Stressing the need for a strict time-bound framework to improve the efficiency and utility of insolvency resolution, a Select Committee of Parliament has proposed a 3-month upper limit for the National Company Law Appellate Tribunal (NCLAT) to pass its orders.
In a report tabled in the House on Wednesday, the 24-member panel, headed by the BJP leader Baijayant Panda, noted: “… given that the effectiveness of the IBC rests on a strict time-bound framework, we emphasise that undue appellate delays risk undermining the efficiency and certainty of the insolvency resolution process.”
The proposal, if accepted, will mark an extension of the time limits for insolvency decisions to the appellate body.
The IBC (Amendment) Bill has proposed deadlines for the National Company Law Tribunal (NCLT) such as a 30-day limit for disposal of liquidation orders, and 30 days to dispose of applications for withdrawal of admitted cases. The Bill also proposes a timeline of 14 days for the NCLT to admit or reject an application for the commencement of the resolution process. However, there is no prescribed time limit for NCLT to approve or reject a resolution plan.
Addressing the ‘Time Gap’
The average time to conclude a resolution process under the Insolvency and Bankruptcy Code (IBC) is on a rise. According to official data, it took 603 days to complete 1,300 corporate insolvency resolution processes (CIRP) in the July-September 2025 quarter, which is higher than 582 days in the corresponding quarter last year. This is way above the 330-day limit set to conclude the process. As per the latest report from the Insolvency and Bankruptcy Board of India (IBBI), the 2896 CIRPs, which ended up in orders for liquidation, took an average 518 days to complete, up from 505 days in the same quarter last year.
Official sources said that the final Bill which could incorporate the recommendations of the select committee will likely be presented in the Budget session.
Meanwhile, the panel has also sought to tweak the definition of “resolution plan” to allow for one or more plans for a company undergoing bankruptcy proceedings. This change has been suggested to maximise the value for a company undergoing bankruptcy proceedings.
In addition, the committee has suggested codification of the basic tenets of the cross-border insolvency framework within the IBC law itself to provide clear legislative guidance for the central government and address judicial concerns.
Codifying the ‘Clean Slate’
Cross-border insolvency is a new concept introduced in the IBC (Amendment) Bill to handle insolvency proceedings that involve companies with assets or creditors in countries outside India, taking cue from the UNCITRAL Model Law on Cross-Border Insolvency (MLCBI) principles.
Experts said that the report seems to promote transparency and reduce litigation. “With the increasing number of cross border insolvencies, the recommendation to set the parameters for, recognition, judicial cooperation and interim reliefs is a welcome step. The recommendation for introducing the “Clean Slate” principle within the IBC would provide much needed clarity to all stakeholders,” said Prateek Kumar, Partner at Khaitan & Co.
The panel has endorsed the draft Bill’s intent to codify “Clean Slate” principle, a mechanism that provides protection to the successful bidder against past claims, including those from statutory authorities., But emphasised that this provisions should not be misused by erstwhile promoters to absolve themselves from the criminal liability for offences committed under the law.
Additionally, the committee has recommended decriminalisation of sections 74 and 76 (of the IBC). These sections, it said, may be replaced with new civil-penalty provisions to “ensure continued accountability while avoiding over-criminalisation of procedural or good-faith errors”. For instance, section 74 prescribes punishment for violating the moratorium and resolution plan.
The panel further said that leaving the composition and framework of the monitoring committee entirely to regulations – as outlined in the draft Bill – could create ambiguity regarding accountability during the implementation phase. The committee noted that the composition, powers and functioning of the monitoring committee – consisting of resolution professionals, representatives of creditors, and the successful bidder – must be expressly incorporated in the IBC itself.
Under IBC, a monitoring committee oversees the post-approval implementation of a resolution plan, ensuring statutory compliance and facilitating the transfer of assets and control to the successful bidder.
Devendra Mehta, partner at PwC said that the clarity on inter-creditor arrangements in liquidation along with decriminalisation of offenses is a big development. “A notable omission has been the failure to repeal the provision enabling disciplinary proceedings against an insolvency professional for not reporting a PUFE (preferential, undervalued, fraudulent, extortionate) transaction which, in their considered opinion, do not qualify as such,” he said.
The Bill was introduced in Lok Sabha in August this year, and was referred to the select committee through a motion moved by the finance minister Nirmala Sitharaman.