Committee Recommends Specialised IBC Benches or Verticals, Citing Rising Insolvency Caseload and Pressure on NCLT’s Judicial and Administrative Capacity
New Delhi: A Parliamentary Standing Committee has recommended the establishment of dedicated benches or specialised verticals for insolvency cases within the National Company Law Tribunal (NCLT) to accelerate the disposal of insolvency matters while ensuring that cases relating to company law continue to receive adequate attention.
The recommendation is part of a report prepared by the Department-Related Parliamentary Standing Committee on Personnel, Public Grievances, Law and Justice, titled ‘Review of Functioning of Tribunal System in the Country’. The report was tabled in Parliament earlier this month.
The committee highlighted the growing workload of the NCLT following the implementation of the Insolvency and Bankruptcy Code (IBC), 2016, and said the tribunal’s expanding insolvency jurisdiction should not come at the expense of its responsibilities under the Companies Act, 2013.
Dedicated IBC Benches Recommended
According to the parliamentary panel, insolvency matters require specialised, time-bound adjudication and now constitute more than half of the NCLT’s overall caseload.
To address the increasing workload, the committee has asked the Ministry of Corporate Affairs to examine the feasibility of creating dedicated IBC benches or verticals within the NCLT.
The proposed specialised mechanism would need:
- Adequate judicial members
- Sufficient technical members
- Dedicated registry support
- Appropriate infrastructure
- Specialised administrative capacity
- Periodic assessment of workload and staffing requirements
The committee believes that creating specialised insolvency mechanisms could help speed up resolution proceedings while allowing the NCLT to give equal attention to matters arising under company law.
NCLT Handles Both Insolvency and Company Law Matters
The NCLT has an important role in India’s corporate legal framework.
While insolvency proceedings have become a major part of its workload following the introduction of the IBC, the tribunal also handles significant matters under the Companies Act, 2013.
These include cases involving:
- Corporate restructuring
- Mergers and amalgamations
- Corporate governance
- Oppression and mismanagement
- Protection of stakeholder interests
- Company-law disputes
- Insolvency and bankruptcy proceedings
The parliamentary committee cautioned that the increasing concentration of insolvency matters should not result in delays in these other areas of the tribunal’s jurisdiction.
NCLT’s Bench Network
Apart from its Principal Bench and New Delhi Bench, the NCLT currently has benches in several major cities across India.
These include:
- Allahabad
- Ahmedabad
- Bengaluru
- Chandigarh
- Chennai
- Cuttack
- Hyderabad
- Indore
- Kolkata
- Kochi
- Mumbai
Despite this network, the committee noted that the tribunal continues to face significant workload and capacity constraints.
Judicial Strength Has Not Kept Pace With Expanding Jurisdiction
The NCLT informed the parliamentary committee that its sanctioned strength has remained unchanged since its establishment even though its jurisdiction has expanded considerably.
The tribunal currently has a sanctioned strength of:
- 1 President
- 31 Judicial Members
- 31 Technical Members
This amounts to a sanctioned strength of 63 positions, including the President.
However, several positions were vacant.
As of July 13, the tribunal was functioning with:
- 1 President
- 26 Judicial Members
- 25 Technical Members
The committee observed that the existing judicial strength is no longer commensurate with the volume and complexity of matters being handled by the tribunal.
According to the report, the NCLT has itself indicated that additional benches and members are required to effectively discharge its expanded responsibilities.
Insolvency Cases Putting Pressure on Tribunal Capacity
The introduction of the Insolvency and Bankruptcy Code, 2016 significantly expanded the NCLT’s role.
The IBC established a time-bound framework for resolving stressed assets and insolvency proceedings. Under the framework, the NCLT serves as the adjudicating authority for corporate insolvency proceedings and approves the final resolution of eligible cases.
With insolvency matters now accounting for a substantial portion of the tribunal’s caseload, the committee said the workload is placing considerable pressure on both the judicial and administrative capacity of the NCLT.
The panel therefore believes that specialised insolvency benches could allow judges and technical members to focus more effectively on complex IBC proceedings.
Staffing Structure Also Raises Concerns
The parliamentary committee also raised concerns about the NCLT’s workforce structure.
According to the report, more than 95 per cent of the tribunal’s workforce is engaged on a contractual basis.
The committee said this creates challenges for administrative continuity and institutional capacity.
Frequent transfers of personnel on deputation, along with high attrition among contractual employees, can result in:
- Loss of institutional memory
- Disruption in administrative processes
- Reduced continuity
- Difficulty in developing long-term domain expertise
- Increased dependence on temporary personnel
The committee has therefore recommended reassessing NCLT staffing requirements and creating adequate permanent posts.
Additional Benches and Members Need Periodic Review
The panel also recommended that the requirement for additional NCLT benches and members should not be assessed only on a one-time basis.
Instead, the requirement should be reviewed periodically in light of changes in the tribunal’s caseload.
This would allow the government to respond to increasing insolvency filings, company-law cases and other matters by expanding judicial and administrative capacity when necessary.
NCLT Records Strong Q1 Resolution Performance
The recommendation comes against the backdrop of a strong performance by the NCLT in approving insolvency resolution plans.
In July, the tribunal reported that it had approved 78 resolution plans involving a total amount of ₹5,517.66 crore during the June quarter.
According to the tribunal, this represented its highest-ever first-quarter performance in terms of approval of resolution plans since the enactment of the Insolvency and Bankruptcy Code in 2016.
The performance highlights both the increasing importance of the NCLT in India’s insolvency-resolution framework and the growing workload being handled by the tribunal.
Why Dedicated Insolvency Benches Could Matter
The committee’s proposal seeks to address a structural challenge within the tribunal system.
Insolvency proceedings under the IBC are designed to operate within prescribed timelines because delays can reduce the value of stressed assets and negatively affect creditors, investors and other stakeholders.
A dedicated insolvency structure could potentially provide:
Faster Case Disposal:
Specialised benches could focus primarily on IBC matters, potentially reducing delays caused by competing company-law cases.
Greater Specialisation:
Judicial and technical members handling insolvency cases on a dedicated basis could develop deeper expertise in complex financial and restructuring matters.
Better Resource Allocation:
Dedicated registry staff and infrastructure could help streamline filing, listing and administrative processes.
Improved Focus on Company Law:
Separating a substantial portion of insolvency work could allow other NCLT benches to devote more attention to mergers, corporate governance and other Companies Act matters.
Broader Significance for India’s Insolvency Framework
The parliamentary panel’s recommendation comes at a time when India’s insolvency-resolution system is playing an increasingly important role in dealing with stressed corporate assets.
The IBC was introduced with the objective of creating a time-bound and market-linked mechanism for resolution of stressed assets.
The NCLT is a central institution in this framework. Its ability to process cases efficiently therefore has implications for creditors, financial institutions, companies, employees, investors and the broader financial system.
However, the committee’s findings suggest that increasing caseloads must be matched by adequate judicial members, technical experts, registry personnel and infrastructure.
Key Recommendations at a Glance
| Issue | Parliamentary Panel’s Recommendation |
|---|---|
| Insolvency workload | Establish dedicated IBC benches/verticals |
| Judicial capacity | Add adequate judicial and technical members |
| Infrastructure | Strengthen registry support and infrastructure |
| Staffing | Reassess workforce requirements |
| Permanent workforce | Create adequate permanent posts |
| Contractual workforce | Reduce excessive dependence on contractual staff |
| Deputation | Address disruption caused by frequent transfers |
| Bench requirements | Review additional benches periodically |
| Company-law matters | Ensure Companies Act cases receive equal attention |
| Insolvency resolution | Improve speed and efficiency of IBC proceedings |
What Happens Next?
The parliamentary committee has recommended that the Ministry of Corporate Affairs examine the feasibility of creating dedicated insolvency benches or verticals within the NCLT.
If implemented, the proposal could lead to a more specialised structure for handling IBC matters while allowing the tribunal’s other company-law responsibilities to be managed more efficiently.
The recommendation also puts the spotlight on the need to strengthen the NCLT’s overall institutional capacity. With vacancies among judicial and technical members and a workforce largely dependent on contractual personnel, increasing permanent staffing and expanding bench capacity could become important components of the tribunal’s future reform.
Conclusion
The Parliamentary Standing Committee’s recommendation for dedicated insolvency benches within the NCLT reflects the growing importance and complexity of India’s insolvency-resolution ecosystem.
With insolvency cases accounting for more than half of the tribunal’s caseload, the proposed specialised structure could help accelerate proceedings while protecting the NCLT’s ability to deal effectively with mergers, corporate governance and other company-law matters.
The tribunal’s approval of 78 resolution plans worth ₹5,517.66 crore in the June quarter demonstrates its critical role in India’s insolvency framework. However, sustaining and improving this performance will require adequate judicial strength, technical expertise, permanent administrative staffing, infrastructure and periodic expansion of benches in line with the evolving workload.
