How Far Can NCLT Go Under Section 60(5)? Adya Oils 2:1 NCLAT Ruling & Supreme Court Appeal Explained

A recent 2:1 decision of the National Company Law Appellate Tribunal (NCLAT) has reopened an important boundary question under the Insolvency and Bankruptcy Code, 2016 (IBC): when a dispute affects the value or saleability of a corporate debtor’s asset, how far can the NCLT go under Section 60(5)(c) before it crosses into the territory of ordinary civil courts?

In ARC Research and Development Centre Limited & Anr. v. Liquidator of Adya Oils and Chemicals Ltd. & Ors., Company Appeal (AT) (Insolvency) No. 292 of 2025, decided on 29 July 2026, the majority upheld NCLT Mumbai’s intervention to protect a right of way used to access land belonging to the corporate debtor. The majority treated the obstruction as closely connected with liquidation and value maximisation. The Judicial Member dissented, warning that a disputed easement claim is ordinarily a civil-law question that should not be adjudicated through summary insolvency proceedings.

The matter has moved quickly. The Supreme Court of India’s official orders listing shows ARC Research and Development Centre Limited v. Liquidator of Adya Oils and Chemicals Ltd., Civil Appeal No. 10529/2026, Diary No. 47007/2026, with an order uploaded on 20 August 2026. That means the NCLAT ruling is under challenge and practitioners should treat the appellate position as live rather than finally settled.

Why This Case Matters for Companies, Liquidators and Investors

Section 60(5)(c) is one of the IBC’s broadest jurisdictional provisions. It empowers the NCLT to decide questions of law or fact arising out of or in relation to insolvency resolution or liquidation proceedings. But the Supreme Court has repeatedly cautioned that insolvency tribunals cannot use this provision to take over disputes that properly belong before another statutory or civil forum.

The Adya Oils ruling therefore matters far beyond one access road. Similar questions arise when a liquidator faces title objections, easement claims, lease disputes, municipal permissions, utility access, encroachments, contractual termination, statutory licences or third-party property rights that directly affect the value of the liquidation estate.

Background: Adya Oils, the Land and the Disputed Right of Way

Adya Oils and Chemicals Ltd., the corporate debtor, owned non-agricultural land at Manglej, Taluka Karjan, District Vadodara, Gujarat. The land had been acquired for an industrial unit. ARC Research and Development Centre Limited owned neighbouring parcels identified in the judgment as New Block Nos. 90 and 92.

The liquidator’s case was that access to the corporate debtor’s land historically passed through those neighbouring blocks and that this access was reflected in a 1999 non-agricultural permission/order and had been used for many years. According to the liquidator, obstruction of that route during the insolvency/liquidation period materially impaired inspection, operations and the prospects of selling the corporate debtor’s property at its best value.

The appellants disputed both jurisdiction and the underlying easement claim. Their core argument was that a right of way by prescription is governed by the Indian Easements Act, 1882 and involves civil rights, evidence and factual adjudication. On that basis, they argued that the liquidator should have approached the competent civil or revenue forum rather than invoke Section 60(5)(c) of the IBC.

What NCLT Mumbai Had Ordered

The NCLT Mumbai Bench, by order dated 22 January 2025 in IA No. 2658 of 2021 in CP (IB) No. 2392/MB/2019, accepted the liquidator’s plea. It concluded that obstruction of access had a direct impact on liquidation, sale and value maximisation. The tribunal granted relief protecting and restoring the right of way and permitted consequential assistance to keep access open.

The dispute then reached the NCLAT under Section 61 of the IBC.

The Central Legal Question: What Does ‘Arising Out of or in Relation to Liquidation’ Mean?

The appeal required NCLAT to apply the jurisdictional test developed in leading Supreme Court decisions, particularly Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta and Embassy Property Developments Pvt. Ltd. v. State of Karnataka.

The principle emerging from those authorities is not that every dispute involving a corporate debtor automatically belongs before the NCLT. The required nexus is stronger: the dispute must arise from, or relate sufficiently closely to, the insolvency or liquidation process. Conversely, a resolution professional or liquidator cannot simply bypass a forum that has exclusive jurisdiction over a right that exists independently of insolvency.

The NCLAT Majority: Section 60(5)(c) Applied Because the Obstruction Hit Liquidation Value

The two Technical Members formed the majority and dismissed the appeal. Their reasoning focused heavily on the factual nexus between the obstruction and the liquidation process.

First, the majority treated the access issue as something more than an ordinary pre-existing civil quarrel. The judgment records the liquidator’s case that the obstruction emerged in the insolvency context and directly affected the ability to inspect, operate and sell the corporate debtor’s industrial property.

Second, the majority considered the historical material, including the 1999 public order and the long period of use, sufficient to support the existence of a subsisting access right. On that footing, it characterised the NCLT’s intervention as recognition and protection of an existing right rather than creation of a new easement from scratch.

Third, the majority emphasised the IBC objective of value maximisation. If the corporate debtor’s land became practically landlocked or materially harder for bidders to inspect and use, its liquidation value could fall. Relegating the liquidator to prolonged satellite litigation could therefore frustrate the time-bound insolvency framework.

The majority ultimately upheld NCLT jurisdiction under Section 60(5)(c), affirmed the right-of-way relief, allowed the liquidator to seek local administrative or police assistance to keep the route unobstructed, and imposed costs of ₹5 lakh on each appellant, payable to the Prime Minister’s National Relief Fund.

The Dissent: NCLT Should Not Decide a Contested Easement Trial

Justice N. Seshasayee, Member (Judicial), disagreed with the majority. The dissent is significant because it highlights the institutional limit that businesses and insolvency professionals should keep in mind when framing Section 60(5) applications.

In substance, the dissent viewed the dispute as one involving the existence of an easementary right over property belonging to third parties. Such a claim can require evidence on long, uninterrupted and legally qualifying use under the Easements Act. The concern was that NCLT/NCLAT proceedings are summary in nature and are not designed to conduct a full civil trial on seriously contested proprietary rights.

The dissent also relied on the Supreme Court’s caution in Gujarat Urja and Embassy Property: the IBC’s single-forum objective does not justify usurping the jurisdiction of ordinary courts or specialised statutory authorities where the disputed right exists independently of insolvency.

The Practical Test After Adya Oils

Until the Supreme Court finally settles the appeal, the safer way to analyse Section 60(5)(c) disputes is to ask a sequence of questions rather than assume that either ‘IBC overrides everything’ or ‘all property disputes belong in civil court’.

1. Did the dispute arise because of, during, or in direct connection with CIRP or liquidation? A post-insolvency obstruction designed to interfere with a sale is more likely to satisfy the nexus test than a long-standing title dispute that existed independently for years.

2. Is the liquidator asking NCLT to protect an existing and reasonably established right, or to create/adjudicate a new proprietary right? The majority in Adya Oils relied materially on the 1999 record and historical use.

3. Does another statute confer exclusive jurisdiction on another forum? Embassy Property remains important where the corporate debtor must seek a licence, renewal, statutory approval or other relief from the authority designated by law.

4. Would forcing separate litigation materially frustrate liquidation, bidder access or value maximisation? This is not conclusive by itself, but it strengthens the insolvency nexus.

5. How fact-intensive is the dispute? If resolution requires oral evidence, title examination, boundary demarcation or a full civil trial, jurisdictional objections become stronger.

What Liquidators and Resolution Professionals Should Do

Liquidators should build the jurisdictional record before filing a Section 60(5) application. The application should clearly explain the insolvency nexus rather than merely state that the asset belongs to the corporate debtor.

Useful evidence may include historical title and revenue documents, approved plans, public orders, photographs, satellite imagery, bidder inspection records, failed auction records, valuation reports showing the impact of the obstruction, correspondence showing when the dispute arose, and evidence connecting the obstruction to promoters, related parties or other interested persons where legally relevant.

The relief should also be carefully framed. A request to preserve access that is already documented may be easier to sustain than a request asking NCLT to conduct an original trial and declare complex third-party ownership rights.

What Companies, Landowners and Third Parties Should Do

Third parties dealing with assets adjacent to or connected with a company in CIRP or liquidation should not assume that an ordinary civil-right label automatically removes NCLT jurisdiction. If their conduct directly blocks a liquidation sale, reduces asset value or interferes with possession, the insolvency forum may examine the matter.

At the same time, a genuine independent property dispute should be documented early. Parties should preserve title records, easement deeds, survey maps, revenue entries, historic correspondence and evidence of actual use. Jurisdiction objections are more persuasive when the dispute demonstrably predates insolvency and requires adjudication of rights unrelated to the insolvency event.

Impact on Buyers of Distressed Assets

Prospective bidders should treat access, easements, utilities and statutory permissions as core due-diligence items. A valuation based only on registered title can be misleading if the land cannot be practically accessed or operated.

Before bidding, investors should verify access routes, survey maps, rights recorded in public documents, pending civil/revenue disputes, local-body permissions, encroachments, physical possession and whether any third party controls essential infrastructure. Bid documents should also be reviewed for allocation of litigation and title risk.

Supreme Court Appeal: Why the Position Is Still Developing

The Supreme Court’s official orders page lists Civil Appeal No. 10529/2026, ARC Research and Development Centre Limited v. Liquidator of Adya Oils and Chemicals Ltd., Diary No. 47007/2026, with an order uploaded on 20 August 2026. Because the NCLAT judgment is now under challenge, the final doctrinal boundary of Section 60(5)(c) in this context may change.

Professionals should therefore cite the NCLAT ruling with its procedural status clearly stated and check the latest Supreme Court orders before relying on it in pleadings, opinions or transactional due diligence.

Key Takeaways

• NCLAT’s 29 July 2026 decision was a 2:1 majority judgment.

• The majority upheld NCLT jurisdiction because the access obstruction had a direct nexus with liquidation, bidder access and value maximisation.

• The majority viewed NCLT as protecting a pre-existing right reflected in historical public records, not creating a wholly new civil right.

• The dissent warned against using Section 60(5)(c) to decide contested easement rights requiring a civil trial.

• The judgment illustrates the continuing tension between the IBC’s single-window objective and the jurisdiction of ordinary civil/statutory forums.

• A Supreme Court appeal is now pending/listed, so the issue remains legally live.

Frequently Asked Questions

Can NCLT decide every property dispute involving a company under IBC?

No. The key question is whether the dispute arises from or has a sufficiently close nexus with the insolvency or liquidation process. Independent disputes that properly belong before another court or statutory authority may remain outside NCLT jurisdiction.

What was the result in ARC Research v. Liquidator of Adya Oils?

By a 2:1 majority, NCLAT dismissed the appeal and upheld NCLT Mumbai’s order protecting the corporate debtor’s right of way. The majority also imposed ₹5 lakh costs on each appellant.

Why is the dissent important?

The dissent reflects a competing view that a seriously disputed easement claim is a civil-law matter requiring evidentiary adjudication and should not be decided through summary IBC proceedings.

Has the Supreme Court finally approved the NCLAT view?

No final approval should be assumed. The Supreme Court’s official listing shows a civil appeal arising from this dispute with an order uploaded on 20 August 2026. The latest Supreme Court record should be checked before treating the NCLAT position as final.

Related PGT & Associates Reading

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NCLT Admits Pen India’s IBC Plea Against Reliance Entertainment Studios: https://www.pgtandassociates.com/post/pen-india-reliance-entertainment-nclt-ibc-financial-debt-2026

Primary and Authoritative References

NCLAT/IBBI order repository: https://ibbi.gov.in/orders/nclat

Full text of NCLAT judgment (29 July 2026): https://indiankanoon.org/doc/31369336/

Supreme Court of India orders listing (Civil Appeal No. 10529/2026; order uploaded 20 August 2026): https://temp.sci.nic.in/

How PGT & Associates Can Help

IBC disputes often turn as much on transaction structure, documentation and asset due diligence as on the statutory text. PGT & Associates can assist companies, creditors, investors and professionals with insolvency-related legal and financial analysis, corporate-law compliance, due diligence and transaction support. For a matter-specific assessment, contact our team through www.pgtandassociates.com.

Disclaimer: This article is for general informational purposes and does not constitute legal, tax or investment advice. Judicial orders may be appealed, stayed, modified or overruled. Readers should review the latest official record and obtain advice based on their specific facts before acting.