What is the common examiner trap about Economy in UPSC exams?

They may ask which law prevails during insolvency, offering options like 'SEBI Act' or 'Companies Act', but the correct answer is the 'IBC' due to Section 238. Another trap is confusing NCLT with NCLAT roles.

What should UPSC aspirants remember about Economy for Prelims?

1. Target this Legal Point: IBC Section 60(5) grants NCLT jurisdiction over questions 'arising out of or in relation to insolvency'. 2. Target this Legal Point: IBC Section 238 gives the Code overriding effect over other laws (like SEBI Act). 3. Target this Nodal Body: NCLAT (National Company Law Appellate Tribunal) is the appellate authority for NCLT orders.

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NCLAT Upholds NCLT Power Under IBC Section 60(5) to Defreeze Demat Accounts Overriding SEBI Framework

Q: As per the news, which appellate tribunal dismissed the appeals filed by BSE?

National Company Law Appellate Tribunal (NCLAT), The article explicitly states that the National Company Law Appellate Tribunal (NCLAT) dismissed the appeals filed by BSE. NCLAT is the appellate forum for orders passed by the National Company Law Tribunal (NCLT).

Q: Consider the following statements regarding the news: 1. The NCLAT upheld that NCLT has jurisdiction under Section 60(5) of the IBC to defreeze Demat accounts. 2. The case pertained to Demat accounts frozen by the National Stock Exchange (NSE) for non-payment of transaction charges. 3. The ruling emphasized the overriding effect of the IBC over the Securities Contracts (Regulation) Act, 1956 during insolvency. Which of the statements given above is/are correct?

Both 1 and 3, Statement 1 is correct as the NCLAT confirmed NCLT's jurisdiction under IBC Section 60(5). Statement 2 is incorrect because the accounts were frozen by BSE (Bombay Stock Exchange), not NSE, for non-payment of listing fees, not transaction charges. Statement 3 is correct as the article mentions the overriding effect of IBC (Section 238) over other laws including the SCRA.

Q: The NCLAT's common order, dismissing BSE's appeals, was how many pages long?

75 pages, The article specifically mentions in its concluding paragraphs that the NCLAT delivered its reasoning in a '75-page-long order'. This is a precise factual detail from the source.

Q: What is the primary legal significance of the NCLAT's ruling as discussed in the article?

It clarifies that the IBC's insolvency process overrides other regulatory actions during resolution., The core of the ruling is the application of IBC Section 238, which gives the Code an overriding effect. The NCLAT held that actions necessary for insolvency resolution (like defreezing accounts by the RP) take precedence, even if they conflict with enforcement actions under securities laws (SEBI Act, SCRA, LODR).

Economy PolityHIGH

Target:UPSC GS-IIIMPSCSSC GABankingTeachingPrelims HighMains MediumStatic GK Link

29 Mar 2026

~2 min

Source: The Hindu

Key Data:Section 60(5) of IBCSection 238 of IBC

Bodies:NCLATNCLTBSESEBI

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~2 min · Quick mode

What This Article Covers

1.NCLAT dismissed BSE's appeals, confirming NCLT's power under IBC Section 60(5) to defreeze Demat accounts of insolvent companies.

2.The ruling emphasizes IBC's overriding power (Section 238) over securities laws (SEBI Act, SCRA, LODR) during insolvency proceedings.

3.The case involved accounts of Future Corporate Resources and Liz Traders frozen by BSE for non-payment of listing fees and fines.

The Big Picture

Prelims · HighMains · Medium

The NCLAT has upheld the NCLT's jurisdiction under the Insolvency and Bankruptcy Code (IBC) to defreeze the Demat accounts of companies undergoing insolvency, even when frozen by stock exchanges like BSE for regulatory non-payment. This ruling reinforces the overriding effect of the IBC (Section 238) over other laws like the SEBI Act and SCRA during insolvency resolution, a critical legal principle for exam perspective.

Exam Lens

Quick Exam Facts From News

Adjudicating AuthorityNCLT (National Company Law Tribunal)

Appellate TribunalNCLAT (National Company Law Appellate Tribunal)

Key IBC SectionSection 60(5) & Section 238

Companies InvolvedFuture Corporate Resources, Liz Traders and Agents

Stock ExchangeBSE (Bombay Stock Exchange)

1-Minute Revision

›Adjudicating Authority: NCLT (National Company Law Tribunal)
›Appellate Tribunal: NCLAT (National Company Law Appellate Tribunal)
›Target this Legal Point: IBC Section 60(5) grants NCLT jurisdiction over questions 'arising out of or in relation to insolvency'.
›Target this Legal Point: IBC Section 238 gives the Code overriding effect over other laws (like SEBI Act).
›Target this Nodal Body: NCLAT (National Company Law Appellate Tribunal) is the appellate authority for NCLT orders.

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News Snapshot

⚖️

Jurisdiction Clarity

NCLAT ruled that NCLT has jurisdiction under IBC Section 60(5) to handle matters related to defreezing Demat accounts during insolvency.

🔀

Overriding Effect

The IBC (Section 238) has an overriding effect over other laws like the SEBI Act and SCRA if there is a conflict during insolvency.

📈

Insolvency Resolution

Defreezing accounts by the Resolution Professional/Liquidator is for the benefit of the corporate debtor and is not barred under IBC Section 14.

Detailed Analysis & Strategic Depth

Context / Background

Stock exchanges like BSE can freeze Demat accounts of listed companies for non-compliance with Listing Obligations and Disclosure Requirements (LODR) Regulations, such as non-payment of annual listing fees. This creates a conflict when such a company enters the Corporate Insolvency Resolution Process (CIRP) under the IBC, as the Resolution Professional needs access to assets for resolution.

Core Analysis & Implications

The NCLAT's decision is a significant interpretation of concurrent jurisdiction. It clarifies that questions 'arising out of or in relation to' insolvency, even if tangentially connected to securities law, fall under the NCLT's domain via IBC Section 60(5). By invoking Section 238, it reinforces the IBC's supremacy as a comprehensive bankruptcy framework, prioritizing the collective resolution of insolvency over individual enforcement actions by sectoral regulators like SEBI.

Future Outlook / Way Forward

This ruling sets a precedent for similar conflicts between the IBC and other regulatory regimes. It may lead to clearer inter-regulatory coordination mechanisms. For exam aspirants, it underscores the need to understand the hierarchy of laws, especially the non-obstante clause (Section 238 IBC), and the broad interpretive scope of 'in relation to insolvency' used by tribunals.

Key Facts at a Glance

Adjudicating AuthorityNCLT (National Company Law Tribunal)

Appellate TribunalNCLAT (National Company Law Appellate Tribunal)

Key IBC SectionSection 60(5) & Section 238

Companies InvolvedFuture Corporate Resources, Liz Traders and Agents

Stock ExchangeBSE (Bombay Stock Exchange)

You've read the full analysis. Now test your understanding.

Practice exam-style questions based on this article.

Q1Static LinkageEasyUPSC, SSC, Banking, State PSC

As per the news, which appellate tribunal dismissed the appeals filed by BSE?

Q2Statement-basedMediumUPSC, Banking

Consider the following statements regarding the news:

1. The NCLAT upheld that NCLT has jurisdiction under Section 60(5) of the IBC to defreeze Demat accounts.

2. The case pertained to Demat accounts frozen by the National Stock Exchange (NSE) for non-payment of transaction charges.

3. The ruling emphasized the overriding effect of the IBC over the Securities Contracts (Regulation) Act, 1956 during insolvency.

Which of the statements given above is/are correct?

Q3Data-centricEasyUPSC, SSC, Banking

The NCLAT's common order, dismissing BSE's appeals, was how many pages long?

Q4Application/ImpactMediumUPSC, Banking

What is the primary legal significance of the NCLAT's ruling as discussed in the article?

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NCLAT Upholds NCLT Power Under IBC Section 60(5) to Defreeze Demat Accounts Overriding SEBI Framework

Exam Lens

Quick Exam Facts From News

1-Minute Revision

News Snapshot

Jurisdiction Clarity

Overriding Effect

Insolvency Resolution

Detailed Analysis & Strategic Depth

Context / Background

Core Analysis & Implications

Future Outlook / Way Forward

Prelims Flashpoints

Key Facts at a Glance