The National Company Law Appellate Tribunal upheld the Adjudicating Authority’s power under Section 60(5) of the IBC to compel suspended directors of a corporate debtor to cooperate in the identification and recovery of leased electric vehicles, thereby clarifying the breadth of the tribunal’s jurisdiction in corporate insolvency proceedings.
Background & Facts
The Dispute
The appellants, Mr. Akshay Singhal and Mr. Pankaj Sharma, were suspended directors of Log 9 Mobility Pvt. Ltd. ("Log 9"). Log 9 was admitted into Corporate Insolvency Resolution Process (CIRP) on 15.09.2025. During the CIRP, Log 9 had a lease agreement as lessee with Gensol EV Lease Ltd. ("Gensol") for electric vehicles (EVs). Both Log 9 and Gensol later entered CIRP, and a Resolution Professional (RP) was appointed for each.
Key Facts
- 15.09.2025: Log 9 admitted into CIRP; RP (Respondent No. 2) appointed.
- Log 9 leased EVs from Gensol; the vehicles remained assets of the corporate debtor.
- RP of Gensol (Respondent No. 1) filed I.A. No. 510 of 2026 under Section 60(5) IBC, seeking return of 100 EVs.
- 21.07.2026: The Adjudicating Authority (NCLAT, Court-I, Ahmedabad) issued an order directing the appellants to appear at the office of Respondent No. 1 and assist in identification and recovery of the EVs from Faridabad.
- The order required the appellants to be present on 31.07.2026 at 11:00 A.M. at the office of the RP of Gensol.
- The appellants contended that they had no privity of contract with Gensol and that the personal direction was coercive.
- The appellants’ own pleadings dated 04.07.2026 acknowledged their cooperation and provision of vehicle-wise information during the CIRP.
Procedural History
- 21.07.2026: Impugned order passed by the Adjudicating Authority directing appellants to assist in EV recovery.
- 04.07.2026: Appellants’ pleadings before the Adjudicating Authority, conceding cooperation.
- 06.08.2026: Appeal filed under Section 61 IBC (Comp. App. (AT) (Ins) No. 1364 of 2026) challenging the impugned order.
- 06 August 2026: NCLAT delivered the present judgment dismissing the appeal.
Parties' Positions
- Appellants: Argued that the direction was beyond the authority of the Adjudicating Authority, as they were no longer part of Log 9’s management and had no contractual relationship with Gensol.
- Respondents: Asserted that Section 60(5) confers wide jurisdiction, allowing the tribunal to issue directions necessary for asset recovery, and highlighted the appellants’ prior cooperation.
Relief Sought
The appellants sought quashing of the impugned order and relief from any personal direction to appear before the RP of Gensol.
The Legal Issue
Whether the Adjudicating Authority, under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, can issue personal directions to suspended directors of a corporate debtor to assist in the identification and recovery of assets, despite the absence of a direct contractual relationship with the creditor.
Arguments Presented
For the Appellants
- The appellants contended that the direction amounted to coercive relief, infringing their personal liberty because they had no privity of contract with Gensol.
- They relied on the principle that a tribunal cannot issue personal orders to individuals who are not parties to the underlying contract, invoking the limits of Section 61 IBC.
- The appellants argued that the Adjudicating Authority’s jurisdiction is confined to matters directly involving the corporate debtor, not to personal obligations of former directors.
For the Respondents
- The respondents argued that Section 60(5) grants the Adjudicating Authority a wide jurisdiction to decide any application or question “arising out of” or “in relation to” the insolvency resolution, which includes the recovery of leased assets.
- They highlighted the appellants’ own pleadings dated 04.07.2026, wherein the appellants admitted to providing detailed vehicle-wise information and cooperating with the RP of Log 9.
- The respondents submitted that cooperation from former directors is essential for the RP to fulfil his statutory duty of taking control and custody of the debtor’s assets, and that the direction was therefore within the tribunal’s power.
The Court's Analysis
The Tribunal examined the scope of Section 60(5) IBC, emphasizing that the provision confers a broad jurisdiction on the Adjudicating Authority to entertain applications “arising out of” or “in relation to” the insolvency resolution of the corporate debtor. The Court noted that the expressions “relating to” and “arising out of” are intended to facilitate speedy resolution and preserve asset value, not to be narrowly confined.
"Section 60(5) of the IBC vests a wide jurisdiction on the Adjudicating Authority to decide any application by or against the Corporate Debtor on any question of priorities or any question of law or facts 'arising out of' or 'in relation to' the insolvency resolution of the Corporate Debtor."
The Tribunal observed that the EVs, though leased to Gensol, remained assets of Log 9, the corporate debtor. Consequently, their identification and recovery are directly linked to the insolvency resolution. The appellants, despite being suspended, had previously conceded in their pleadings that they furnished information and cooperated with the RP of Log 9. This admission negated the claim that they had no responsibility.
The Court rejected the contention that personal directions were impermissible, holding that the tribunal’s power under Section 60(5) extends to ordering individuals who, by virtue of their former managerial positions, possess knowledge indispensable for asset recovery. The direction to appear before the RP of Gensol was found to have a clear nexus with the insolvency proceedings and was therefore within jurisdiction.
Having found no merit in the appeal, the Tribunal dismissed it, affirming the impugned order and refusing any cost award.
The Verdict
The appeal filed under Section 61 IBC is dismissed. The Court upholds the impugned order dated 21.07.2026, directing the appellants to cooperate with the Resolution Professional of Gensol for identification and recovery of the EVs. No costs are awarded.
What This Means For Similar Cases
Broad Jurisdiction Under Section 60(5)
- Practitioners must recognize that the Adjudicating Authority can issue personal directions to former directors or officers when their knowledge is essential for asset recovery.
- The terms “arising out of” and “in relation to” are interpreted expansively to support the overarching goal of preserving debtor asset value.
Continued Cooperation Obligations
- Even after suspension or removal, directors may be compelled to assist in insolvency proceedings if they possess relevant information.
- Courts will look to prior pleadings or admissions of cooperation as evidence of ongoing duty.
Strategic Drafting of IBC Applications
- Applicants should explicitly request cooperation from former management in their petitions, citing Section 60(5) to pre-empt challenges.
- Respondents should document all instances of cooperation by former directors to strengthen the tribunal’s jurisdictional basis.
Practical Takeaways
- File detailed pleadings showing any cooperation by former directors to avoid later disputes.
- Anticipate personal directions and advise clients accordingly when they hold managerial knowledge.
- Cite Section 60(5) robustly to justify any request for assistance from individuals outside the current management.
