Delhi High Court Affirms NCLT's Exclusive Powers in Insolvency Disputes

In a landmark ruling that reinforces the specialised nature of India's insolvency regime, the Delhi High Court has declared that once proceedings are initiated under the Insolvency and Bankruptcy Code (IBC), 2016, the National Company Law Tribunal (NCLT) holds exclusive jurisdiction to examine all related matters—including allegations of fraud and the validity of debt assignments. The judgment effectively bars parallel civil court actions that could stall or undermine insolvency proceedings.

The decision stems from a dispute between Roseland Buildtech Pvt. Ltd. and Vihaan 43 Realty Pvt. Ltd., where the latter initiated insolvency proceedings claiming an unpaid loan of Rs 80 crores. The case, decided by Justice Purushaindra Kumar Kaurav on January 5, 2026, establishes a clear precedent on jurisdictional boundaries within India's bankruptcy framework.

Background and Context

The Insolvency and Bankruptcy Code was enacted in 2016 to replace India's fragmented insolvency regime with a unified system under a specialised forum. Before its implementation, debt recovery and corporate insolvency matters could span multiple courts and lengthy timelines, often leaving creditors and debtors in protracted legal battles. The IBC sought to centralise these disputes before the NCLT, which was specifically designed to handle corporate law matters efficiently.

According to the court's observations, the IBC represents "a complete code" with explicit jurisdictional safeguards. Sections 63 and 231 of the legislation contain what the court described as "classical ouster clauses"—provisions designed to prevent parallel proceedings that could derail the insolvency process. This statutory design reflects a deliberate policy choice to ensure business certainty and timely resolution of distressed assets.

Key Figures and Entities

Roseland Buildtech Pvt. Ltd. filed a commercial suit challenging insolvency proceedings initiated against it by Vihaan 43 Realty Pvt. Ltd. under Section 7 of the IBC. The proceedings were based on an alleged default arising from a loan agreement that Vihaan 43 Realty claimed had been assigned to it through a Business Transfer Agreement dated March 6, 2020.

Court records indicate that Roseland Buildtech argued the loan had been fully discharged through payments related to share transfer arrangements and alleged the Business Transfer Agreement was fraudulent, forged, and void. The company sought declarations from the civil court that no debt was due and that the insolvency proceedings constituted malicious litigation. Vihaan 43 Realty countered by applying for rejection of the plaint under Order VII Rule 11 of the Civil Procedure Code, arguing the IBC explicitly barred such suits.

The case was heard by Justice Purushaindra Kumar Kaurav, who has previously delivered significant rulings on commercial law matters. The legal teams included Tanmaya Mehta and Palash Singhai representing Roseland Buildtech, with Darpan Wadhwa appearing for Vihaan 43 Realty.

Legal and Financial Mechanisms

The court's analysis hinged on interpreting the jurisdictional boundaries between civil courts and the NCLT once insolvency proceedings commence. Justice Kaurav observed that while the plaintiff argued NCLT couldn't examine fraud or assignment deed validity at the Section 7 application stage, the IBC provides specific provisions—Sections 65, 75, and 60(5)(c)—that address precisely these concerns within the insolvency framework.

The judgment emphasized that the NCLT is "institutionally equipped, both in terms of jurisdiction and procedure, to adjudicate complex disputes involving allegations of fraud, forgery, fabrication of documents, and collusion." This observation underscores the legislative intent to create a comprehensive forum capable of handling all aspects of insolvency disputes, rather than fragmenting them across different judicial venues.

Significantly, the court characterized Roseland Buildtech's civil suit as an "impermissible collateral attack" on the NCLT's jurisdiction. The judgment warned that permitting such parallel proceedings would allow parties "to achieve indirectly what they are barred from doing directly," thereby defeating the legislative intent of the IBC. This reasoning establishes a robust barrier against forum shopping and strategic litigation designed to delay insolvency resolution.

International Implications and Policy Response

The ruling has broader implications for India's business environment and its attractiveness to foreign investors. By reaffirming the NCLT's exclusive jurisdiction, the decision strengthens the predictability and efficiency of India's insolvency regime—key considerations for international lenders and investors evaluating credit risk and enforcement mechanisms.

Legal experts note that the judgment aligns India's insolvency framework with international best practices, where specialized bankruptcy courts typically exercise exclusive jurisdiction over insolvency-related matters. This approach minimizes litigation costs and prevents contradictory rulings from different forums that could complicate cross-border restructuring efforts.

The decision may also influence ongoing discussions about judicial reform and the need for further specialization in commercial dispute resolution. By demonstrating the NCLT's capability to handle complex fraud allegations within insolvency proceedings, the judgment supports arguments for expanding specialised commercial courts' jurisdiction across other areas of business law.

Sources

This report draws on the Delhi High Court judgment in ROSELAND BUILDTECH PVT. LTD. vs VIHAAN 43 REALITY PVT LTD (C.S. (COMM.) 812/2025, decided January 5, 2026), provisions of the Insolvency and Bankruptcy Code, 2016, and court filings reviewed through legal databases. Additional context was obtained from previous landmark IBC cases and academic commentary on India's insolvency framework evolution.