IBC jurisdiction over co-operative society dispute upheld; unilateral dividend adjustment disallowed, with interest modified from filing date.

The NCLAT held that exclusion of the Companies Act, 2013 for multi-State co-operative societies under the Multi-State Co-operative Societies Act, 2002 did not oust IBC jurisdiction, and the NCLT could entertain disputes arising from CIRP under section 60(5)(c). It further held that unilateral adjustment of dividends and share-related amounts against the appellant's dues during CIRP and after approval of the resolution plan was impermissible, so refund was justified. Interest on the refund was, however, modified to run from 04.03.2025, the date the refund application was filed, rather than from each adjustment date.

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Issues: (i) Whether the National Company Law Tribunal had jurisdiction under the Insolvency and Bankruptcy Code, 2016 to entertain the application despite the appellant being a multi-State co-operative society governed by the Multi-State Co-operative Societies Act, 2002; (ii) Whether the unilateral adjustment of dividends and share-related amounts during CIRP and after approval of the resolution plan was impermissible; (iii) Whether interest on the refund amount was payable from the dates of adjustment or from the date of filing of the application.

Issue (i): Whether the National Company Law Tribunal had jurisdiction under the Insolvency and Bankruptcy Code, 2016 to entertain the application despite the appellant being a multi-State co-operative society governed by the Multi-State Co-operative Societies Act, 2002.

Analysis: Section 121 of the Multi-State Co-operative Societies Act, 2002 excludes the application of the Companies Act, 2013 to multi-State co-operative societies, but that exclusion does not displace the operation of the Insolvency and Bankruptcy Code, 2016. The Code defines the adjudicating authority as the National Company Law Tribunal and confers broad jurisdiction under Section 60(5)(c) over questions of law or fact arising out of or in relation to insolvency resolution proceedings. The appellant had itself filed a claim in the CIRP and received payment under the resolution plan, and the dispute raised by the successful resolution applicant arose directly from the insolvency process.

Conclusion: The application was within the jurisdiction of the National Company Law Tribunal, and the objection to maintainability failed.

Issue (ii): Whether the unilateral adjustment of dividends and share-related amounts during CIRP and after approval of the resolution plan was impermissible.

Analysis: The shares held by the corporate debtor were reflected in the information memorandum and treated as assets of the corporate debtor. The appellant had not disclosed any mutual credit arrangement or security over the shares in its claim. Once CIRP had commenced, and even after approval of the resolution plan, unilateral adjustment of the dividend payable against the appellant's dues could not be justified. The Code's provisions protecting the corporate debtor's assets and the effect of moratorium supported the conclusion that the amounts adjusted had to be restored.

Conclusion: The adjustment of Rs. 56,00,000/- was impermissible and the refund direction was sustained, subject to modification only on the commencement date for interest.

Issue (iii): Whether interest on the refund amount was payable from the dates of adjustment or from the date of filing of the application.

Analysis: The application seeking refund was filed on 04.03.2025, and no proceedings had been initiated during the CIRP period for the same relief. The direction to award interest from each adjustment date was modified in view of the stage at which the claim was pressed before the adjudicating authority and the appellate tribunal.

Conclusion: Interest at 10% per annum was made payable from 04.03.2025 till payment.

Final Conclusion: The appeal succeeded only to the limited extent of modifying the commencement date for interest, while the remaining directions for refund and all other findings were upheld.

Ratio Decidendi: Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 confers jurisdiction on the National Company Law Tribunal over disputes arising out of or in relation to insolvency resolution proceedings, and a special statute excluding the Companies Act does not by itself oust that insolvency jurisdiction.

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