Parliamentary panel recommends dedicated insolvency benches in NCLT for faster case disposal

A Parliamentary panel has recommended dedicated insolvency benches or verticals within the NCLT to speed up IBC case disposal while ensuring equal attention to company law matters. It also called for additional members, benches and permanent staff to strengthen the tribunal

New Delhi: A Parliamentary panel has suggested establishing dedicated benches or verticals for insolvency cases at the National Company Law Tribunal (NCLT) to expedite disposal of such matters as well as ensure that the tribunal gives equal attention for cases under the companies law.

Apart from the principal bench and the New Delhi bench, NCLT has benches in Allahabad, Ahmedabad, Bengaluru, Chandigarh, Chennai, Cuttack, Hyderabad, Indore, Kolkata, Kochi, and Mumbai. The recommendations are part of a report prepared by the Department-Related Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice.

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The report on ‘Review of Functioning of Tribunal System in the Country’ was tabled in Parliament earlier this month. The panel said steadily expanding insolvency jurisdiction of the tribunal should not dilute its equally important responsibilities under the Companies Act, 2013, including matters relating to mergers and amalgamations, corporate governance, and protection of stakeholder interests.

Noting that insolvency matters require specialised and time-bound adjudication and now account for more than half of the tribunal’s total caseload, the committee recommended that the corporate affairs ministry examine the feasibility of establishing dedicated IBC benches/verticals within the tribunal, with adequate judicial and technical members, registry support and infrastructure.

“Such a specialised mechanism would facilitate expeditious disposal of insolvency matters while ensuring that the tribunal’s company law jurisdiction receives equal attention,” it said. The Insolvency and Bankruptcy Code (IBC) provides for time-bound and market-linked resolution of stressed assets and the final resolution is approved by the tribunal.

As per the report, the tribunal informed the committee that while the sanctioned strength of 62 members has remained unchanged since its inception, its jurisdiction has expanded substantially following the enactment of the Insolvency and Bankruptcy Code, 2016.

“According to the Tribunal, the existing judicial strength is no longer commensurate with the volume and complexity of matters being adjudicated and additional benches and members are required to effectively discharge its expanded mandate.

“The tribunal has further informed that insolvency matters now constitute a substantial proportion of its caseload, placing considerable pressure on its judicial and administrative capacity,” it said.

The sanctioned strength of the tribunal is 1 President, 31 Judicial Members and 31 Technical Members. Some of the posts are vacant. The tribunal was functioning with the President, 26 Judicial Members, and 25 Technical Members as on July 13.

Further, the panel said the tribunal’s staffing requirements should be reassessed and adequate permanent posts be created to reduce dependence on contractual and deputation-based personnel. “… more than 95 per cent of the tribunal’s workforce is presently engaged on a contractual basis and frequent transfers of deputationists along with high attrition among contractual personnel adversely affects continuity in administration, resulting in loss of institutional memory and impeding the development of domain expertise,” the report said.

Also, the committee said the requirement of additional benches and members be reviewed periodically in light of the growing case load. NCLT, in July, said it had approved 78 resolution plans involving a total amount of Rs 5,517.66 crore in the June quarter. It also marked the “highest-ever first quarter performance in terms of approval of resolution plans since the enactment of the Insolvency and Bankruptcy Code, 2016 (IBC),” the tribunal had said in a report.