NCLAT Upholds NCLT's Power to Defreeze Demat Accounts During Insolvency

The National Company Law Appellate Tribunal has dismissed BSE's appeals, confirming the power of the National Company Law Tribunal to defreeze Demat accounts during insolvency proceedings. The decision was made under Section 60 (5) of the Insolvency & Bankruptcy Code, emphasizing NCLT's jurisdiction despite BSE's contention regarding securities law.

The National Company Law Appellate Tribunal (NCLAT) has upheld the jurisdiction of the National Company Law Tribunal (NCLT) to defreeze Demat accounts during the insolvency resolution process. This comes as a setback to BSE, which had challenged the NCLT's authority under Section 60 (5) of the Insolvency & Bankruptcy Code (IBC).

BSE argued that the NCLT's decisions encroached on areas governed by the Securities Law Framework and SEBI regulations. However, the NCLAT stated that the IBC holds overriding power in cases of conflict, thereby authorizing the NCLT to entertain such applications during insolvency proceedings.

The tribunal's ruling applies to Demat accounts of Future Corporate Resources and Liz Traders and Agents, which were previously frozen over compliance and fee-related issues. With the appellate tribunal's decision, the NCLT's orders to BSE to vacate these freezes stand affirmed, aiming to aid the financial recovery of the companies involved.

(With inputs from agencies.)