A key parliamentary committee has called for urgent reforms to tackle severe delays in India's corporate insolvency process, recommending a strict three-month deadline for the appellate tribunal to resolve appeals.
Key Recommendations to Speed Up IBC
The select committee of Parliament examining the bill to amend the Insolvency & Bankruptcy Code (IBC) has identified a critical gap. It noted that the IBC currently does not prescribe any statutory timelines for the disposal of appeals by the National Company Law Appellate Tribunal (NCLAT). This absence has led to significant hold-ups, especially in appeals related to the rejection of claims during the Corporate Insolvency Resolution Process (CIRP) or liquidation, and those concerning the approval or rejection of resolution plans.
The committee, headed by BJP MP Bijayant Panda, has firmly recommended that NCLAT should dispose of appeals within three months of their receipt. The panel observed that the current Amendment Bill also fails to introduce these crucial timelines, a shortfall it seeks to rectify.
Infrastructure Hurdles and Admission Timelines
The 24-member panel supported the government's proposal for the National Company Law Tribunal (NCLT) to admit a petition within 14 days and start the resolution process once a payment default is confirmed. However, it highlighted a major practical obstacle: the lack of adequate infrastructure in the tribunals, which is causing massive delays in case decisions.
In response, the Ministry of Corporate Affairs has assured the committee that it will draft regulations after carefully assessing the infrastructure and administrative needs to ensure the legal timelines can be met.
The scale of the delay problem is stark. Official data shows that against the mandated 270-day resolution period, the 1,300 completed cases took an average of 603 days. Furthermore, 77% of the nearly 1,900 ongoing cases have already exceeded the 270-day limit.
Addressing Complex Group Insolvency
On the operationalisation of group insolvency provisions, the committee examined the bill's framework. This includes forming a common bench, coordinating creditor committees, appointing a group coordinator, and creating a combined committee of creditors.
The panel emphasised that the implementing rules must be tailored to India's unique business environment. It pointed out factors like promoter-driven litigation, influence from related parties, and the inherent complexity of cross-entity claims, which require a nuanced regulatory approach.
These collective recommendations represent a significant push to inject efficiency and predictability into India's corporate rescue and liquidation framework, which has been bogged down by procedural delays.
