Jurisdiction of the Adjudicating Authority (NCLT) to adjudicate ...

Jurisdiction to adjudicate pre-CIRP closure notice challenged before NCLT.

Case Laws     IBC

September 24, 2024

Jurisdiction of the Adjudicating Authority (NCLT) to adjudicate upon a closure notice issued prior to the initiation of the Corporate Insolvency Resolution Process (CIRP). The key points are: The Adjudicating Authority did not determine its jurisdiction to pronounce on the closure notice dated 31.07.2017, issued before CIRP initiation. After CIRP initiation, all claims must be filed and examined within the CIRP/Liquidation Process. The High Court and Supreme Court orders granted liberty to raise claims and contentions before NCLT but did not adjudicate on NCLT's jurisdiction over the pre-CIRP closure notice. The Supreme Court's judgment in Embassy Property case clarified NCLAT's limited jurisdiction u/s 60(5). The closure notice, issued under the state Industrial Disputes Act prior to CIRP, is unrelated to the CIRP process. Hence, the Adjudicating Authority rightly rejected entertaining the challenge to the pre-CIRP closure notice, being outside its competence. Consequently, the appeal was dismissed as the Adjudicating Authority did not err in rejecting the application challenging the pre-CIRP closure notice.

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