In an effort to unclog the heap of Insolvency Cases at NCLT, the Ministry of Corporate Affairs has decided to look for efficient benches to fast track these cases. Listing and Hearing of Companies Act-related matters will also be done through these benches. Government is also working to increase the strengths of tribunal benches for faster disposal of matters.
K V R Murty, Joint Secretary in Ministry of Corporate Affairs said on May 23 that cities like Mumbai and Delhi where more than half of the country’s incorporated firms are registered will be their first target area for the commencement of this initiative.
Subsequently, the government will expand the capacity and capability of NCLT to handle a large volume of cases. Speaking in the context of challenges faced by India’s NCLT, he said, “What is leading to the lag in timelines in India is the extraordinary burden that the NCLT has faced with the IBC cases, because of which there have been reports that Companies Act matters are taking longer”.
According to the Corporate Affairs Ministry, combining the proposed fast-tracked mechanism with the expansion of the classes or coverage of the companies is the way to deal with this challenge. The Ministry of Corporate Affairs is looking for options to identify stipulated benches for specifically dealing with IBC cases and Companies Act-related matters.
To scale down the timelines on the formulation of the suitable framework, the Ministry suggested industry bodies to bring some kind of white paper, self-contained comprehensive proposal indicating therein as to what is happening across various jurisdictions.
The comments related to the initiative were made during ASSOCHAM webinar on ‘Regulators’ Web-confluence on Corporate Restructuring, M&As and Joint Venture. And these came after government legislated changes to the insolvency code to fast-track processing of cases.
A restructuring plan has been mutually agreed by companies and their creditors. This pre-packed insolvency procedure will help NCLT to get ease on its current burden once the proposed changes get approval from Parliament.