In a recent order [1], the Hon’ble National Company Law Tribunal, Mumbai Bench (“NCLT”), once again reiterated the settled legal position that the NCLT cannot be invoked as a forum for recovery of money arising out of commercial transactions unconnected with insolvency proceedings.
An application under section 60(5) of the Insolvency and Bankruptcy Code, 2016 (“Code”), was filed by the Resolution Professional seeking refund of money with interest towards an unadjusted advance, alleging that non-refund disrupted the Corporate Insolvency Resolution Process (“CIRP”). The Tribunal held that the claim was purely in the nature of recovery arising in the ordinary course of business and did not stem from the insolvency of the Corporate Debtor.
The Resolution Professional argued that the Respondent’s conduct amounted to non-cooperation and contravention of the provisions of the Code, warranting the exercise of the NCLT’s residuary jurisdiction under section 60(5) of the Code.
Bridgehead Law Partners, through Ranit Basu, Maitri Malde, Dua Shaikh and Harshada Nirmal, represented the Respondent before the Hon’ble Tribunal.
After considering the pleadings and material on record, the Tribunal held that the claim was essentially in the nature of recovery of money arising from a commercial transaction entered into in the ordinary course of business. The Tribunal observed that such a claim does not arise out of or relate to the insolvency of the Corporate Debtor, and therefore falls outside the scope of section 60(5) of the Code.
Significantly, the Tribunal noted that an application seeking approval of the resolution plan was already pending when the recovery application was filed. It was further held that the appropriate remedy for recovery of the alleged outstanding amount lies before the competent civil court, and not before the NCLT.
Accordingly, the application filed by the Resolution Professional was dismissed. This order reinforces the well-settled principle that the NCLT is not a recovery forum. The residuary jurisdiction under section 60(5) of the Code cannot be stretched to adjudicate contractual disputes or recovery claims that are independent of, and do not arise from, the insolvency resolution process.
For more information about the aforesaid order or its implications you may write to us at: solutions@bridgeheadlaw.com.
Ranit Basu | Partner
Harshada Nirmal | Associate
Rabiya Mehdi | Intern
Views expressed are personal to the authors and do not constitute as legal advice.
[1] NCLT, Mumbai Bench: Interlocutory Application no. 3557 of 2025 in Company Petition (IBC) no. 3080 of 2018