Parliament Panel suggests dedicated NCLT benches for insolvency cases

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 to cases under the Companies Act.

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.

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.