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MUMBAI : The recent postings of judicial and technical members to various benches of the National Company Law Tribunal (NCLT) is likely to speed up bankruptcy resolution, experts said.

The corporate affairs ministry on Friday notified the appointment of five judicial and five technical members to various NCLT benches. The judicial appointments were Justice (retd.) T Krishna Valli (Bengaluru), Kuldeep Kumar Kareer (Mumbai), Ashok Kumar Bhardwaj (Delhi), Praveen Gupta (Allahabad) and Bidisha Banerjee )Kolkata). The technical members comprised Prabhat Kumar and Anu Jagmohan Singh (Mumbai), Charan Singh (Hyderabad), Ashish Verma (Allahabad) and Atul Chaturvedi (Delhi).

Most experts said these appointments will expedite the admission and disposal of cases, fast-tracking the resolution process.

Ashish Pyasi, associate partner, Dhir and Dhir Associates said, “The recent appointment of members will help in accelerating the admission or rejection of petitions, quick disposal of applications for approval of resolution plans which are pending for a long time. However, the same will be short-lived since the proportion of appointments is much lower than the vacancies." He further said, “If we look at Mumbai NCLT, there are five courts and with the appointment of three new members, the tally of members will go up to eight; but to make all the five courts to be fully operational, two more members are needed."

At present, NCLT has 16 benches across the country. In some, members will be retiring, so the recent appointments will be insufficient. For optimum level in NCLT, all vacancies need to be filled so that the burden on existing benches gets reduced and future appointments and re-appointments, if any, should be done or planned swiftly by the ministry of corporate affairs so that the disposal is not delayed, he said.

The tenures of many members expired around mid-2022, and appointments have been made to fill those vacancies. “Due to delay in appointments, the burden on the existing benches has increased manifold," Pyasi said.

Sonam Chandwani, partner, KS Legal said the shortage of members was one of the main causes for the delay in completing the resolution process at NCLT. “With the new appointments in place, the backlog will now be reduced and cases will be resolved quickly. Due to these backlogs, the value of the assets is destroyed, there are more non-performing assets, there is commercial uncertainty, and there are outrageous haircuts throughout the resolution process. Because the IBC is ineffective and corporate debtors take advantage of this by delaying the resolution of their cases, they are able to buy time while having the value of their assets diminished and have the upper hand during negotiations. As a result, debtors will be under additional pressure to resolve their disputes swiftly".

In August 2020, the apex court questioned the Centre about the delays in filling up vacancies. The data available on the NCLT website showed that there are 31,203 cases that are on record under Sections 7, 9 and 10 of IBC. As of 31 August, 7,175 cases were pending at a pre-admission stage while there are 3,369 cases pending post-admission of the cases, data showed. The number of cases adjudicated by the tribunal stands at 25,812 while 22,443 cases have been disposed of by the NCLT.

ABOUT THE AUTHOR

Priyanka Gawande

Priyanka Gawande is a senior legal correspondent at Mint. She has worked as legal reporter for four years with both television and digital mediums. Based in Mumbai, she reports on disputes across sectors including banking, corporates and finance. This also includes insolvency and bankruptcy cases and intellectual property rights (IPR) litigation. Her focus also comprises tracking capital markets and disputes relating to securities law. Previously, Priyanka worked with Informist Media for 2.5 years covering major insolvency and bankruptcy cases and corporate developments. She started her career in journalism with Business Television India (BTVi) where she reported on primary markets, banking, finance and insurance companies.
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