Date : 18-02-2020

Provisions under the IBC

On the vide recommendation of Justice Eradi Committee on law relating to insolvency and winding up of companies, the NCLT and NCLAT was established on 1st June, 2016.

The jurisdiction of NCLT and NCLAT extents to the Companies Act, 2013 and Limited Liability Partnerships under the Insolvency and Bankruptcy Code, 2016. The NCLT and NCLAT has limited subject-matter jurisdiction specifically in the matters related to the companies and their liquidation and insolvency. The establishment of the NCLT and NCLAT was also challenged in the SC but the court upheld their establishment.

This abovementioned jurisdiction given to the NCLT and NCLAT has been bestowed to them upon by the IB Code itself, under Section 60 and 61, respectively. This section clearly lays down the powers and jurisdiction of these tywo court very elaborately.

Further, that section 62 declares that the appeal shall lie to the SC directly after the disposal of matter from NCLAT. This clarifies the position of hierarchy in the case of insolvency amongst the courts.

The code specifically debarring the jurisdiction of the civil courts under section 63,

“Section 63: Civil court not to have jurisdiction: No civil court or authority shall have jurisdiction to entertain any suit or proceedings in respect of any matter on which National Company Law Tribunal or the National Company Law Appellate Tribunal has jurisdiction under this Code. Civil court not to have jurisdiction.”

Provisions under the civil law

The jurisdiction of other civil courts on the matter dealt within the NCLT and NCLAT, is barred by the Section 9 of the Code of Civil Procedure, 1908. The sections specifically states that all the civil courts have jurisdiction in matters of civil nature, unless the jurisdiction of the court is either expressly or impliedly barred.

Companies act being the special law overrides the general law, surpasses the jurisdiction of civil court and give the jurisdiction to the NCLT and NCLAT. The merits of establishing NCLT and NCLAT include exclusive jurisdiction, a decrease in the multiplicity of litigation before courts and the time efficiency with which the cases are heard and decisions passed.

The jurisdiction of the NCLAT is exclusive jurisdiction, creating a special forum for the adjudication of the matters allocated to the Tribunal. No court can take cognizance of the matter exclusive within the jurisdiction of the tribunal, and if the court takes the cognizance and passes any judgment/decree, then such judgment/decree will be non est and will have no force while executing the same.

The National Company Law Tribunal (NCLT) is a quasi-judicial body in India that adjudicates issues relating to Indian companies. Decisions of the NCLT may be appealed at the National Company Law Appellate Tribunal (NCLAT). The NCLAT decisions can be challenged at the Supreme Court on a point of law. The Supreme Court of India has upheld the Insolvency and Bankruptcy Code in its entirety.

Disclaimer: -This article is for the general information and awareness of its readers, In-case of any legal matter in relation with readers, they are expected to have legal opinion before placing reliance on it. Further it contains completely author's views on the subject and completely unbiased based on authors own experience, study and understanding.

Author : Shivani Aggarwal