Jurisdictional Overlap: Analyzing the NCLT’s Penal Powers for Fabricated Evidence under the BNSS and BSA

Introduction

Does the National Company Law Tribunal (NCLT) lack the statutory authority to penalize mala fide litigants? At first glance, the recent ruling in Delhi Liquors v. Badri Prasad¹ might suggest so, as it clarified that the NCLT is not a criminal court under the Bharatiya Nagarik Suraksha Sanhita (BNSS). However, a closer look reveals a far more potent reality: the tribunal has traded the bottleneck of criminal prosecution for a high-precision “tactical disqualification” against fabricated evidence. By refusing to be bogged down by lengthy perjury trials, the NCLT is prioritizing commercial reality over procedural sabotage, signaling that it will dismantle dishonest defenses in real-time.

This evolution into a technologically swift forum was displayed in the Delhi Liquors case. When a Corporate Debtor attempted to stall a Section 9 insolvency petition by inventing a “pre-existing dispute,” they relied on a purported demand letter. Rather than offering a simple denial, the Petitioner countered with forensic precision.

By proving the physical envelope was too light to actually contain the alleged letter, the Petitioner successfully invoked the Bharatiya Sakshya Adhiniyam (BSA). Instead of waiting years for a Magistrate to determine if a crime was committed, the Tribunal utilized the doctrine of adverse inference (Section 106 BSA). This allowed the NCLT to instantly neutralize the defense. It proved that in the fast-paced world of corporate insolvency, for a creditor, immediate forensic proof is a far more potent weapon than the delayed gratification of a criminal prosecution. 

The Jurisdictional Advantage: Strategic Restraint

While some see the NCLT’s limited criminal jurisdiction as a weakness, it is actually a vital safeguard for the insolvency timeline. During the proceedings, the Petitioner argued for the invocation of Section 379 of the BNSS (the successor to Section 340 CrPC). However, the Tribunal’s refusal to pivot into a “Criminal Court” was a strategic victory for efficiency.

Under Section 215 of the BNSS, prosecuting “offences against justice” is a notoriously slow-moving process. By maintaining its status as a specialized statutory body under Section 408 of the Companies Act, the NCLT avoids this “criminal trap.” As the Supreme Court reinforced in the Embassy Property Developments case². This restraint ensures the Tribunal remains a forum for resolution, not a bottleneck for investigations. This creates a “dual-track” advantage: creditors can secure a win in their insolvency case immediately, while the criminal courts handle the punishment of the individuals separately.

Conclusion: Resolution Over Retribution

Ultimately, the Delhi Liquors ruling establishes that the NCLT’s power isn’t diminished by its lack of penal authority; it is sharpened by it. By decoupling insolvency adjudication from the slow grind of the BNSS, the Tribunal preserves the essential “summary nature” of the IBC.

The warning to litigants is now clear: the NCLT may not put you in a cell, but it possesses the precision to strike out your entire defense the moment mala-fide intention is detected. In this new landscape governed by the BSA, a fabricated letter isn’t just a crime; it is a self-inflicted wound that leads to the immediate loss of corporate control.

1. Delhi Liquors v. Badri Prasad, IA/423(MP)/2024 in C.P. (IB) No. 25 of 2024, (2026) ibclaw.in 496 NCLT ↩︎
2. Embassy Property Developments v. State of Karnataka (2019) ↩︎

Expositor(s): Adv. Jahnobi Paul