Disputes Arise out of Employment Contract Cannot be Adjudicated by NCLT/NCLAT under IBC: NCLAT

The National Company Law Appellate Tribunal (NCLAT) ruled that employment contract disputes fall outside the jurisdiction of the Insolvency and Bankruptcy Code (IBC). The tribunal clarified that the IBC is primarily designed to resolve financial or operational debts and cannot be invoked for disputes arising solely from employment contracts. This decision prevents the misuse of the IBC for non-debt related employment issues and ensures that the insolvency framework is applied for its intended purpose.