NCLAT Clarifies NCLT's Investigation Powers Under Companies Act

The National Company Law Appellate Tribunal (NCLAT) clarified that the National Company Law Tribunal (NCLT) can exercise its power under the Companies Act to order investigations by probe agencies in insolvency cases. NCLAT emphasized the necessity for NCLT to comply with preconditions, including providing a reasonable opportunity to concerned parties before ordering such investigations.

The National Company Law Appellate Tribunal (NCLAT) has clarified the investigative powers of the National Company Law Tribunal (NCLT) under the Companies Act. According to a recent order, NCLT can direct investigations into corporate matters related to insolvency and bankruptcy, provided specific procedural preconditions are met.

This clarification by NCLAT came following a May 15 order, addressing an appeal by Max Publicity & Communication, which contested an NCLT decision on an insolvency plea rejection. The plea, initiated by Max Publicity's operational creditor, was initially dismissed on January 21, 2025.

While NCLAT upheld NCLT's power to order inquiries, it stressed that such actions must allow for a fair hearing for implicated parties. The three-judge panel, chaired by Justice Ashok Bhushan, emphasized this procedural integrity should precede any directive for investigation by agencies like the SFIO or EOW.

(With inputs from agencies.)