Adjournments in insolvency & bankruptcy cases not to exceed a week, rules NCLT

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26 Aug, 2025 12:21

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The National Company Law Tribunal (NCLT) has decided to not give adjournments of beyond one week while hearing insolvency and bankruptcy cases.

The tribunal has been loaded with multiple petitions filed under the insolvency and bankruptcy code (IBC), which became operational in December last year. The number went up especially after the government empowered the Reserve Bank of India (RBI) by passing the ordinance of the Banking Regulation (Amendment) Act which enabled them to direct banks to act against large defaulting corporates.

On June 13, the RBI released a circular directing banks to file cases against those 12 large defaulting corporates including Essar Steel, Bhushan Steel, Bhushan Power & Steel (unlisted), Jaypee Infratech, Electrosteel Steels, Alok Industries, ABG Shipyard, Jyoti Structures, Era Infra Engineering, Amtek Auto, Lanco Infratech and Monnet Ispat and Energy.

As a matter of urgency from the government and the Reserve Bank’s side, the IBC cases are taken hands on by the tribunal to ensure the judgments are heard and brought to a closure as soon as possible and do not get embroiled in delaying tactics used by the companies.

Judge BSV Prakash Kumar, the presiding judge in the Mumbai bench at the NCLT, on Monday, was hearing multiple cases filed by banks against defaulting companies where many counsels sought adjournments for next month.

However, for the cases those under the IBC, Kumar told the judicial assistant in the courtroom to give a date next week. He said, “Do not give more than one week in IB (insolvency and bankruptcy) matters.”

In other cases such as Innoventive Industries filed by ICICI Bank, Kumar also pulled up the company’s lawyers to come “sufficiently prepared” for the hearings as the “court’s time is valuable”.

Among the 12 non-performing asset (NPA) accounts referred by the RBI to be filed on priority with the NCLT, Monnet Ispat and Energy’s case filed by State Bank of India witnessed two adjournments over failure to clarify a mismatch in the claim and default amount.

Coming down heavily on SBI, the bench observed that there appeared to be a “lack of seriousness“ on SBI's part on a case of national importance.

He said, "It is your job to show the defaulted amount. Today, if we pass this order, then tomorrow this claim will be applicable to other cases as well. I don't know whether you are seeing seriousness in the query asked by us or not.”

In Essar Steel’s case, the Gujarat High Court dismissed the company’s arguments to rule in favour of banks to fast-track the insolvency proceedings against the steel producer.

The NCLT is due to hear most of the 12 cases this week and the next with a view to kick-start the resolution process.

The 12 defaulting companies comprise a quarter of the total bad loans in the banking industry, the total which stands at about Rs 7 lakh crore.

As per the IBC, 2016, once the application filed by a financial creditor under Section 7 of the IBC is admitted by the NCLT, a moratorium period of 180 days commences, extendable up to 270 days. During the moratorium period, the insolvency resolution professional (IRP) takes operating and financial control of the defaulting entity’s Board till the resolution process is completed.