title 28, section 157(b) of the U.S. Code, Core proceedings include

(A) matters concerning the administration of the estate; (B) allowance or disallowance of claims against the estate or exemptions from property of the estate, and estimation of claims or interests for the purposes of confirming a plan under chapter 11….; (C) counterclaims by the estate against persons filing claims against the estate; (D) orders in respect to obtaining credit; (E) orders to turn over property of the estate; (F) proceedings to determine, avoid, or recover preferences; (G) motions to terminate, annul, or modify the automatic stay; (H) proceedings to determine, avoid, or recover fraudulent conveyances; (I) determinations as to the discharge-ability of particular debts; (J) objections to discharges; (K) determinations of the validity, extent, or priority of liens; (L) confirmations of plans; (M) orders approving the use or lease of property, including the use of cash collateral; (N) orders approving the sale of property other than property resulting from claims brought by the estate against persons who have not filed claims against the estate; (O) other proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor or the equity security holder relationship, except personal injury tort or wrongful death claims; and (P) recognition of foreign proceedings and other matters under chapter 15 of title 11…

Further, if the matter is a core proceeding, then the bankruptcy court can make a final judgment on the merits, subject to the review of the district court. However, if the bankruptcy court comes to the conclusion that a matter is not a core proceeding but is related to a bankruptcy case, the bankruptcy judge is allowed to make a final judgment on merits only if the parties to the dispute so consent. Otherwise, they are only allowed to submit their opinions on the case – any findings of fact or conclusions of law, to the district court. The district court can make any final orders or judgments in such non-core proceedings, after taking the bankruptcy court’s findings and conclusions into account. Such related to proceedings under Title 11 are considered non-core, in that they ‘do not invoke a substantive right created by bankruptcy but nonetheless fall within the jurisdiction of the bankruptcy court because they share a nexus with the bankruptcy case and will have some “conceivable effect” on the administration of the debtor’s estate’[10].

The judgment of the court in Pacor, Inc. v. Higgins[11] is widely cited and has given rise to the Pacor test. The court has observed:

The usual articulation of the test for determining whether a civil proceeding is related to bankruptcy is whether the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy. Thus, the proceeding need not necessarily be against the debtor or against the debtor’s property. An action is related to bankruptcy if the outcome could alter the debtor’s rights, liabilities, options, or freedom of action (either positively or negatively) and which in any way impacts upon the handling and administration of the bankrupt estate.

In this context, the concept of adversary proceedings/bankruptcy litigation under Rule 7001 of the Federal Rules of Bankruptcy Procedure may be further examined. An adversary proceeding can be initiated when a cause of action that is related to the bankruptcy, but needs to be handled separately arises. Such proceedings are generally initiated by a debtor, creditor, or trustee in order to enforce some right vested in them, which could not be enforced by simply filing a motion under the main bankruptcy case.

Bankruptcy courts have held that adversary proceedings initiated as to quiet title of property, even by third parties[12] are maintainable before them through the related to stipulation under section 157(b)(3) and section 1334(b)[13]. The court, in Bushman Custom Farming, LLC v. Stillmunkes (In re Stillmunkes)[14], concluded that it had related to jurisdiction over the claims against a debtor.  The court found that the outcome of the adversary proceeding  ‘could change the value of Creditor’s allowed claim, even though Debtor has not objected to it and it is small relative to the Debtor’s overall liabilities.’ [15]

There is also the possibility for removal of cases from state forums to bankruptcy courts under Title 28, section 1452(a), which states that –

A party may remove any claim or cause of action in a civil action other than a proceeding before the United States Tax Court or a civil action by a governmental unit to enforce such governmental unit’s police or regulatory power, to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title.

The procedure for such removal is given under Rule 9027 of the Federal Rules of Bankruptcy Procedure. Section 1452(b) states that once a dispute is removed to the bankruptcy court, the court can choose to remand the dispute on some equitable ground. Such removal is often sought by parties who might feel that a particular state law claim or cause of action would be better suited to adjudication by a bankruptcy court which has jurisdiction over the matter.

However, it has also been interpreted by the Supreme Court that even in cases where a claim has the statutory designation of being core, the jurisdiction of bankruptcy courts may be ousted if they do not have the constitutional authority to hear such claims. This argument stems from Article III of the US Constitution which mandates that judicial power of the USA is vested with the Supreme Court and inferior courts (district courts). Despite bankruptcy courts being a division of federal district courts, they are established under Article I of the Constitution. In Stern v. Marshall[16], the Supreme Court in deciding a counterclaim for tortious interference, had stated that the test to determine whether a claim/issue is determinable by bankruptcy courts is  ‘whether the action at issue stems from the bankruptcy itself or would necessarily be resolved in the claims allowance process.’ The decision in Stern was stated to relate to the specific facts before it, however it has inevitably had wider implications[17].

Section 1334(c)(2) also provides for mandatory abstention from hearing matters by the bankruptcy courts in certain scenarios. This has been interpreted in Lindsey v. O’Brien (In re Dow Corning Corp.)[18] – ‘For mandatory abstention to apply, a proceeding must: (1) be based on a state law claim or cause of action; (2) lack a federal jurisdictional basis absent the bankruptcy; (3) be commenced in a state forum of appropriate jurisdiction; (4) be capable of timely adjudication; and (5) be a non-core proceeding’.

In cases of permissive abstention under section 1334(c)(1), the court in Williams v. Citifinancial Mortgage Co. (In re Williams)[19], laid down a 12-factor test to determine whether the bankruptcy court should abstain from hearing a matter or not. The factors included – ‘the effect or lack thereof on the efficient administration of the estate if a Court recommends abstention; the extent to which state law issues predominate over bankruptcy issues; and the degree of relatedness or remoteness of the proceeding to the main bankruptcy case,’ among others.

In this regard, it appears that disputes that intrinsically relate to the determination of restructuring between a debtor and their creditors can be brought before the bankruptcy court in the form of adversary proceedings. However, the decision in Stern, with regard to the constitutionality of a bankruptcy court’s jurisdiction, even over core bankruptcy proceedings has made the situation hazy. Regardless, setting aside the constitutionality challenge, the principles underpinning their statutory and judicial interpretations on the matter – core vs. non-core proceedings, “related to jurisdiction, and the conceivable effects doctrine (i.e. Pacor test), do have commonalities with the Indian position.

In as much as section 60(5)(c) of the IBC confers jurisdiction on the NCLT to decide matters  ‘arising out of or in relation to insolvency resolution or liquidation proceedings’, obvious parallels can be drawn to the core vs. non-core dilemma and related to jurisdictional aspects of the US position. Further, the Indian Supreme Court in Gujarat Urja and Vishal Ghisulal spoke about the jurisdiction of the NCLT in matters which have a clear nexus with insolvency/liquidation proceedings.

Further, the enactment of a removal clause within the IBC in the nature of Title 28, section 1452 would also be prudent. Allowing parties in a related dispute pending before a civil court to make such decisions the subject matter of the insolvency court, in the interest of efficiency and quality of the insolvency or liquidation process, would go a long way in fulfilling the objectives of the IBC.


The UK Insolvency / Liquidation regime with respect to companies is governed by the Insolvency Act, 1986 (UK Insolvency Act). Chapter VI of the UK Insolvency Act specifically deals with winding up of companies by the court. Section 117(1) of the UK Insolvency Act states that the High Court of England and Wales has jurisdiction to wind up any company registered in England and Wales.

Within the High Court, the Insolvency and Companies List of the Business and Property Courts division takes up matters relating to insolvency/liquidation. The Insolvency and Companies List is authorised to handle all insolvency matters appearing before the High Court. Insolvency Work includes petitions, applications and claims relating to insolvent corporations and individuals. Other than generally being governed by the Insolvency Act, matters relating to insolvency could involve many other areas of law covered by various pieces of legislation[20].

In such cases where the dispute could be brought before multiple specialist fora, it is stated that ‘the claimant must consider whether there are aspects requiring the expertise of a specialist judge and choose the list, sub-list or court in which the relevant specialist judges sit.’[21] The most prudent way forward would be for a claimant to come to a decision on the overriding nature of the dispute and then issue proceedings in the appropriate court, even if part of the dispute would normally be better suited to being heard in another court/list.

Regardless, the relevant court shall have the power to rectify any error made in deciding jurisdiction if it so desires under Rule 3.10 of the Civil Procedure Rules, 1997. Further, Rule 30.2 speaks about transfers between various county court benches as well as district registries, Rule 30.5 speaks about transfers of disputes between the specialist lists of the High Court, and Rule 30.3(2) lays down certain criteria that need to be followed in deciding whether a case must be transferred, including the financial value of the claim and the amount in dispute; whether it would be more convenient or fair for hearings (including the trial) to be held in some other court etc.

In this context, the transfer of disputes not primarily based on insolvency matters to the Insolvency and Companies List is authorised at the discretion of the relevant judge. While the structures of the court systems in the UK and India strongly differ, the ability for disputes to be transferred to a forum where they may be more conveniently tried is a valid consideration for the Indian system to recognise. In this regard, the ability to remove/transfer disputes is a feature that is common across both the USA and the UK; however, the agents for such removal/transferal are different – being the parties themselves and the specialist judge respectively.


The UNCITRAL is the core legal body of the United Nations system in the field of international trade law[22]. UNCITRAL formulates modern, fair, and harmonised rules on commercial transactions. These include conventions, model laws and rules which are acceptable worldwide, legal and legislative guides, recommendations of great practical value, updated information on case law and enactments of uniform commercial law, technical assistance in law reform projects, and regional and national seminars on uniform commercial law[23]. One of the legislative guides by UNCITRAL is the Legislative Guide on Insolvency Law.

The UNCITRAL model law has discussed the jurisdiction of matters arising in the course of the insolvency proceedings. The competence for commencement and all later issues arising in the conduct of insolvency proceedings may lie with the same court of a State or different courts will have competence for different issues. To increase the transparency and ease of use of the insolvency law for the benefit of debtors, creditors and third parties (especially when they are from a foreign country), it should be made clear in the law which courts have jurisdiction over which matters. Although provisions specifying which courts have jurisdiction over insolvency proceedings may not always be included in the insolvency law, a reference to the provisions of the law other than the insolvency law that specifies court jurisdiction might usefully be included in the insolvency law[24].

Firstly, it is recommended that the relevant insolvency laws should clearly indicate (or include a reference to the relevant law that establishes it) the court that has jurisdiction over the commencement and conduct of insolvency proceedings, including matters arising in the course of those proceedings[25].

The second recommendation by the UNCITRAL prescribes that the insolvency law should specify that the court may grant relief of a provisional nature, at the request of the debtor, creditors or third parties, where relief is needed to protect and preserve the value of the assets of the debtor or the interests of creditors, between the time an application to commence insolvency proceedings is made and commencement of the proceedings, including:

  • Staying execution against the assets of the debtor, including actions to make security interests effective against third parties and enforcement of security interests;
  • Entrusting the administration or supervision of the debtor’s business, which may include the power to use and dispose of assets in the ordinary course of business, to an insolvency representative or other person designated by the court;
  • Entrusting the realisation of all or part of the assets of the debtor to an insolvency representative or other person designated by the court, in order to protect and preserve the value of assets of the debtor that, by their nature or because of other circumstances, are perishable, susceptible to devaluation or otherwise in jeopardy; and
  • Any other relief of the type applicable or available on commencement of proceedings[26].


The provisions of the IBC, as further interpreted by Indian courts (including in the Gujrat Urja case, the TCS case and the Embassy case), have laid down elaborate groundwork regarding the residuary jurisdiction of insolvency courts with respect to questions of law or fact arising out of or in relation to the CD’s insolvency resolution or liquidation under IBC. Nevertheless, the jurisprudence on this matter is at a nascent stage. For further evolution and interpretation, Indian legislature and Indian courts may rely on principles laid down and applied under foreign insolvency laws, including under the bankruptcy regime in the US  being (a) test of core vs. non-core proceedings, (b) related to jurisdiction, and (c) conceivable effects doctrine (i.e., Pacor test), to be applied on a case to case basis.


[1] Section 408, Companies Act, 2013.

[2] Also relied upon by the courts in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta, (2020) 8 SCC 531.

[3] (2021) 7 SCC 209.

[4] Ibid.

[5] (2022) 2 SCC 583.

[6] Ibid.

[7] (2020) 13 SCC 308.

[8] Ibid.

[9] Henninger S. (2020), “Bankruptcy Courts and the Constitution”, American Bar Association.

[10] Williams v. Citifinancial Mortgage Co. (In re Williams), 256 B.R. 885 (2001).

[11] 743 F.2d 984 (1984).

[12] Lindsey v. Duckworth Dev. II (In re Lindsey), 2021 WL 1140661 (11th Cir. 2021).

[13] Kennedy C. (2021), Bankruptcy Court May Exercise “Related to” Jurisdiction Over Quiet Title Action”, Riker Danzig,13 July.

[14] Bankr. N.D. Iowa, 19-01011 (2020).

[15] Hardy R. (2020), “Court May Exercise “Related To” Jurisdiction Over Adversary Complaint By A Creditor Against a Third Party, Spencer Fane LLP.

[16] 564 U.S. 462 (2011).

[17] Freeman J. (2020), “Bankruptcy Court Jurisdiction”, Freeman Law.

[18] 86 F.3d 482, 497 (6th Cir. 1996).

[19] Supra Note 8

[20] Chancery Guide (2022), HM Courts & Tribunals Service, 111.

[21]UK Judiciary (2017), “Advisory Note and Draft Practice Direction for the Business and Property Courts”, Courts and Tribunals Judiciary.  


[23] Ibid.

[24] UNCITRAL (2005), “A Legislative Guide on Insolvency Law”, United Nations.


[26] Ibid.





These are the views and opinions of the author(s) and do not necessarily reflect the views of the Firm. This article is intended for general information only and does not constitute legal or other advice and you acknowledge that there is no relationship (implied, legal or fiduciary) between you and the author/AZB. AZB does not claim that the article's content or information is accurate, correct or complete, and disclaims all liability for any loss or damage caused through error or omission.