The National Company Law Tribunal (NCLT)—an important limb in the country’s insolvency regime—is working efficiently despite several “apparently noticeable shortcomings,” its President Ramalingam Sudhakar has said.
Reeling out statistics to buttress the proof of efficacy , Sudhakar said at IBBI’s sixth Annual Day event that the average percentage of cases adjudicated by NCLT stood at 85.4 per cent (an average of Section 7,9, and 10 cases).
He highlighted that NCLT—as an adjudicating authority for IBC cases—has adjudicated 79.6 per cent of IBC cases filed by financial creditors (Section 7 of the IBC). In the case of operational creditors (section 9) initiated insolvency cases, the percentage of adjudication of cases stood at 83.72 percent. For insolvency cases initiated by corporates, the adjudicated percentage stood at 93.94% (Section 10).
On value terms, Sudhakar highlighted that the total amount settled before admission stood at ₹7,10,000 crore; settled after admission under Section 12A stood at ₹24,612 crore; and resolution plans approved stood at ₹3.03 lakh crore.
“This should dispel murmurs in certain quarters that all is not well with NCLT,” he said.
Sudhakar highlighted that this performance is despite “several apparent and noticeable shortcomings” like periodical reduction of members — 28 out of a sanctioned strength of 63 and the need to improve infrastructure facilities in metros like Mumbai, Delhi, Chennai, and Kolkata.
“These shortcomings, however, do not deter us from our commitment to the Code (IBC) and our role as an adjudicator in ensuring effective corporate governance,” Sudhakar said.
Even as company courts, NCLT has disposed of 93.29 per cent of cases, he added.
While the NCLT President may assert that the Tribunal is working efficaciously, adhering to timelines specified under law is still a pain point and there are delays in the admission stage itself, sources added.
Meanwhile, Finance Minister Nirmala Sitharaman later at the IBBI event made it clear that it was unacceptable that banks should take a hefty haircut on loans extended to companies going through the resolution process under the IBC. With few cases, seeing haircuts as high as 95 per cent, such levels are impossible to accept, Sitharaman noted.
“The resolution value should stand out so that nobody can point a finger and say , “oh my god, look at the banks. They have taken this kind of haircut. Is that acceptable?”, she said.