The National Company Law Appellate Tribunal (NCLAT) has ruled that the National Company Law Tribunal (NCLT) holds the authority to direct investigations into a company’s affairs in insolvency matters under the Companies Act. The decision, issued from New Delhi, India, on 17 June 2025, clarified that such directives must comply with due process, including providing affected parties a fair hearing and adhering to Section 212 when involving the Serious Fraud Investigation Office (SFIO).
The National Company Law Appellate Tribunal (NCLAT) on 17 June 2025 clarified that the National Company Law Tribunal (NCLT) holds the power to direct investigations into the affairs of companies involved in proceedings under the Insolvency and Bankruptcy Code (IBC), by invoking provisions of the Companies Act, 2013.
This ruling resolves ambiguity regarding the legal boundaries of the NCLT in corporate insolvency matters and reinforces its quasi-judicial oversight over companies undergoing resolution or liquidation. The tribunal emphasized that any such directive must follow the principles of natural justice.
The NCLT may invoke its powers under the Companies Act to direct investigative authorities to look into company affairs. However, it must ensure that concerned parties are granted a fair hearing before doing so.”
NCLAT
The appellate tribunal also revised an earlier NCLT order, underlining that any direction to the Serious Fraud Investigation Office (SFIO) for a probe must strictly adhere to Section 212 of the Companies Act, 2013, which governs the legal process for initiating such investigations.
This clarification is likely to shape future corporate insolvency cases, ensuring that while the NCLT retains significant supervisory power, procedural safeguards remain intact for companies and stakeholders.
The ruling comes as India strengthens its corporate governance mechanisms and enforcement framework amid an evolving insolvency ecosystem. Legal experts say the verdict enhances clarity on the jurisdiction of tribunals while reinforcing investor and creditor confidence in the IBC process.
