Despite the issue being flagged in many quarters, a large number of vacancies in the company law tribunals remains unfilled, resulting in a slowing of the process of insolvency resolution.
This was highlighted by the Supreme Court while ordering the liquidation of grounded Jet Airways. “One another serious issue pertaining to the functioning of the NCLTs and NCLAT is that there is often a shortage of members in the tribunals and inadequate infrastructure to support their functioning. A shortfall of members and the lack of requisite strength has led to tribunals only sitting for a few days of the week or a few hours in a day,” the SC said.
Experts said that SC’s remarks show that the urgency with which the ministry of corporate affairs (MCA) will have to work to address the issue of inadequate strength of NCLTs. “If NCLT was functioning properly, Jet could have been revived. As such, much is desired to be done at MCA in regard to the first-100 day agenda of Modi 3.0 governent as unveiled by it,” said G.P. Madaan, founder and managing partner at Madaan Law Offices.
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NCLT is currently operating with 43 members as against the sanctioned strength of 63. As per IBBI analysis, the average duration for resolving insolvency cases at NCLT was 716 days in FY24, which was higher than 654 days recorded in FY23.
The MCA had floated consultation paper for changes in Insolvency and Bankrutpcy Code (IBC) in 2023 but none of the changes have been brought in so far. “Nearly half-a-dozen big-ticket items are stuck at the discussion stage, including pre-package scheme for large corporates, project-wise corporate insolvency resolution process (CIRP), cross-border insolvency cases, and creditor-led resolution process,” said a leading corporate lawyer, on the condition of anonymity.
FE has recently reported that these amendments may be introduced in the upcoming winter session of Parliament.
The MCA is now focussed on newly-launched PM internship scheme.
The ministry got a new secretary – Deepti Gaur Mukherjee – in September, and the proposed amendments to Companies Act that are aimed at reducing compliance budren might undergo fresh scrutiny. “The delay in implementing the proposals by MCA could partly be on account of need of a fresh look at them. Another reason could be diverse views and lack of consensus among the stakeholders regarding such changes,” said the lawyer quoted above.
From: financialexpress
Financial News
