Parliamentary Panel Recommends Dedicated NCLT and NCLAT Benches to Expedite IBC Cases

Shri Bhartruhari Mahtab, Chairperson of the Parliamentary Standing Committee on Finance, is leading the push for dedicated NCLT and NCLAT benches to strengthen the IBC framework.

In a significant move to streamline and strengthen the corporate insolvency framework, the Parliamentary Standing Committee on Finance has recommended the establishment of dedicated benches within the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) exclusively for handling matters under the Insolvency and Bankruptcy Code, 2016 (IBC). The panel, chaired by BJP MP Shri Bhartruhari Mahtab, met on Thursday to deliberate on the functioning of the IBC and its emerging challenges, with a view to enhancing its efficacy.

The committee's deliberations come ahead of the Monsoon Session of Parliament, where key amendments to the IBC are expected to be introduced. The committee has expanded its agenda to examine not only the perspectives of financial institutions but also the broader industrial impact, particularly on the micro, small and medium enterprises (MSME) sector. A detailed report is likely to be tabled during the Monsoon Session.

At its recent meeting, the committee engaged with senior representatives from four major public sector banks—State Bank of India, Indian Bank, Bank of Baroda, and Indian Overseas Bank—on the theme of reviewing the IBC's working. One of the pressing concerns raised was the prolonged delay in completing the Corporate Insolvency Resolution Process (CIRP). Although the IBC mandates that CIRP must be concluded within 330 days, current data indicates that the average resolution time has extended to 507 days.

In light of these delays, the panel strongly advocated for the creation of exclusive NCLT and NCLAT benches to hear only IBC cases, which would help clear the backlog and ensure strict adherence to statutory timelines. The panel also discussed the need to strengthen the Code by incorporating provisions to address group insolvency and cross-border insolvency, both of which are presently outside the scope of the legislation.

The panel also sought clarity on the status of ongoing high-profile insolvency matters, including the Bhushan Power and Steel Limited (BPSL) case, which remains sub judice after the Supreme Court quashed JSW Steel’s resolution plan earlier this year. While representatives of the banks refrained from commenting on the specifics, the committee asserted its prerogative to examine the systemic issues underlying such cases, regardless of their pendency.

Later in the day, Reserve Bank of India Governor Sanjay Malhotra appeared before the panel to brief members on broader economic issues, including developments related to the IBC. The committee also used this opportunity to raise concerns about the deteriorating working conditions of banking correspondents (BCs). Citing the alarming resignation of over 250,000 BCs due to insufficient institutional support, members urged the RBI to direct banks to provide necessary tools such as laptops and internet connectivity to BCs, especially in unbanked and under-banked rural regions.

Additionally, the panel questioned the RBI on the effectiveness of grievance redress mechanisms, particularly the performance of the Banking Ombudsman system. Issues such as the rising threat of cybercrime and the circulation of counterfeit currency, especially in Rs. 500 denominations, were also discussed.

Earlier, on May 28 and 29, the committee had engaged with representatives from Union Bank of India, Punjab National Bank, Canara Bank, and the Insolvency and Bankruptcy Board of India (IBBI) as part of its ongoing review of the IBC framework.

The 31-member committee includes several experienced parliamentarians such as former Finance Minister P. Chidambaram, Congress MPs Manish Tewari and Gaurav Gogoi, Trinamool Congress leader Sougata Roy, Revolutionary Socialist Party’s N. K. Premachandran, and BJP MPs P. P. Chaudhary and Milind Deora from Shiv Sena.

Apart from proposed amendments to the IBC, the Ministry of Finance and the Ministry of Corporate Affairs are also expected to introduce legislative bills during the Monsoon Session, including the Income Tax Bill, Insurance Bill, and the Bill for Banning of Unregulated Lending Activities.