Centre set to appoint 50 more members to NCLT benches to expedite resolution

The average time for a corporate insolvency resolution process (CIRP) to conclude has risen to 716 days in 2023-24, up from 654 days in 2022-23.

In an effort to reduce pendency of cases under insolvency resolution, the Centre is likely to appoint 50 more members - both judicial and technical - to the National Company Law Tribunal (NCLT) to cut delays in the conclusion of Corporate Insolvency Resolution Process, or CIRP, a senior official told Moneycontrol on April 7.

The appointment process of members is likely to be completed in the ongoing financial year, it is learnt.

“The Finance Minister had made the announcement in the July 2024 Union Budget. We’re in process of selecting the candidates, and building the required infrastructure to accommodate the higher strength,” one official said.

At present, the NCLT has a sanctioned strength of 63 members, posted across 16 benches in India. With the addition of 50 more members, the tribunal’s sanctioned strength is slated to rise to 113.

In March, the Ministry of Corporate Affairs (MCA) had assigned benches to 21 newly-appointed members of the NCLT, in order to fill the current sanctioned strength. The assignment of the benches was done months after the Supreme Court expressed disappointment regarding inadequate staffing at the NCLT.

The assignment of benches to 21 new members - done in March - happened two months after the appointment order was issued by the MCA. The delay, according to sources, was mainly because the induction programme had not been not concluded. “The programme is critical to the sensitise the new members with the working of the tribunal. The new members sat through the sessions of NCLT Delhi,” one source said.

In November 2024, an apex court bench led by former Chief Justice of India DY Chandrachud had emphasised that the lack of members and scant infrastructure were impeding the insolvency resolution process. The bench had also urged the government to act swiftly and fill vacancies.

Under the extant regulations, the NCLT has a sanctioned strength of 63, but over the years, its strength had reduced to 39. Till February 2025, the NCLT was functioning with a little over half of its sanctioned strength. “One key reason for not filling up the vacancy in due time is that there are very few people qualified for the job,” an official explained. “It’s getting increasingly difficult to find the suitable candidates for role of members.”

"The escalating workload at NCLTs has led to significant delays in the disposal of cases, both under the Insolvency and Bankruptcy Code and the Companies Act. Given the criticality of NCLTs to the country’s financial and corporate ecosystem, their efficient functioning should get close attention from the central government,” said Manmeet Singh, Partner, Cyril Amarchand Mangaldas.

Siddharth Srivastava, partner at Khaitan & Co said, “Increasing of NCLT members will not only expedite the resolution under IBC but also ensure that successful bidders don’t back out of plan implementation citing delay in plan approval and company losing its value because of pendency of cases.”

“Increased benches will also ensure that objections raised by various stakeholders during CIRP is heard and settled expeditiously leading to overall quick resolution and value maximisation," Srivastava added.

Data published by the Insolvency and Bankruptcy Board of India (IBBI) shows that the average time for a corporate insolvency resolution process (CIRP) to conclude has risen to 716 days in 2023-24, up from 654 days in 2022-23. The Insolvency and Bankruptcy Code (IBC), however, mandates the CIRP has to be concluded in 330 days.

The IBBI data also shows that the recovery rate for creditors stands at 49.2% if the CIRP is concluded within 330 days. It reduces to 36%, if the CIRP process concludes between 330-599 days, and beyond 600 days taken to resolution, the recovery rate stands at a mere 26.1%.

In July 2024, Finance Minister Nirmala Sitharaman had said that appropriate changes to the IBC - reforms and strengthening of the tribunal and appellate tribunals - will be initiated to speed up insolvency resolution. “Additional tribunals will be established. Out of those, some will be notified to decide cases exclusively under the Companies Act,” she had said.