The Supreme Court of India has initiated a suo motu case to address the “grim” situation surrounding the prolonged delays in approving resolution plans by the National Company Law Tribunal (NCLT). Terming the backlog a threat to the very purpose of the Insolvency and Bankruptcy Code (IBC), a bench comprising Justices J B Pardiwala and K V Viswanathan on Wednesday called for urgent reforms on a “war footing” to address severe manpower and infrastructure shortages across NCLT benches nationwide.
The apex court’s intervention comes after a report from the NCLT Principal Bench revealed a staggering backlog. According to the data, 383 applications for the approval of resolution plans are currently pending across various benches. The delays are significant, ranging from a few months to as long as 700 days.
A resolution plan is a critical statutory proposal under the IBC designed to rescue distressed companies through restructuring or takeovers. Under the current framework, timing is essential to prevent the erosion of the corporate debtor’s value. The bench observed that if these delays continue, the legislative intent of the IBC—to ensure time-bound revival of companies—would stand frustrated.
During the proceedings, the court highlighted that the primary hurdles appear to be a lack of adequate infrastructure and a shortage of personnel within the tribunals. The bench noted that it had previously observed on April 16 that many applications were languishing for several years, particularly in the New Delhi Principal Bench and other regional centers.
To gain a comprehensive understanding of the crisis, the court had previously impleaded the Insolvency and Bankruptcy Board of India (IBBI) as a party respondent. The IBBI was directed to furnish detailed statistics regarding pending applications and the specific reasons for the slow adjudication process across the country.
The bench has now directed that the matter be placed before Chief Justice of India Surya Kant to assign the case to an appropriate bench for further monitoring and directions.
The court’s decision to take suo motu cognisance originated during the hearing of two separate pleas challenging a 2023 order passed by the National Company Law Appellate Tribunal (NCLAT). Realizing that the issue of delay was systemic rather than isolated, the court expanded its scope to address the national crisis in the insolvency resolution process.
