NCLT Jurisdiction: What It Decides and What It Does Not

A supplier in Madhya Pradesh is owed Rs 40 lakh by a company that keeps promising to pay. Someone tells him the fastest route is insolvency, so he sends a demand notice and files a petition. At the hearing the company produces an email it sent eight months earlier rejecting two consignments on quality grounds. The petition is dismissed, and the supplier has spent a year to arrive back where he started.

That case is the shortest way to explain NCLT jurisdiction. The National Company Law Tribunal is not a debt recovery court. It is a tribunal constituted under Section 408 of the Companies Act 2013 with a defined set of powers under two statutes: the Companies Act 2013 for company law disputes, and the Insolvency and Bankruptcy Code 2016 for the insolvency and liquidation of corporate persons. If a claim does not fit one of those two boxes, the tribunal will not fix it, however strong the claim is on merits.

Below is what falls inside, what falls outside, and the deadlines that decide whether a right survives.

The insolvency side

Under Section 60(1) of the IBC, the NCLT is the adjudicating authority for corporate persons. Three entry routes exist.

• Section 7. A financial creditor, typically a lender, applies on a default.
• Section 9. An operational creditor, typically a supplier, employee or a government dues claimant, applies after a demand notice under Section 8.
• Section 10. The corporate debtor itself applies.

The minimum default is Rs 1 crore, raised from Rs 1 lakh by notification in March 2020. Below that figure the tribunal has no jurisdiction, whatever the merits. For micro, small and medium enterprises there is a separate pre-packaged insolvency route under Section 54A with a threshold of Rs 10 lakh.

A Section 9 petition has a step nobody should skip. The operational creditor serves a demand notice under Section 8, and the corporate debtor has 10 days to pay or to bring to notice a dispute that existed before the notice. A pre-existing dispute, genuine and not spurious, ends the petition. It does not matter that the creditor would win a civil suit. The Code is not designed to decide contested claims, which is why using it as pressure on a disputed invoice tends to fail.

Once a petition is admitted, the effects are immediate and wide.

• A moratorium under Section 14 freezes suits, recovery, enforcement of security under SARFAESI and transfer of assets.
• The board is suspended and an insolvency professional runs the company.
• The resolution process must be completed within 180 days, extendable once by up to 90 days, with an outer limit of 330 days including time spent in litigation.
• Section 29A disqualifies a range of persons from submitting a resolution plan, including wilful defaulters and, subject to conditions, promoters connected with the defaulting company.
• If a plan is approved under Section 31 it binds everyone, including dissenting creditors and government authorities. If none is approved, liquidation follows under Section 33.

One more piece belongs here. Insolvency of a personal guarantor to a corporate debtor goes before the same NCLT under Section 60(2), so a promoter who signed a personal guarantee can be pulled into the company’s insolvency forum rather than a separate one.

The company law side

The Companies Act half of the tribunal’s work is less publicised and, for most private companies, more relevant. It includes:

• Oppression and mismanagement, Sections 241 and 242. This is the main remedy for a squeezed minority shareholder. Section 244 sets an eligibility threshold: members holding not less than one tenth of the issued share capital, or not less than 100 members or one tenth of the total number of members, whichever is less. The Tribunal has power to waive that requirement in a fit case, and applications for waiver are common in closely held companies.
• Schemes of compromise, arrangement, amalgamation and demerger, Sections 230 to 232, with a fast track route for small companies and holding and wholly owned subsidiary mergers under Section 233.
• Reduction of share capital, Section 66.
• Rectification of the register of members, Sections 58 and 59, including refusal to register a transfer of shares. The appeal windows here are short and are counted in days from the refusal or from delivery of the transfer instrument, so check them before anything else.
• Winding up, Sections 271 and 272, on grounds including a special resolution, fraudulent conduct of affairs, default in filing financial statements or annual returns for five consecutive financial years, and the just and equitable ground. Inability to pay debts is no longer a Companies Act winding up ground; it moved to the IBC.
• Restoration of a struck off company, Section 252. An appeal against the Registrar’s order lies to the Tribunal within three years, and a separate application by the company, a member, a creditor or a workman is available on a longer footing. Companies discover this when a bank account is frozen or a property cannot be transferred.
• Class action, Section 245, investigation into a company’s affairs, Section 213, removal of an auditor, Section 140(5), voluntary revision of financial statements, Section 131, change of financial year, Section 2(41), and conversion of a public company into a private company, Section 14.

What the NCLT does not decide

This list saves more time than the previous two.

• Bank and financial institution recovery. A lender’s recovery claim of Rs 20 lakh and above goes to the Debt Recovery Tribunal under the RDB Act 1993, and a borrower’s challenge to SARFAESI enforcement goes to the DRT under Section 17. The NCLT has no role in either. That is a separate procedure with its own clocks, set out in the note on limitation and timelines in DRT proceedings.
• Insolvency of individuals and partnership firms. With the exception of personal guarantors to corporate debtors, the adjudicating authority for individuals and firms under the Code is the DRT, not the NCLT. People file in the wrong forum on this point regularly. Our work on the lending side is described on the banking and debt recovery practice page.
• Contractual disputes, damages and specific performance. Breach of a supply agreement, a shareholders agreement claim sounding in damages, or a suit for specific performance belongs in the civil or commercial court, or in arbitration where there is an arbitration clause.
• Title and property disputes. Ownership, possession and title questions are for the civil court, whatever the company’s interest in the property.
• Criminal liability. Offences under the Companies Act are tried by Special Courts constituted under Sections 435 and 436. The NCLT does not convict anyone. Nor does it hear a cheque bounce complaint under Section 138 of the Negotiable Instruments Act 1881, which goes to a magistrate.
• Homebuyer grievances as a first stop. Allottees are financial creditors under the Code, but a Section 7 application by allottees must be filed jointly by not less than 100 allottees of the same real estate project, or 10 percent of the total allottees of that project, whichever is less. For an individual buyer the practical forum is the state real estate regulatory authority or the consumer commission, which is real estate and property work rather than insolvency work.
• Trade mark and patent matters. After the Tribunals Reforms Act 2021 abolished the Intellectual Property Appellate Board, these go to the High Court.
• Writ relief. Constitutional remedies under Article 226 lie only before the High Court. The NCLT cannot strike down a rule or a circular.

Appeals, and the deadlines that differ

The single most expensive mistake in this area is assuming the appeal period is the same under both statutes. It is not, and the insolvency timeline is far shorter.

Appeal	Provision	Time	Extension available
NCLT to NCLAT, IBC matter	IBC s.61	30 days from the order	Up to 15 days, on sufficient cause
NCLAT to Supreme Court, IBC matter	IBC s.62	45 days	Up to 15 days
NCLT to NCLAT, Companies Act matter	Companies Act s.421	45 days from receipt of the order	Up to a further 45 days
NCLAT to Supreme Court, Companies Act matter	Companies Act s.423	60 days	Up to a further 60 days

The 15 day cap under Section 61 is a hard ceiling. It is not a discretion the appellate tribunal can enlarge, and appeals filed on the 47th day are dismissed as time barred without reaching the merits. Diarise the date of the order, not the date the certified copy arrives.

Where a Madhya Pradesh matter goes

NCLT jurisdiction is territorial as well, and it follows the location of the registered office of the company. Matters for companies registered in Madhya Pradesh go before the NCLT bench having jurisdiction over the state, which sits at Indore, with appeals to the NCLAT. Corporate and insolvency work of this kind forms part of our corporate and commercial practice.

Mistakes worth avoiding

• Using Section 9 as a collection letter. If there is any prior email, debit note or quality complaint on record, expect it to be produced. Consider a commercial suit or arbitration instead.
• Filing below the threshold. A default under Rs 1 crore is not curable by adding interest and damages to reach the figure. The default itself must meet the threshold.
• Ignoring Section 29A before bidding. Promoters who plan to submit a resolution plan should test eligibility at the start, not after a plan is filed.
• Treating an oppression petition as a damages claim. Sections 241 and 242 give equitable relief in the affairs of the company. A claim purely for money usually belongs elsewhere.
• Missing the 30 day IBC appeal. By the time a certified copy is applied for casually, the window has often gone.

This post is general information about NCLT jurisdiction under the Companies Act 2013 and the Insolvency and Bankruptcy Code 2016, and is not legal advice on any specific dispute. Forum choice depends on the documents, the parties and the relief sought, and getting it wrong costs time that limitation does not give back. To discuss your own facts, use the contact page.