Corporate affairs ministry assessing need to ramp up bench strength of NCLT

While industry stakeholders are calling for dedicated benches to handle insolvency matters, the government is reportedly not in favour of this proposal.

Ruchika Chitravanshi reports.

The Ministry of Corporate Affairs (MCA) is contemplating an increase to the existing strength of the National Company Law Tribunal (NCLT) benches to handle the growing case load.

The ministry is currently analysing the time taken by each bench to dispose of matters and the total number of cases being handled by each bench.

"We need to first determine our requirement, given that the NCLT handles both Company Act and insolvency and bankruptcy matters.

"The latter constitutes the majority of the case burden.

"We are gathering the data to understand the ground reality," explained a senior official.

At present, the NCLT has a sanctioned strength of 63 members, including both technical and judicial members.

As stated on the NCLT website, 55 of these positions are filled.

The government has been advocating for the use of technology, including an IT-enabled system for case management, to accelerate processes and reduce reliance on manpower.

However, there is recognition that there will still be a need for additional strength at the benches.

The NCLT consists of 28 courts and 16 benches across India.

Any increase in the sanctioned strength would likely require Cabinet approval.

While industry stakeholders are calling for dedicated benches to handle insolvency matters, the government is reportedly not in favour of this proposal.

As of August 2022, the NCLT had cleared more than 93 per cent of matters related to mergers and acquisitions under the Companies Act, and over 80 per cent of cases falling under various other provisions of the Act.

The original remit of the NCLT was to deal with cases under company law.

These days, however, the adjudicating authority is predominantly handling cases linked to the Insolvency and Bankruptcy Code (IBC).

Of the insolvency applications submitted by financial and operational creditors and promoters, nearly 72 per cent were resolved by August 2022.

Out of the 18,504 cases pending with the NCLT, 10,544 are related to the IBC.

Between November 2017 and August 2022, the NCLT dealt with 31,203 cases for the initiation of insolvency, of which 7,175 were pending at the pre-admission stage and 3,369 were pending post-admission, as per the data provided by the Tribunal.

Legal experts believe that the NCLT needs to address challenges such as delayed hearings and inadequate infrastructure, which contribute to a low approval rate for resolution plans.

The NCLT has enhanced its e-court system, allowing round-the-clock filing, and is working on implementing a multi-protocol label switch (MPLS) system to connect all benches online.