After a much-needed capacity boost, NCLT readies to fast-track cases

NCLT got 18 fresh recruits, a new president and a chairman, during the last month, after more than one and a half years

After getting a much-needed shot in the arm of 18 appointments, a new president and a chairman, after over one and a half years, the National Company Law Tribunal (NCLT) is sitting in a more comfortable position than it was a month ago. While this should help in clearing the backlog of cases in the short term, experts feel the authority needs to be strengthened with adequate training, infrastructure and mechanisms to ensure independence from the government.

Earlier this month, the government appointed eight judicial and ten technical members at the NCLT Benches after the Supreme Court (SC) directed the posts be filled immediately. Of the 63 sanctioned posts, 43 are now occupied. The government recently advertised for 15 more posts for six technical and nine judicial members.

“Most new members have resumed office recently. In the next two to three months we should see some difference in the pendency of cases,” a senior official said. Two of the most important appointments happened on October 29. Justice Ashok Bhushan, a former SC judge, was appointed chairperson of the NCLT and Justice Ramalingam Sudhakar, former chief justice of Manipur High Court, was named president.

Some NCLT members also point out that the original mandate of the NCLT was to deal with cases under the company law. However, these days the adjudicating authority is mostly dealing with cases related to the Insolvency and Bankruptcy Code (IBC).

“The strength sanctioned does not take into account the added workload of NCLT. IBC has become primary work. There will be a shortage of members till this is addressed,” a senior NCLT official said. 

As of August 2021, nearly 21,000 cases were pending at the NCLT. Of these, 13,000 related to IBC and the remaining dealt with company law.

To make best use of the available resources, some members are doubling up for other Benches as well. For instance, in the absence of any judicial member at the Allahabad Bench, a member of the Kochi Bench has stepped in. 

The NCLT has 28 courts and 16 Benches across India. Having dedicated Benches for IBC cases has been one of the industry’s suggestions. “NCLT can do this on its own as well. These decisions required a full-time president, who has just been appointed to lead such an initiative,” a legal expert, who did not wish to be named, said.

Meanwhile, the NCLT will start to see attrition from June with several members retiring. Many have just one year of service left.

For the judges recently appointed, the NCLT held a colloquium on IBC, company law among other subjects.

Judges play a critical role in insolvency proceedings and must be independent and competent in today’s society. We need trained and skilled judges to conduct such adjudications successfully and quickly,” said Sonam Chandwani, managing partner, KS Legal and Associates.

IBC and company law practitioners have raised the issue of lack of domain expertise among NCLT members as one of the big challenges in the judicial process. 

A senior lawyer also said the NCLT has to stay independent of the government in matters where the government is one of the litigants.

“While the increase in strength is great news for NCLT, will it improve jurisprudence or quality of judgments?” he asked.

Legal experts also feel that the NCLT needs to overcome obstacles such as delayed hearings and lack of infrastructure which leads to a low approval rate of resolution plans. The NCLT has strengthened its e-court system, allowing 24X7 filing and is working on putting together an MPLS — a multi-protocol label switch— system that would connect all Benches online.