Mumbai (IANS) - A small number of judges at the National Company Law Tribunal (NCLT) might slowdown the resolution of Insolvency and Bankruptcy Code (IBC) cases, research firm Jefferies has said. According to its report "IBC - Expectations Running High" dated June 23, there are currently only 11 benches of NCLTs, with 2-3 judges per bench. However, estimates suggest the requirement of more than 100 Judges. The NCLT plays a crucial part in IBC which has a strict time-bound resolution criteria (initial verdict within 180 days). The IBC allows NCLT to ensure compliance of the submitted resolution plan.
"The bandwidth at the NCLT is also limited, given that they are saddled with historical cases from BIFR (Board for Industrial and Financial Reconstruction) or High Courts pertaining to liquidation under the Companies Act 2013," the report said. "However, there is a sense of prioritisation of the IBC cases, which implies other commercial dispute cases may be suffering delays."
The report added that there exists a need for a "speedier insolvency resolution" which is paramount considering the stressed assets in the system are about $173 billion. As per the World Bank, India ranks 136 out of 189 in terms of insolvency resolution with an average recovery rate of 26% taking about 4.3 years, which is largely due to a poor early-detection and cumbersome judicial process which makes ‘exits' tougher.