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Inherent and Discretionary Powers of the NCLT and NCLAT under the IBC: Where the Limits Lie
Insolvency proceedings run on a statutory clock. The Insolvency and Bankruptcy Code, 2016 (“IBC”) prescribes who may act, at what stage, and within what time. Yet no statute anticipates every situation, and tribunals are sometimes asked to fill gaps, relax timelines or undo steps already taken. How far the National Company Law Tribunal (“NCLT”) and the National Company Law Appellate Tribunal (“NCLAT”) may go in exercising inherent and discretionary powers under the IBC has been addressed by the Supreme Court in a line of decisions, and the question has taken on added significance after the Insolvency and Bankruptcy Code (Amendment) Act, 2026 introduced firmer timelines into the Code.
Sources of NCLT and NCLAT Powers Under the IBC
Three distinct sources are usually invoked.
Inherent powers. Rule 11 of the National Company Law Tribunal Rules, 2016, and the corresponding Rule 11 of the National Company Law Appellate Tribunal Rules, 2016, preserve the tribunals’ inherent power to make orders necessary to meet the ends of justice or to prevent abuse of their process. An “inherent” power is one that exists because the body is a tribunal, not because a specific provision confers it.
Residuary jurisdiction. Section 60(5)(c) of the IBC allows the NCLT, as Adjudicating Authority, to decide any question of priority or of law or fact arising out of or in relation to the insolvency resolution or liquidation of a corporate debtor.
Power to extend time. Rule 15 of both sets of Rules permits the tribunal to extend time fixed by the Rules or by its own order, on such terms as the justice of the case requires, even where the request is made after the time has expired.
Above these sits the Supreme Court’s jurisdiction under Article 142 of the Constitution to do “complete justice”, which is not available to the tribunals themselves.
The Governing Principle: Inherent Power Cannot Override the Statute
The foundational statement is found in Ebix Singapore Pte. Ltd. v. Committee of Creditors of Educomp Solutions Ltd. (Supreme Court, 13 September 2021). The Court held that any claim seeking the exercise of residuary powers under Section 60(5)(c), inherent powers under Rule 11, or even Article 142 must be closely scrutinised for broader compliance with the insolvency framework. It cautioned that judicial creation of a remedy not envisaged by the statute risks disturbing the coordination the IBC is designed to achieve, including its emphasis on timeliness and predictability.
That principle was applied in GLAS Trust Company LLC v. BYJU Raveendran & Ors., 2024 INSC 811 (Supreme Court, 23 October 2024; Bench of Dr. D.Y. Chandrachud, CJI, J.B. Pardiwala and Manoj Misra, JJ.). The NCLAT had used Rule 11 to approve a settlement between the corporate debtor’s promoter and a single operational creditor, and to close the corporate insolvency resolution process (“CIRP”), after admission but before the committee of creditors (“CoC”) had been constituted. The Supreme Court set this aside. Its central reasoning was that where a procedure has been prescribed exhaustively for a particular purpose, the power must be exercised in that manner; a tribunal must be circumspect in invoking inherent powers to deviate from it and must justify any deviation as necessary to prevent abuse of process. Because the IBC and the regulations provided a specific route for withdrawal, Rule 11 could not be used to bypass it.
Discretion to Extend Time: The Jet Airways Decision
Discretionary power received similar treatment in State Bank of India & Ors. v. Consortium of Mr. Murari Lal Jalan and Mr. Florian Fritsch & Anr., 2024 INSC 852 (Supreme Court, 7 November 2024), concerning the CIRP of Jet Airways (India) Ltd. The NCLAT had repeatedly accommodated the successful resolution applicant on implementation timelines and had permitted a performance bank guarantee to be adjusted against an upfront payment obligation.
The Supreme Court held that the Rule 15 power “must not be exercised mechanically without any application of mind”, and that an extension of the timelines fixed in a resolution plan must weigh the period sought against its consequences for continued implementation. It observed that multiple extensions may undermine the economic feasibility of the plan and increase the corporate debtor’s liabilities. In its concluding section on shortcomings in the IBC framework, the Court recorded that tribunals should not entertain repeated attempts to depart from a CoC-approved plan, and that discretion to alter binding plan terms, including timelines, should be kept to a minimum.
On the facts, the Court exercised its own powers under Article 142 and directed liquidation. That step rested on the Supreme Court’s constitutional jurisdiction; it does not indicate that the NCLT or NCLAT possess an equivalent power.
The 2026 amendments and their Effect on Discretion
The Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026) received assent on 6 April 2026. Most of its provisions were brought into force on 26 May 2026 by Ministry of Corporate Affairs notification S.O. 2625(E) dated 22 May 2026. Several of the changes bear directly on how tribunal discretion now operates.
Firmer procedural timelines. The amended Code now requires the Adjudicating Authority to decide applications under Sections 7, 9 and 10 within fourteen days of receipt, to decide on resolution plans within thirty days (Section 31(2A)), to pass liquidation orders within thirty days (Section 33(2A)) and dissolution orders within thirty days (Section 54(4)). Where the time is exceeded, reasons must be recorded in writing. Section 61(6) directs the NCLAT to dispose of appeals within three months. These provisions do not render late orders void, but they make departures from the statutory schedule a matter of recorded justification.
Admission is no longer open-ended. Under the substituted Section 7(5), if a default has occurred, the application is complete and no disciplinary proceeding is pending against the proposed resolution professional, Explanation I provides that no other ground shall be considered to reject the application. This narrows the scope for discretionary refusal at the admission stage.
Withdrawal is now more tightly framed. The substituted Section 12A permits withdrawal only on an application by the resolution professional with the approval of ninety per cent of the CoC’s voting share. Sub-section (2), which opens with a non obstante clause, bars withdrawal before the CoC is constituted and after the first invitation for resolution plans. The kind of pre-CoC settlement closure examined in GLAS Trust is therefore now expressly excluded by the Code itself. Readers should check the current text of the CIRP Regulations, which operate subject to the amended Section 12A.
Plan compliance has statutory consequences. New Section 67B allows the Adjudicating Authority, on application by the Insolvency and Bankruptcy Board of India, the Central Government or an authorised person, to impose penalties for contravening an approved resolution plan. Section 30(2)(d) now contemplates a committee to supervise implementation. Together with the observations in the Jet Airways judgment, these provisions point towards enforcement of plan terms rather than repeated extension.
A statutory route for restoration. Section 33(1A) now permits the CoC, by at least sixty-six per cent of the voting share, to seek a one-time restoration of the CIRP for up to 120 days before a liquidation order is passed. Where the statute supplies such a mechanism, the reasoning in GLAS Trust suggests that parties should expect tribunals to use it rather than invoke inherent powers to reach a similar result.
What Remains within the Tribunals’ Discretion
These decisions do not abolish inherent or discretionary powers under the IBC. Rule 11 continues to serve where the Code and the regulations are silent and intervention is needed to prevent abuse of process. Rule 15 continues to permit extensions where the justice of the case requires. What the case law requires is that such powers:
- be exercised only where no express provision governs the matter;
- not be used to achieve a result the statute prohibits or regulates differently;
- be supported by reasons explaining why deviation from the prescribed procedure is necessary; and
- take into account the effect on timeliness, value maximisation and the collective interest of creditors.
Practical Significance
For those participating in insolvency proceedings, the combined effect of Ebix, GLAS Trust, the Jet Airways decision and the 2026 amendments is that relief framed as an appeal to a tribunal’s inherent jurisdiction under the IBC is likely to face close scrutiny where the IBC provides a specific procedure. Withdrawal, restoration, extension and plan modification are each now governed by identifiable statutory provisions, conditions and time limits. How these provisions will be interpreted in borderline cases, including whether particular timelines are mandatory or directory in effect, will be settled through future decisions of the NCLAT and the Supreme Court.
Legal Information Disclaimer
This article provides general information about Indian law as it stood on 16 September 2026. It is not legal advice, and reading it does not create an advocate–client relationship. Statutes, rules and judicial interpretations change, and their application depends on the facts of each matter. Readers should consult the current official text of the laws and judgments cited and should not act on this information without advice specific to their circumstances. This article is published for legal awareness and education and is not intended to advertise or solicit professional work.
Sources / Authorities
- Insolvency and Bankruptcy Code, 2016 — Sections 7(5), 9(5), 10(4), 12A, 30(2)(d), 31(2A), 33(1A), 33(2A), 54(4), 60(5)(c), 61(6), 67B (as amended). Updated text: IBBI – Legal Framework
- Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026), Gazette of India, 6 April 2026 — IBBI copy
- Ministry of Corporate Affairs, Notification S.O. 2625(E) dated 22 May 2026 (commencement from 26 May 2026) — IBBI copy
- National Company Law Tribunal Rules, 2016 — Rules 11 and 15; National Company Law Appellate Tribunal Rules, 2016 — Rules 11 and 15
- Ebix Singapore Pte. Ltd. v. Committee of Creditors of Educomp Solutions Ltd., Supreme Court of India, 13 September 2021 — Indian Kanoon
- GLAS Trust Company LLC v. BYJU Raveendran & Ors., 2024 INSC 811, Civil Appeal No. 9986 of 2024, Supreme Court of India, 23 October 2024 — Indian Kanoon
- State Bank of India & Ors. v. Consortium of Mr. Murari Lal Jalan and Mr. Florian Fritsch & Anr., 2024 INSC 852, Civil Appeal Nos. 5023–5024 of 2024, Supreme Court of India, 7 November 2024 — Supreme Court of India
- Constitution of India — Article 142
