Insolvency jurisdiction extends to de-freezing a corporate debtor's own assets when dues are crystallised and asset administration is at stake.

Crystallised dues for annual listing fee, coupled with freeze of the corporate debtor's own demat accounts, gave the dispute a sufficient insolvency nexus. Section 60(5)(c) of the Insolvency and Bankruptcy Code empowered the Adjudicating Authority to deal with questions arising out of insolvency or liquidation, and the need to preserve and realise the corporate debtor's assets for creditors fell within that remit. The securities law regime governing stock-exchange compliance and default consequences did not exclude insolvency jurisdiction where the relief sought was de-freezing to enable administration of assets in insolvency proceedings. The Adjudicating Authority therefore had jurisdiction to allow de-freezing, and the appeals were dismissed.

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Issues: Whether the National Company Law Tribunal had jurisdiction under Section 60(5)(c) of the Insolvency and Bankruptcy Code, 2016 to direct de-freezing of the corporate debtor's demat account frozen by the stock exchange for non-payment of annual listing fee, and whether the dispute fell within the insolvency framework notwithstanding the securities law regime.

Analysis: The demat accounts contained shares admittedly owned by the corporate debtors, and the annual listing fee had already been quantified and crystallised; what remained was only recovery and the consequential freeze of the accounts. The statutory scheme under Sections 17, 18, 25, 35 and 36 of the Insolvency and Bankruptcy Code, 2016 requires the interim resolution professional, resolution professional and liquidator to take custody and control of the corporate debtor's assets and to preserve them for the benefit of creditors. Section 60(5)(c) confers residuary jurisdiction on the Adjudicating Authority over questions of law or fact arising out of or in relation to insolvency or liquidation. The securities law framework under the Securities Contracts (Regulation) Act, 1956, the Securities and Exchange Board of India Act, 1992 and the Listing Obligations and Disclosure Requirements Regulations, 2015 empowers stock exchanges to regulate compliance and impose consequences for default, but once the dues are crystallised and the issue is the availability of the corporate debtor's own assets for insolvency or liquidation, the matter acquires a sufficient insolvency nexus. The earlier freezing action did not oust the Adjudicating Authority's jurisdiction where the relief sought was to enable administration and realisation of the corporate debtor's assets in insolvency proceedings.

Conclusion: The Adjudicating Authority had jurisdiction to entertain and allow the application for de-freezing of the demat accounts, and the challenge by the stock exchange failed.

Final Conclusion: The appeals were dismissed and the directions for de-freezing of the corporate debtors' demat accounts were upheld as a valid exercise of insolvency jurisdiction.

Ratio Decidendi: Where the dues are crystallised and the relief sought is for access to the corporate debtor's own assets in insolvency or liquidation, the Adjudicating Authority may exercise Section 60(5)(c) jurisdiction notwithstanding the securities law framework.

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