Govt to create 'admission benches' in NCLT to expedite CIRP applications
New Delhi, Dec 5, 2023
The admission bench will admit/reject the application within 14 days of receiving it
Before rejecting the application, the applicant is given seven days (from the receipt of notice from the AA) to rectify the application
The union government is planning to add "admission benches" in the National Company Law Tribunal (NCLT) to expedite the insolvency resolution process, which is currently facing delays with respect to the mandated timeline under the Insolvency and Bankruptcy Code (IBC).
A government official said, "The government will amend the law and add admission benches in the NCLT, so that the process of either accepting or rejecting the application for the initiation of the Corporate Insolvency Resolution Process (CIRP) against the debtor is completed within 14 days."
The official said that the admission bench will admit/reject the application within 14 days of receiving it. "The government is in touch with the NCLT for the same," the source added.
As per the IBC, in all cases where an application to initiate a CIRP is filed, the Adjudicating Authority (AA), or NCLT, should admit it within 14 days of receiving the application. If an application by a financial creditor, an operational creditor, or a corporate applicant, the AA can reject it. However, before rejecting the application, the applicant is given seven days (from the receipt of notice from the AA) to rectify the application.
Currently, the NCLT has 63 members, which, according to experts, is an inadequate number to complete the CIRP in the mandated 330 days.
Saloni Kothari, group general counsel of BDO India, said, "Separate admission benches at the NCLT will aid tribunal members of such benches to have sole focus on admission matters ensuring on-time commencement of the IBC processes, as envisaged under IBC but currently not being implemented due to paucity of time."
She added, "The added benefits of timely admission is that lesser depreciation of assets takes place between the initiation and admission (of the resolution plan). It's also a deterrent to errant borrowers that count on court delays and overall timeliness in the IBC ecosystem."
Abhishek Rastogi, the founder of Rastogi Chambers, said, "Expediting litigation at the stage where formation of these additional benches will only help all stakeholders involved in the process — financial creditors, operational creditors, etc."
[The Business Standard]
