Max Publicity & Communication vs. Enviro Home Solutions Private Limited
- Nov 1, 2025
- 4 min read
(i) Introduction
This article summarizes the judgment passed by the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, on 15th May 2025, in the matter of Max Publicity & Communication Pvt. Ltd. vs. Enviro Home Solutions Pvt. Ltd. (Company Appeal (AT) (Insolvency) No. 456 of 2025).
The appeal was filed by Max Publicity & Communication Pvt. Ltd. (Appellant) challenging the directions contained in paragraphs 53 to 66 of the order dated 21.01.2025 passed by the Adjudicating Authority (National Company Law Tribunal - NCLT), Mumbai Bench.
The background of the case is that the NCLT rejected an application filed under Section 9 of the Insolvency and Bankruptcy Code (IBC) by the Operational Creditor (Enviro Home Solutions Pvt. Ltd.) against the Appellant (Corporate Debtor). However, while rejecting the Section 9 application, the NCLT issued adverse observations and directed the forwarding of the order copy to the Central Government through the Ministry of Corporate Affairs (MCA) and various other central authorities for investigation. The Appellant was aggrieved specifically by these directions and observations, including the reference to investigation into a larger conspiracy related to Corporate Social Responsibility (CSR) obligations of a company named Veda.
(ii) Arguments by Both the Parties
Arguments by the Appellant (Max Publicity & Communication Pvt. Ltd.):
The Appellant, through Learned Senior Counsel Shri Neeraj Malhotra, argued that the Adjudicating Authority (AA) lacked jurisdiction to direct any investigation against the Appellant while dismissing the Section 9 application.
Key contentions included:
Scope of Section 9: The jurisdiction under Section 9 of the IBC is limited to considering whether the application is complete and whether the operational creditor has proven debt and default. Any further directions or observations are beyond the scope of a Section 9 application.
Fraud Determination: The AA, while exercising jurisdiction under Section 9, cannot determine fraud or forgery. Issues concerning evasion of customs duty or malpractices suggest a need for inquiry and investigation, which cannot be entertained under the IBC.
Natural Justice Violation: The order forwarding the copy to different statutory authorities was passed without giving the Appellant an opportunity to respond to the adverse observations made against it, violating the principle of natural justice.
Companies Act Compliance: Specific provisions exist in the Companies Act, 2013 (CA, 2013), for directing investigations (e.g., Section 213), which require a reasonable opportunity of being heard to the company, a pre-condition that was not met in the present case.
Arguments by the Amicus Curiae
Learned Senior Counsel acting as Amicus Curiae, supported the Adjudicating Authority's action in forwarding the order.
Key contentions included:
Dual Jurisdiction: The AA, while deciding a Section 9 application, also exercises the jurisdiction of the National Company Law Tribunal (NCLT) under the Companies Act, 2013.
Forwarding vs. Directing Investigation: The AA did not issue a "direction for investigation" within the meaning of the CA, 2013. Rather, the order was forwarded, leaving it open for the appropriate authorities to take steps permissible under law.
Inherent Powers (Rule 11): The NCLT possesses inherent power under Rule 11 of the NCLT Rules, 2016, to forward the copy of the relevant material to appropriate authorities when the facts of a particular case require it.
Duty to Act: If the AA, functioning as a Tribunal under the CA, 2013, is satisfied that the facts of a particular case require looking into by statutory authorities, it is not precluded from forwarding the copies.
(iii) Legal Issues/Questions the Court Answered
The NCLAT primarily addressed the extent of the Adjudicating Authority's jurisdiction when rejecting a Section 9 application, particularly concerning issuing directions regarding investigations into potential fraud:
Jurisdiction of the AA under IBC and CA, 2013: The NCLAT held that the Adjudicating Authority, while exercising jurisdiction under Section 9 of the IBC, also exercises the jurisdiction of the NCLT under the Companies Act, 2013 [55(i)].
Power to Direct Investigation (Section 213): The AA, in exercise of powers under Section 213 of the CA, 2013, can direct an investigation [55(ii)]. However, this direction is subject to the pre-condition of affording a reasonable opportunity of being heard to the parties concerned [19, 55(ii)]. Since this pre-condition was not met in the NCLT order, the NCLAT concluded that the observations and directions could not be construed as a formal order directing investigation under Section 213 [19, 55(ii)].
Interpretation of NCLT Order Paragraphs 65 and 66: The NCLAT clarified that the directions and observations in paragraphs 65 and 66 of the impugned order cannot be read as any direction to statutory authorities to investigate [14, 57(i)]. Paragraph 65 merely stated that contentions regarding the transactions are "left open for the appropriate authorities... to investigate and unearth the larger conspiracy".
Power to Forward Orders (Rule 11): The NCLAT held that the NCLT can exercise its inherent jurisdiction under Rule 11 to forward the copy of the order to relevant statutory authorities if the NCLT views that it is necessary for them to do the needful.
Directing SFIO Investigation (Section 212): The NCLAT reaffirmed that the AA, while exercising jurisdiction under the CA, 2013, cannot issue any direction to the Serious Fraud Investigation Office (SFIO) for carrying out investigation. A direction to carry out an investigation of a company's affairs by SFIO under Section 212 can only be made in accordance with the statutory provisions of Section 212.
(iv) Final Observations of the Court
The NCLAT disposed of the Appeal by modifying the NCLT's order dated 21.01.2025.
The conclusions and final directions were:
Deletion of Investigation References: The NCLAT held that there was no occasion for the NCLT to make observations or refer the matter to the Economic Offences Wing (EoW) or the SFIO for investigation. Therefore, the reference of EoW and SFIO in paragraph 65 stands deleted [57(ii)].
No Formal Direction for Investigation: The NCLAT confirmed that the observations and directions made in paragraphs 65 and 66 are not to be treated as any direction for carrying out any investigation by the statutory authorities referred to therein [57(i)].
Upholding Forwarding Order: The NCLAT upheld the direction in paragraph 66 to forward the copy of the order to statutory authorities (including the Central Government through MCA, Registrar of Companies Mumbai, Income Tax Authorities, and GST Authorities) for taking appropriate steps under the Companies Act, Income Tax Act, and any applicable statutes [57(ii), 6].
