On a hot summer afternoon, the Mumbai Branch of National Company Law Tribunal (NCLT) was jam-packed with a battery of top lawyers, corporate representatives, the Resolution Professional, journalists, law trainees, and junior lawyers. There was a palpable sense of expectation in the courtroom as the high-profile case related to Jet Airways was listed to be heard at 12:30 pm.
Many had arrived as early as 11 am to ensure they got a place to sit in the courtroom, located on the sixth floor of the MTNL exchange building, after endlessly waiting in a queue in front of four old lifts, of which two were not working and the other two could take only six people each at a time. The two-judge Bench was to hear over 70 cases that day in courtroom-1 between 11 am and 5 pm. The display board, which was supposed to show the case number being heard, was not working. The 400 sq ft courtroom was packed like sardines.
“In the Jet Airways case I am always worried, I will miss my matter before I manage to push to the front,” says Rahul Kamerkar, a lawyer representing one of the employee associations in the insolvency plea against Jet Airways.
A little over a month ago, the NCLT in Mumbai had shifted to this swanky premise nestled in the bylanes of South Mumbai. Everyone was hoping that the new location would be better, bigger and more spacious than the previous one. However, that was not to be. “They are simply MTNL offices converted into courtrooms, they were never meant to house such a large number of people,” says Kamerkar.
Similar scenes unfold 550 km away from Mumbai, where a crucial hearing related to the ₹43,000-crore insolvency case of Essar Steel was being heard in the only court-room of the Ahmedabad Branch of NCLT.
As the two judicial members were hearing the arguments by senior counsels, a remark from one of the judicial members revealed the extent of unease felt in the courtroom. “Please check, if the AC’s working?” Pointing at one of the two cassette ACs inside the room, the sweating judicial member had actually reflected the feeling of everyone — exhausted for lack of ventilation. The case has lasted for over 600 days at the same premises, with hours-long hearings sometimes even beyond the court timings, until late in the evening.
Soon after the constitution of the NCLT in June 2016, the Ahmedabad Bench was accommodated in a temporary rented set-up. But last month, the Ahmedabad Bench was shifted to a newly-constructed, bigger campus with swanky looks and better facilities. The authorities tried to overcome the limitations experienced in the older building with better seating arrangements, bigger courtrooms and wider passages with modern architecture.
The lawyer fraternity, however, looks at the upgradation of the physical infrastructure as just an outer makeover. “There is a need to overhaul operations of the NCLT to make it more professional and result-oriented. The approach of the court staff has to be transparent and unbiased. It is seen that some senior court staff is not qualified for the posts they are holding. This is reflected on the resolution process. We are seeing lesser number of productive outcomes every day and increasing incidents of adjournments,” rues a lawyer representing corporate clients at the NCLT Ahmedabad Bench.
Ashish Pyasi, Associate Partner, Dhir and Dhir Associates, believes that in the past two years the Ministry has taken various steps to improve the functioning of NCLT, including increasing the number of Benches in Mumbai initially from two to three, and now five; even then, the infrastructure is definitely not adequate.
Somasekhar Sundaresan, a lawyer, said that the Benches of the NCLT have been extraordinarily over-burdened as they have to not only deal with cases under the IBC but also under the Companies Act, 2013.
Located a few yards behind the iconic and imposing Town Hall building in the busy Esplanade area of central Kolkata is the colonial-era building of 5 Esplanade Row (West), which houses two benches of the Kolkata NCLT.
According to Mamata Binani, Vice-President, NCLT Kolkata Bar Association, the NCLT infrastructure in Kolkata remains “relatively weak”. “There is too much pressure of IBC-related cases on the benches. Since IBC cases are mounting, disposal of company law cases are slowing down. We are also finding it difficult to explain the delay to our clients,” Binani said.
The IBC at present can be triggered if there is a minimum default of ₹1 lakh. Ashok Kumar Pradhan, MD and CEO, United Bank India, feels that the threshold should be increased.
“There are too many IBC cases being pushed into the NCLT. It is delaying the resolution process,” he said, adding that “the system was getting clogged” and other options should be explored first before they are taken to the NCLT.
“The NCLT is more focussed on resolution rather than creating value for the stakeholders. This means huge haircuts for banks and extra provisioning,” Pradhan said.