The National Company Law Tribunal (NCLT) plays a crucial role in adjudicating matters under the Insolvency and Bankruptcy Code, 2016 (IBC). Over the years, several NCLT rulings have clarified important procedural and substantive aspects of the insolvency process.
While the Supreme Court and NCLAT often lay down broader principles, NCLT benches across India regularly interpret the IBC in practical situations. In this article, we discuss five important NCLT judgments that continue to remain relevant for insolvency professionals, resolution professionals, creditors, and corporate lawyers.
1. Exclusion of Lockdown Period in CIRP Timelines
Ramaswamy Palaniappan v. Radha Krishnadharmarajan (Resolution Professional) (2021)
During the COVID-19 pandemic, many Corporate Insolvency Resolution Processes (CIRP) were affected due to nationwide lockdowns. In this case, the NCLT dealt with the question of excluding the lockdown period from the CIRP timeline.
The Committee of Creditors (CoC) had sought exclusion of 179 days on account of the lockdown. The NCLT allowed the exclusion by relying on Regulation 40C of the CIRP Regulations, which was specifically introduced to deal with the extraordinary situation created by the pandemic.
Key Takeaway: This judgment reinforced that the object of the IBC is to ensure value maximization and that strict adherence to timelines should not defeat the purpose of the Code during force majeure events. It upheld the commercial wisdom of the CoC in seeking such exclusions.
2. NCLT’s Power to Direct Investigation in Cases of Fraud
Ministry of Corporate Affairs v. Amit Chandrakant Shah (Resolution Professional) (2021)
In this case, the Resolution Professional filed an application under Section 66 of the IBC alleging fraudulent and wrongful trading by the management of the corporate debtor. The NCLT examined whether it could direct the Central Government to refer the matter to the Serious Fraud Investigation Office (SFIO).
The Tribunal held that under Section 213 of the Companies Act, 2013, it has the power to direct investigation where there is a prima facie case of fraud. However, such power must be exercised cautiously and only when sufficient material is placed before the Tribunal.
Key Takeaway: This judgment clarified the scope of NCLT’s powers in dealing with fraudulent conduct during CIRP. It struck a balance between empowering the Tribunal to act against fraud while preventing arbitrary referrals to investigative agencies.
3. Whether Disqualified Promoters Can Propose Schemes During Liquidation
Arun Kumar Jagatramka v. Jindal Steel and Power Ltd. (2021)
This is one of the most significant rulings on the interplay between the IBC and the Companies Act. After the failure of CIRP, the corporate debtor went into liquidation. A promoter, who was disqualified under Section 29A of the IBC, filed an application proposing a scheme of compromise and arrangement under Sections 230-232 of the Companies Act.
The NCLT allowed the application, observing that there was no express bar under the Companies Act preventing a disqualified person from proposing such a scheme.
However, this view was later clarified and restricted by higher authorities. The judgment sparked important discussions on whether liquidation can be used as a backdoor route by disqualified promoters to regain control of the company.
Key Takeaway: The case highlighted the need for clear boundaries between the IBC and the Companies Act during liquidation. It led to further judicial developments reinforcing that Section 29A disqualifications should apply even during liquidation proceedings.
4. Disqualified Persons Cannot File Compromise Schemes in Liquidation
Ashish Mohan Gupta v. Hind Motors India Ltd. (In Liquidation) (2021)
Building on the issues raised in the previous case, this NCLT ruling took a stricter view. Here, a director and promoter who was disqualified under Section 29A and Section 35(1)(f) of the IBC filed an application for a scheme of compromise under Sections 230-233 of the Companies Act during liquidation.
The NCLT held that a person disqualified under the IBC cannot be allowed to propose a scheme of arrangement in liquidation. Allowing such applications would defeat the very purpose of Section 29A, which is to keep defaulting promoters away from the corporate debtor.
Key Takeaway: This judgment strengthened the legislative intent behind Section 29A. It made it clear that liquidation cannot be used by disqualified promoters to regain control through the route of compromise and arrangement.
5. Strict Timeline for Challenging Liquidator’s Decisions
SICOM Ltd. v. Sundaresh Bhat (NCLT Ahmedabad Bench) (2021)
In this case, a secured creditor challenged the decision of the liquidator after a delay of 551 days. The creditor had failed to provide proper documentation regarding charge registration and was treated as an unsecured creditor.
The NCLT held that under Section 42 of the IBC, any person aggrieved by the decision of the liquidator must file an appeal within 14 days. The Tribunal also emphasized that only charges that are properly registered and presented to the liquidator would be considered valid.
Key Takeaway: This judgment reinforced the importance of strict adherence to timelines under the IBC. It also clarified that proper registration of charges (under the Companies Act and CERSAI) is essential for a creditor to claim secured status during liquidation.
Why These Judgments Still Matter in 2026
Even though these judgments were delivered in 2021, they continue to influence insolvency proceedings across India. They have helped clarify several grey areas, including:
- Treatment of timelines during extraordinary situations
- Powers of NCLT in cases involving fraud
- Application of Section 29A during liquidation
- Procedural discipline in challenging liquidator decisions
For insolvency professionals, resolution applicants, creditors, and corporate lawyers, these rulings serve as important precedents while dealing with CIRP and liquidation matters.
Conclusion
The NCLT continues to play a vital role in shaping insolvency jurisprudence in India. While the Supreme Court and NCLAT lay down broader principles, NCLT benches regularly deal with practical issues that arise during day-to-day insolvency proceedings.
The five judgments discussed above highlight key principles related to CIRP timelines, fraudulent trading, promoter disqualifications, and procedural requirements in liquidation. Staying updated with such rulings is essential for anyone practising in the field of insolvency and corporate restructuring.
If you are dealing with any NCLT-related matter or need assistance in insolvency proceedings, it is advisable to consult an experienced legal professional who understands the evolving jurisprudence under the IBC.