1 min read.Updated: 23 Oct 2021, 01:04 PM ISTLivemint
The caseload of NCLT has gone up over the years and there is a huge backlog of cases, and they have been working tirelessly to meet the requirement of the ever-rising workload, said Rajesh Verma, secretary in the ministry of corporate affairs
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NEW DELHI :
There is an urgent need to curtail procedural delays in bankruptcy resolution, despite the significant achievements of the National Company Law Tribunal (NCLT) and the appellate tribunal in implementing the Insolvency and Bankruptcy Code (IBC), according to Rajesh Verma, secretary in the ministry of corporate affairs.
Verma said in a monthly update of the corporate sector released by the ministry said that the caseload of NCLT has gone up over the years and that there is a huge backlog of cases. Verma said the role of these tribunals was of “prime significance" in the conclusion of bankruptcy proceedings and that they have been working tirelessly to meet the requirement of the ever-rising workload. They also played a “tremendous job" in ironing out the issues and difficulties faced in implementing the bankruptcy code, Verma said.
“Despite such significant achievements of the adjudicating authorities, in order to realise the objectives of the Code to its full potential, there is an urgent need to address procedural delays, as it often leads to value erosion of the corporate debtor," said Verma. In 2019, Parliament amended IBC to provide for conclusion of bankruptcy resolution process within 330 days including the time taken for litigation.
Verma said that the government has recently cleared the appointment of 21 new members in NCLT and the process of filling up posts of 15 members in NCLT and three members in NCLAT was underway.
The government also introduced an alternative bankruptcy resolution scheme for small businesses earlier this year, which is informal up to a point, before the corporate turnaround plan is placed before a tribunal for its sanction. This is also expected to reduce the burden on tribunals. Sticking to the timeline under the Code would help in expeditious resolution of stressed assets and enhance the ease of exit, Verma said in the review.
The Parliamentary Standing Committee on Finance had in August said more than 71% of the cases remained pending for more than 180 days, which pointed to a deviation from the original objectives of the Code intended by Parliament.
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