The Standing Committee on Finance has recommended the establishment of a performance monitoring mechanism by the Ministry of Corporate Affairs (MCA) to track pendency and disposal rates at the National Company Law Tribunal (NCLT). 

The Parliamentary Panel said in a report tabled in the Lok Sabha last week that MCA should also maintain data regarding the average time taken for the resolution process.

According to the Panel, introducing such a system would enable timely interventions to clear backlogs and improve resolution timelines, addressing persistent delays that undermine the tribunal’s efficiency. 

Acknowledging NCLT’s critical role in corporate dispute resolution and enhancing ease of doing business, the Panel headed by BJP Lawmaker Bhartruhari Mahtab noted NCLT’s significant progress since its inception in 2016, with 86,828 cases disposed of by August 2024. 

However, the backlog of 19,969 cases underscores enduring challenges stemming from procedural delays, infrastructure limitations, and manpower shortages, the report added.

The average time for resolving insolvency and liquidation cases remains a pressing concern, the Committee observed, as delays conflict with the objective of swift corporate dispute resolution. 

To address these inefficiencies, the Committee has proposed a series of measures.

Expediting Recruitment 

The Parliamentary Panel has urged the MCA to prioritise filling all revived and sanctioned posts within the current financial year. Despite the revival of 238 abolished posts in 2023, the tribunal continues to face a staffing shortfall, with recruitment underway for only 100 additional members against a demand for 729 posts. The reliance on contractual staff, while helpful, cannot substitute for a permanent workforce, the Committee emphasised.

Finalising Procedural Rules

The Committee recommended the swift finalisation and implementation of procedural rules tailored to NCLT’s role under the Insolvency and Bankruptcy Code (IBC). It also stressed the importance of regular training programs and colloquiums for tribunal members to reduce delays and enhance case management.

Infrastructure and Technology Upgrades

Noting that infrastructure gaps and incomplete digital integration hinder the tribunal’s optimal functioning, the Committee highlighted the need for timely implementation of the Ministry’s plans for an integrated IT platform and expansion of NCLT benches. While E-Courts and hybrid hearings have been rolled out across 16 benches, further physical and digital upgrades are essential to improve case processing times and ensure transparency.

Full Utilisation of Budget Allocations

Despite a steady increase in budget allocations for NCLT—from ₹52.15 crore in 2019-20 to ₹89.36 crore in 2022-23—a marginal reduction in 2024-25 to ₹89.31 crore could hinder operational enhancements. The Committee urged the MCA to fully utilise allocated funds, prioritising recruitment, infrastructure development, and technology integration.

Data-Driven Monitoring

To ensure effective oversight, the Committee called for tracking data on average resolution times and establishing a mechanism to prevent inflating pending case numbers by counting additional applications within the same case separately.

The Committee believes that addressing these challenges comprehensively will enhance NCLT’s capacity to fulfil its mandate of expeditious dispute resolution, thereby supporting economic growth and improving India’s ease of doing business rankings.