NCLAT dismisses BSE plea on Demat

New Delhi: NCLAT has dismissed appeals filed by the BSE, affirming that the NCLT has jurisdiction to order defreezing of Demat accounts of companies undergoing insolvency or liquidation.

A two-member bench held that under Section 60(5) of the Insolvency and Bankruptcy Code (IBC), the NCLT is empowered to entertain such applications and pass appropriate directions. It ruled that the earlier NCLT orders directing BSE to unfreeze the accounts were valid exercises of jurisdiction.

BSE had argued that matters related to Demat accounts fall under the securities law framework and SEBI regulations, and therefore lie outside the NCLT’s authority. The dispute involved two firms, Future Corporate Resources and Liz Traders and Agents, whose accounts were frozen due to non-payment of listing fees and regulatory non-compliance. Resolution professionals and liquidators approached the NCLT seeking defreezing to enable sale of shares and recovery of dues. The tribunal had ruled in their favour, prompting BSE to challenge the orders before NCLAT.

Dismissing the appeals, NCLAT said the issue was directly linked to insolvency resolution and not barred under IBC provisions. It noted that ownership of shares was undisputed and that unlocking the accounts was necessary to maximise value for creditors.