NCLAT needs to dispose of appeals within 3 mths: Panel

New Delhi: Amid increasing delays, the select committee of Parliament examining the bill to amend the Insolvency & Bankruptcy Code has recommended that The National Company Law Appellate Tribunal (NCLAT) should dispose of appeals within three months of their receipt.

“…IBC presently does not prescribe any statutory timelines for the disposal of appeals by NCLAT. This gap has resulted in delays, particularly in appeals challenging the rejection of claims during the CIRP (corporate insolvency resolution process) or liquidation processes, as well as appeals concerning the approval or rejection of resolution plans. The committee further noted that the Amendment Bill also fails to introduce any specific statutory timelines for the NCLAT,” the panel said in its report.

The 24-member committee of lawmakers, headed by BJP’s Bijayant Panda, has also backed govt’s move to provide that the National Company Law Tribunal should admit a petition within 14 days and initiate the resolution process after it is convinced that there is payment default and other procedural requirements are fulfilled. But it also pointed to the lack of infrastructure in the tribunals, which was resulting in a massive delay in deciding cases. In addition, the ministry of corporate affairs has assured the panel that it will draft regulations “after carefully calibrating the infrastructure, functional and administrative requirements” to ensure that the timelines provided under the law are met.

Against the 270 days provided under the law, the 1,300 cases where resolution has taken place have on an average taken 603 days. In fact, 77% of the nearly 1,900 ongoing cases have taken more than 270 days, according to the latest available official data.

On group insolvency, which is sought to be operationalised, the committee pointed out that the bill provides for constitution of a common bench, mechanisms for coordination between committees of creditors and professionals, appointment of a group coordinator, formation of a combined committee of creditors, and the execution of binding coordination. It said that the rules should be tailored to India’s unique institutional environment, which includes factors like promoter-driven litigation, related-party influence, and the inherent complexity of cross-entity claims.