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CS Professional · Insolvency and Bankruptcy - Law and Practice · Cross Border Insolvency (Elective 7.5)

A foreign creditor claims against Arjun Components Ltd, which is in liquidation and has a subsidiary situated in India. The creditor disputes the priority of its claim and also makes a claim against the subsidiary. Which authority can decide the claim against the subsidiary and the question of priorities?

The NCLT can decide both. Section 60(5) gives it jurisdiction, despite any other law, over claims by or against the corporate debtor, including claims against its subsidiaries situated in India, and over any question of priorities arising out of the insolvency or liquidation proceedings.

  1. AThe NCLT, which has jurisdiction over claims by or against the corporate debtor, including its subsidiaries situated in India, and priority questionsCorrect
  2. BOnly the civil court where the subsidiary operates
  3. COnly the Insolvency and Bankruptcy Board of India
  4. DOnly the liquidator, whose decision is final

Explanation

Section 60(5) gives the NCLT jurisdiction, notwithstanding any other law, over claims by or against the corporate debtor including claims by or against its subsidiaries situated in India, and over any question of priorities or of law or facts arising from the insolvency or liquidation. The civil court option is wrong because the provision overrides other laws.

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