NCLT Chandigarh Says It Cannot Decide On Property Title, Fraud Or Authenticity Of Board Resolutions

The National Company Law Tribunal (NCLT) Chandigarh has recently held that its insolvency jurisdiction cannot be used to decide disputes over property ownership, allegations of fraud, or the authenticity of board resolutions. The court ruled that such issues squarely fall under the purview of civil court.

A bench of Judicial Member Khetrabasi Biswal and Technical Member Shishir Agarwal, while examining the scope of the tribunal's jurisdiction under section 60(5) of the Code, observed,

“The present application is filed under Section 60(5) of the IBC, which confers only a limited, residuary jurisdiction strictly confined to issues arising 'out of or in relation to' the CIRP. The jurisdiction under Section 60(5) cannot be expanded to adjudicate questions of title, fraud, or genuineness of board resolutions—matters that fall squarely within the domain of civil courts.”

The dispute arose from an application filed by GBP Developers Pvt. Ltd., which sought exclusion of 19 bighas of land from the corporate insolvency resolution process of Gupta Builders and Promoters Pvt. Ltd. The applicant claimed absolute ownership of the land and said the corporate debtor only held development rights under a joint development agreement.

The applicant company alleged that the corporate debtor was asserting ownership on the basis of a forged and fabricated sale deed and a fabricated board resolution. The corporate debtor, on the other hand, argued that the NCLT does not have jurisdiction under the Code to decide disputes involving title, fraud, or the validity of sale deeds.

While rejecting the plea, the tribunal noted that the relief sought would effectively require cancellation of a registered sale deed and a declaration of ownership.

It observed that “The reliefs sought by the Applicant are in the nature of cancellation of a registered instrument and declaration of title, both of which are remedies exclusively falling within the domain of the civil court". Subsequently, it dismissed the insolvency plea. 

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