Context:
The Parliamentary Standing Committee on Finance has recently deliberated on setting up a dedicated National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) specifically for IBC-related cases. This comes ahead of proposed amendments to the IBC in the upcoming Monsoon Session of Parliament.
Why Reforms Are Urgent
- Delays Continue to Undermine IBC Objectives:
- IBC’s original aim was to resolve insolvencies within 330 days.
- Yet, resolution cases took an average of 597 days (as per IBBI data till March 2025).
- Liquidation cases took 508 days on average.
- The Supreme Court’s verdict in the Bhushan Power and Steel case, which overturned a resolution plan, adds uncertainty to outcomes.
- Capacity Constraints at NCLT/NCLAT:
- The current tribunals handle both company law and IBC matters, leading to severe backlog and inadequate focus.
- No significant institutional expansion has accompanied their expanding mandate.
Proposed Solutions
- Establish Dedicated IBC Tribunals:
- A separate set of NCLT and NCLAT benches exclusively for insolvency matters could streamline case flow and reduce pendency.
- Rapid Capacity Expansion:
- Immediate recruitment of more judicial and technical members.
- Increase infrastructure, digitisation, and case management tools.
- Legislative Clarity and Certainty:
- Amendments must prevent reversal of resolution plans years later, ensuring finality and investor confidence.
- Clear rules on admission timelines, withdrawals, and valuation norms are needed.
