FAQ:
If Suraksha is already ignoring the NCLT-approved plan, and NCLT does not itself have ‘enforcement machinery’, then what is the SECOND order that will force Suraksha to comply?”
Here is the clear, correct, legally accurate explanation:
⭐ 1. Does NCLT Have Enforcement Power?
YES — it absolutely does, but in a different way than police/civil courts.
NCLT cannot send police to the site, but NCLT has statutory enforcement power under the IBC, which is stronger because violations become criminal offences.
✔ NCLT has the power to:
-
Declare Suraksha in default of the Resolution Plan
-
Initiate contempt proceedings (civil + criminal)
-
Initiate prosecution under IBC Section 74
-
Direct IBBI to begin investigation
-
Order replacement of Suraksha (RP/RA)
-
Order attachment of assets
-
Order banks/IMC to freeze or redirect funds
-
Report to Supreme Court for further directions
In insolvency, these are the strongest legal weapons.
⭐ 2. If Suraksha continues to ignore, what is the next order NCLT passes?
There are only two real outcomes:
🔥 Outcome A: NCLT issues a “Compliance Order” + Warning under IBC Section 74
This is the standard second order.
NCLT orders:
-
Suraksha must correct SOAs within X days
-
Stop all inflated charges
-
Follow the Resolution Plan strictly
-
Submit compliance report to IMC + NCLT
-
Warning of criminal action (IBC 74)
This order alone usually forces compliance because…
🔥 What is IBC Section 74? (Very Important)
If Suraksha violates the NCLT-approved plan:
→ Directors face 3 years imprisonment
→ Company faces up to ₹1 crore fine
→ It becomes a CRIMINAL OFFENCE, not civil
No builder wants to face IBC Section 74 prosecution.
This is the REAL enforcement arm of NCLT.
⭐ Outcome B: NCLT escalates to IBBI + Supreme Court
If Suraksha still refuses:
✔ NCLT refers the case to IBBI for investigation
IBBI can:
-
suspend Suraksha’s management
-
impose penalties
-
disqualify directors
-
initiate prosecution
-
recommend criminal investigation
✔ NCLT can refer to Supreme Court
Supreme Court may:
-
summon Suraksha management
-
freeze assets
-
replace Suraksha as Resolution Applicant (if extreme)
-
appoint a Court Receiver
-
impose personal liability on directors
This has happened before in Jaypee Infratech:
👉 2018 Supreme Court removed old Jaypee promoters and took over CIRP
It can happen again if Suraksha acts in bad faith.
⭐ 3. What WILL Suraksha do if NCLT passes a second order?
👉 99% chance Suraksha complies.
Reason:
Because non-compliance becomes a criminal offence (IBC Section 74) punishable with imprisonment.
👉 Suraksha will NOT risk:
-
criminal prosecution
-
being disqualified
-
being thrown out of the project
-
directors being summoned to Supreme Court
-
funds being frozen
-
IMC taking control
Builders fear IBC violations more than any other law.
⭐ 4. Why Suraksha is acting overconfident NOW?
Because:
-
They assume homebuyers will not go to NCLT
-
They assume they can manipulate SOAs silently
-
They assume small individual complaints can be ignored
-
There is no immediate penalty unless NCLT is invoked
This is exactly why:
The moment one strong Section 60(5) NCLT application is filed,
everything changes.
After the first NCLT notice is issued to Suraksha →
They start obeying.
Because the risks become HUGE.
⭐ 5. What is the REAL second order that forces compliance?
NCLT → “Compliance Order + Section 74 Warning”
This is the most powerful and effective.
It triggers fear because it directly threatens:
-
criminal liability
-
personal director liability
-
company penalties
-
Supreme Court escalation
No builder wants this.
⭐ 6. FINAL VERDICT
✔ NCLT does have enforcement power
BUT enforcement = criminal consequences, not police.
✔ The “second order” forces Suraksha to comply because:
-
violating NCLT plan = illegal
-
violating NCLT plan = criminal offence
-
violating SC instructions = contempt
✔ If Suraksha still refuses (rare):
NCLT → IBBI investigation → Supreme Court intervention.
This chain is far more powerful than High Court’s writs.
Prepared by- @suveshvsaa13 / X
Email: "ind.vision47@gmail.com"