With mounting pendency infra woes NCLT struggles as insolvency cases surge beyond capacity

New Delhi, Dec 31 (PTI) The Insolvency and Bankruptcy Code (IBC) framework in 2025 was marked by mounting stress on timelines and capacity, with resolution processes stretching far beyond the statutory limits, despite efforts by the National Company Law Tribunal (NCLT) to cope with its limited capacity.
     Senior advocates and legal industry experts have voiced concerns over systemic delays, pointing to nearly 10,000 cases stuck at the admission stage, with recovery worth more than Rs 10 lakh crore locked in distressed assets, and to almost 24 of the 30 NCLT courts operating on half-day schedules.
     Delays stem not only from limited capacity but also from repeated adjournments, contested defaults, and excessive litigation under Section 60(5) of IBC.
     When asked about the overall functioning of NCLT, Senior Advocate Ramji Srinivasan told PTI: "There is a sense of disappointment."
     "The reasons for these are primarily not because of any lack of effort by the president of the NCLT, but the challenges that he faces or that beset the institution. It's a large institution spread all over India and requires definite and consistent government support," he said, adding, "lack of timely appointments of good people and the lack of infrastructure support have made NCLT vulnerable to criticism from all quarters."
     NCLT was envisioned as a tribunal that would handle primarily company matters; however, over the last nearly 10 years, it has been 'besieged by an overwhelming number of cases that belong to a separate jurisdiction, which is the Insolvency & Bankruptcy Code.
     Moreover, there has been "no corresponding assessment or increase in the number of judges or members or infrastructure to cope with this deluge.
     The provisions relating to CIRP (Corporate Insolvency Resolution Process) came into force on December 1, 2016, and since then, the NCLT has admitted 8,659 cases as of September 30, 2025, according to data sourced from the IBBI (Insolvency and Bankruptcy Board of India).
     In this Resolution Plan (bids), 1,300 CIRPs have been approved, 1,223 CIRPs were withdrawn under section 12A, and 1,342 are settled.
     NCLT, which functions with over 15 benches, has 1,898 ongoing CIRP cases besides others, which are at different stages for admission.
     Moreover, the average time taken to complete an insolvency resolution process has increased by 126 days over the past 18 months, reaching 9 months in September 2025. While it took an average of 566 days for completion by the end of March 2024, the time frame has jumped to 688 days as of the September 2025 quarter. This excludes time spent in litigation and other activities during CIRP.
     The prescribed timelines of 270 days (180 days with an extension of up to 90 days) and 330 days (the maximum legal deadline to complete a CIRP) under IBC "remains in the books" only, said Senior Advocate P Nagesh.
     The government appointed 24 new members in early this year.
     “Despite new appointments, NCLT and NCLAT simply do not have the bench strength to deal with the volume and complexity of work. Several structural issues, beyond headcount, kept statutory CIRP timelines elusive. Slow admission driven by repeated adjournments, deficient filings, and contested defaults are the real reasons for delay," said Nagesh.
     Moreover, 2025 also saw a rise in the influence of parallel regulatory regimes, such as PMLA, which attaches the assets of the corporate Debtor, leaving the Resolution Applicants (bidders) reluctant to pick up such companies, he said.
     NCLT Bar Association Secretary General Saurabh Kalia said NCLT has been facing various constraints on the infrastructure side.
     "The infrastructure in Delhi, Chandigarh, and a few other benches has caused immense difficulty being faced by not only the NCLT, the members of the bar, but all other stakeholders as well," he said.
     However, Kalia also added that, as of September 30, 2025, there were 53,727 total cases filed, of which 46,725 were disposed of, and only 7,002 were pending.
     Lakshmikumaran & Sridharan Executive Partner Yogendra Aldak said 2025 should be read as a "year of course correction" in which focus shifted from expanding access to insolvency to calibrating entry, enforcing timelines, and encouraging parallel and pre-emptive restructuring avenues.
     "While the tribunal technically operated with a sanctioned strength of 63 members, the ground reality was materially different. By early 2025, nearly 24 of the 30 NCLT courts across the country were functioning only on a half-day basis, with individual members often presiding over multiple courts through video conferencing," Aldak said.
     Khaitan & Co Partner, Restructuring & Insolvency Siddharth Srivastava said Bench strength is an important factor, but it is one among several causes of delay, alongside legacy backlog, complexity of large CIRPs, frequent litigation and appeals, and practical constraints such as incomplete records and delayed cooperation from ex-management.
     Cryil Amarchand Mangaldas Partner Madhav Kanoria said 2025 will also be known for some landmark cases, including the review of the Bhushan Power and Steel Judgment.
     "The review judgment re-emphasised the importance of the commercial wisdom and the limited jurisdiction of tribunals and courts in matters of resolution plans. The Supreme Court also laid down that High Courts ought to refrain from interfering in matters related to IBC. These judgments are important because legal proceedings cause maximum delays in the completion of CIR processes under IBC," he said.
     "One consistent challenge has been the time taken in the approval of resolution plans. Such delays cause anxiety amongst bidders (especially since they cannot back off once CoC approves their plan)," he said.
     NCLT and NCLAT benches are adequately equipped to handle multiple matters; however, this problem arises from infinite and repetitive applications filed during CIRP, most notably under Section 60(5) of the Code, which has increasingly become a tool for derailment rather than resolution, SKS & Partners Managing Partner Suraj Kumar Singh said.

(This story has not been edited by THE WEEK and is auto-generated from PTI)