Govt looks to double the number of benches at NCLT as bankruptcy cases mount

The government is considering increasing the number of benches at the quasi-judicial body National Company Law Tribunal (NCLT) by two-fold to handle thousands of bankruptcy cases coming up within two years of its constitution.

“Number of NCLT benches should be equal to the number of high courts in the country, (which is 24 right now) from the existing 11 (benches). Looking at the number of cases related to corporate disputes, there is a definite plan to have new benches and courts,” a senior government official told Moneycontrol.

As of now, the Ministry of Corporate Affairs (MCA) has set up eleven benches — one principal bench at New Delhi and ten benches at New Delhi, Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata and Mumbai. These benches will be headed by the President and 16 judicial members and nine technical members at various locations.

NCLT was constituted on June 1, 2016 under Companies Act, 2013, to specifically cater to companies-related disputes and is the arbitration authority for cases filed under Insolvency and Bankruptcy Code (IBC).

IBC law was implemented in May 2016 to tackle the bad loans menace that had dampened banks’ appetite to lend to the sectors in need.

“Apart from speedy NPA resolution, there is another reason why there should be more benches across the country — it is the cause of action or to make it as localised as possible,” the official explained.

For instance, if a company is registered in Hyderabad, but have business operations in Haryana. “The company will then have to come to Hyderabad for hearing,” the official said.

Around 9,000 cases are pending with the NCLT benches for insolvency and other routine cases. There are more than 5,000 cases in Mumbai and 2,100 in Delhi.

As many as 701 corporates had been admitted into resolution process, of which 67 were closed on appeal or review, 22 resulted in resolution, while 87 yielded liquidations.  Around 173 corporates have initiated voluntary liquidation.