The case pertained to two companies – Future Corporate Resources and Liz Traders and Agents. BSE froze their demat accounts as these companies, which are undergoing an insolvency process, allegedly failed to pay the annual listing fee to the stock exchange, among others.
The resolution professionals assigned for both companies approached NCLT, as they planned to sell shares held in the companies to recover money. The Mumbai-bench of NCLT in October 2025 and July 2024 passed two separate orders, directing BSE to take back the freeze on the accounts.
BSE subsequently moved to NCLAT and filed two separate appeals against the orders. The stock exchange challenged the power of the NCLT to defreeze the demat accounts of businesses undergoing insolvency resolution and the liquidation process.
Passing a common order on the two petitions by BSE, a two-member NCLAT bench said that NCLT has the jurisdiction under section 60 (5) of the Insolvency & Bankruptcy Code (IBC) to entertain applications for defreezing of the Demat accounts during insolvency and pass a direction also.
“The fate of these appeals was dependent on the issue as to whether NCLT was having jurisdiction under Section 60 of the IBC to pass impugned orders, we do not find it relevant to discuss this aspect of the matter at length, as we have already held that NCLT was having jurisdiction under section 60 (5) of the Code to entertain such applications and the impugned orders have been passed in valid exercise of such jurisdiction,” the NCLAT said.
The appellate tribunal noted that the ownership of the companies regarding the shares held in those demat accounts has not been disputed. The NCLAT said accounts were frozen due to dues, which have become debt under the insolvency process. In that case, NCLT would have jurisdiction to deal with those dues (debt) under the IBC framework, as they are connected to the insolvency of those companies, it explained.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)