In over nine years, the National Company Law Tribunal (NCLT) has made significant strides, but the rising backlog of cases is undermining the tribunal’s efficiency and its objective of swift corporate dispute resolution, the standing committee on finance said in its latest report.
The panel noted that NCLT has thus far disposed of 86,828 cases till August 2024, but there’s a huge backlog of 19,969 cases with average time for case disposal remains concerning, especially for insolvency resolution and liquidation matters.
Marginal reductions in Budget estimates for NCLT
The committee further said that the budget allocations for NCLT have steadily increased from Rs 52.15 crore in FY20 to Rs 89.36 crore in FY23 but there was a marginal reduction in budget estimates for FY25 – to Rs 89.31 crore – which is potentially limiting operational enhancements.
“Despite the implementation of e-courts and hybrid hearings across 16 benches, physical infrastructure gaps and incomplete digital integration hinder optimal performance. The committee feel that the ministry’s plan to establish an integrated IT platform and expand benches is promising, but timely execution is essential,” said the report.
Data to be maintained on the time taken in the resolution process
The panel has recommended that the ministry of corporate affairs (MCA) should actively maintain data on the average time taken for resolution process in addition to setting up a performance monitoring mechanism to track pendency and disposal rates which would enable timely interventions to clear backlogs and improve resolution timelines.
The committee has also prescribed to create a mechanism where additional applications within the same case should be counted separately to avoid inflating the number of pending cases. This will ensure a more accurate reflection of the case backlog, it said.
On its part, the MCA has maintained that it is providing adequate funds for the infrastructure development of NCLT. However, its attempts to augment capacity are facing challenges. “Recently, four new courts have been made for NCLT in Kolkata. The shifting is stalled due to an ongoing stay on shifting based on the petition filed by NCLT bar association. A court was also constructed in Delhi which had to be abandoned due to orders of the Delhi High Court,” the ministry said.