The "Residuary" Shield: Deciphering the NCLT’s Power to Adjudicate Fraud, Forgery and Complex Facts in the context of ‘Roseland Buildtech Pvt. Ltd versus Vihaan 43 Reality Pvt Ltd.’

In a recent decision the Hon’ble Delhi High Court (Roseland Buildtech Pvt. Ltd versus Vihaan 43 Reality Pvt Ltd) on 05.01.2026 delved into the interesting question of analyzing the ‘length and breadth’ of the NCLT’s powers to adjudicate fraud, forgery and complex facts while acting as an adjudicating authority under Insolvency and Bankruptcy Code, 2016 (‘IBC’). IBC was envisioned as a unified mechanism to consolidate insolvency laws and ensure a speedy, time-bound resolution process. Central to this objective is the National Company Law Tribunal (NCLT). However, a recurring question has challenged NCLT’s boundaries: Can a summary tribunal like the NCLT adjudicate complex issues of fraud, forgery, and collusion?

Based on the interpretation of Sections 60(5)(c), 65, and 75 of IBC, the Hon’ble Delhi High Court has answered this question with a resounding ‘yes’.

The Jurisdictional Trinity: Sections 65, 75, and 60(5)(c)

NCLT’s jurisdiction to handle actions of fraud, forgery and complex facts is primarily derived from three pillars of IBC:

1. Section 65: Explicitly grants the NCLT power to penalize the malicious or fraudulent initiation of the Corporate Insolvency Resolution Process (CIRP).

2. Section 75: Provides for penalties for false information provided in insolvency applications.

3. Section 60(5)(c): Acts as a residuary provision, giving the NCLT the jurisdiction to entertain any question of priority, law, or fact "arising out of or in relation to insolvency resolution”.

   
   

From a combined reading of these sections, the Hon’ble Court reached the conclusion that NCLT has power to delve into the veracity and truthfulness of statements, documents, and information presented by parties during adjudication on insolvency petitions. This includes adjudicating upon allegations of forgery and collusion that might otherwise derail the integrity of the CIRP.

Textual Hook Requirement

The Court clarified that while the NCLT's powers are broad, they are not infinite. The Supreme Court, particularly in the Gujarat Urja Vikas Nigam Ltd. v. Amita Gupta (2021) 7 SCC 209, provided a critical caveat. The NCLT cannot derive power solely from the "spirit" or "object" of the IBC. There must be a ‘specific textual hook’ within IBC to exercise jurisdiction. The Court has consciously clarified that NCLT's residuary jurisdiction, though wide, is nonetheless defined by the text of IBC. Specifically, NCLT cannot do what IBC consciously did not provide it the power to do.

Therefore, the NCLT’s power under Section 60(5)(c) is interpreted as ‘incidental and ancillary’. It is a power used to meaningfully exercise a broader mandate explicitly provided elsewhere in the statute. If a dispute arises dehors (outside) the insolvency of the corporate debtor, it must be handled by civil courts or other competent authorities.

Preventing Adjudicatory Fragmentation

The necessity for a broad interpretation of these powers stems from a practical reality of ‘threat of litigation delay’. If the NCLT were barred from deciding on issues of fraud or document fabrication related to insolvency proceedings, the parties could carve out issues to be tried in civil courts and other forums. This fragmentation would (i) paralyze the unified mechanism of the IBC, (ii) Lead to overlapping matters across different forums and (iii) Make timely resolution a distant mirage.

By centralizing these incidental disputes within the NCLT, the law ensures that the insolvency timeline remains intact.

Institutional Competence

There has often been skepticism regarding whether NCLT is "institutionally equipped" to handle complex evidence. However, when read alongside the NCLT Rules, 2016, it is evident that the NCLT has the procedural tools to examine evidence and resolve serious factual controversies. Whether it is a claim of fabrication or a complex scheme of collusion, the NCLT is both legally and procedurally empowered to ensure that the CIRP is not used as a tool for fraud.

CONCLUSION

The NCLT and NCLAT have actively moved beyond simple summary adjudications to protect the sanctity of the insolvency process. By leveraging Section 60(5)(c) as an ancillary power to Sections 65 and 75, NCLT can consciously act as a gatekeeper against malicious litigation and also ensuring that the IBC remains an efficient vehicle for economic resolution rather than a playground for procedural delays by forum shopping by the litigants.

The above article was authored by Mr. Rohit Jolly (Partner) and Mr. Nayan Mittal (Senior Associate)