Govt ramps up capacity of the NCLT Benches to boost decision-making

The government is ramping up the capacity of the National Company Law Tribunal (NCLT) Benches to boost decision-making and reduce delays.

It will set up dedicated Benches for insolvency and bankruptcy cases and add 40 new positions for NCLT, said Injeti Srinivas, secretary, corporate affairs ministry to the standing committee on finance. 

“When the NCLT was set up, IBC was never in the picture. It was only set up as a company law court. The IBC has now sort of dominated,” Srinivas said. 

Because of the increase in IBC cases, which are getting primacy at the NCLT, company cases are getting badly delayed. The government is also planning to set up specialised Benches for competition law to reduce the burden of the appellate tribunal, which is referred to on all matters from company law and IBC to competition law and the national financial reporting authority. 

The corporate affairs ministry has finalised the recruitment rules for NCLT Benches. The total sanctioned strength for regular staff in NCLT is 320. Around 725 people are engaged on outsource mode in NCLT. Separately, three to four law clerks have been engaged for each Bench. 

“In the NCLT, of 63, 48 are in position...Now that the recruitment rules are ready, we are very hopeful that in six months or so all the  regular staff will be in position,” Srinivas said. 

Since inception, close to 62,000 cases came to the NCLT.  These include the ones which transferred from board of industrial and financial reconstruction and high courts. 

Of these, more than 40,000 cases were disposed and 21,500 cases were pending. The government estimates that the number of cases being referred to the NCLT is rising at a rate of 10 per cent. The load of cases is expected to go up, as more stressed companies knock on the doors of the Tribunal. 

The corporate affairs ministry is also planning to increase the threshold for cases referred through the IBC to the tribunal from the current limit of Rs 1 lakh. “The law permits us to go up to Rs 1 crore, but of course, a lower threshold actually has a deeper impact on behaviour because there is a fear of being pulled into the IBC process. But of course, this is being revisited,” Srinivas said. 

For speedy disposal of cases, the government on March 15 constituted another Bench of the National Company Law Appellate Tribunal at Chennai to hear the appeals against the orders of NCLT Benches. It will have jurisdiction of Karnataka, Tamil Nadu, Kerala, Andhra Pradesh, Telangana, Lakshadweep, and Puducherry.