The Insolvency and Bankruptcy Board of India (IBBI) is considering allowing cases admitted by the National Company Law Tribunal (NCLT) for insolvency proceedings to be shifted from one bench to another to speed up the resolution process, sources close to the development said.
In order to avoid piling up of cases at NCLT benches, the IBBI is likely to allow cases to be moved to less busy benches from benches where the number of cases is higher, the sources quoted above said. Typically, the NCLT benches at New Delhi and Mumbai receive far more number of cases compared with other benches such Jaipur or Chennai.
“This move will help in faster resolution through more efficient utilisation of the resources that are currently available,” a senior banker with a large public sector bank said on condition of anonymity. “The resolution process for many of the smaller cases is getting held up because of the larger cases. This move will help in clearing the backlog till the NCLT infrastructure is adequately expanded,” the banker added.
At present, cases admitted by a particular bench of the NCLT are resolved at that particular bench, unless an appeal is filed at the National Company Law Appellate Tribunal (NCLAT) or the Supreme Court.
In many instances, such as the Binani Cement case, hearings at the NCLT bench resume after appeals at the NCLAT or the Supreme Court are heard.
Most of the cases admitted by the NCLT have overshot their stipulated resolution time frame of 270 days. In some of the large cases like Essar Steel and Bhushan Power and Steel, litigations have delayed the resolution process, and the matter is still pending with the NCLAT even after a year of the companies being admitted to the NCLT.
In the case of Monnet Ispat, which was one of the 12 companies in the Reserve Bank of India’s first list of corporate defaulters, the resolution order was passed by the Mumbai bench of the NCLT exactly a year after it was admitted. Of the top 12 stressed assets, most of which were admitted between July and August last year, only five have been resolved so far.
Bankers have started selling their exposure to the companies admitted by the NCLT because of the delay in resolution. They have put on sale nearly Rs 8,000 crore worth of exposures to NCLT assets, saying that they found it more feasible to sell their exposures and make cash recoveries rather than wait for the resolution to happen.