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Govt to strengthen NCLT for speedy resolution of stressed assets

N Sundaresha Subramanian | New Delhi Jun 29, 2017 01:24 PM IST
Govt-to-strengthen-NCLT-for-speedy-resolution-of-stressed-assets
The National Company Law Tribunal (NCLT) is rising up to the task of handling cases dealing with large stressed assets under the new insolvency regime. The government is planning to recruit more members and add more benches in the coming months, according to officials close to the development.

The body, which falls under the administrative control of the Union Ministry of Corporate Affairs, has already begun the process of recruitment. "They have started the process to recruit 15 or 16 more members, which means there could six or seven new benches," said a senior official.

It would be a mix of 1:3 between judicial and technical members. Four judicial members and about a dozen new technical members are likely to join the system soon. They will be deputed to existing benches or might be placed in the new benches that will come up in a phased manner.

High court judges, district judges who have served in the rank for at least five years and advocates with at least 10 years of experience are eligible for appointment as judicial members. Officers holding the rank of secretary or additional secretary would be considered for technical members. Chartered accountants, company secretaries and cost accountants with fifteen years experience would also be eligible.

Over the past couple of weeks, special benches have been constituted to handle a large number of cases relating to the insolvency code. The Mumbai bench of NCLT set up a special bench under Judicial Member Ina Malhotra between June 19 and June 23 to handle cases related to insolvency and amalgamation.

After the Reserve Bank of India (RBI) identified 12 large stressed companies for insolvency, banks have moved their application in several cases. These matters are likely to be taken up by the tribunal in the coming days.

Separately, the National Company Law Appellate Tribunal (NCLAT), the appellate body, has invited applications to recruit two technical members.

The tribunal has also called for candidates, including retired government officials, to work on roles such as court officers, stenographers, deputy registrars and other office staff on contractual basis. Nearly 100 new staff members are being added to the system.

In the first phase, the ministry had set up eleven benches- one principal bench at New Delhi and 10 regional benches in Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata, Mumbai and New Delhi. These benches are headed by President Mahesh Mittal Kumar along with 16 judicial members and nine technical members at different locations.

In 2015, the Union government had informed the Supreme Court that it planned to set up a bench of the NCLT in every High Court jurisdiction across the country. At present, there are 24 high courts across various states in India.

Even if the current recruitment drive for NCLT is over, the system would still be burderned with work and its officials would have their hands full. Following the repeal of the Sick Industrial Companies Act, the NCLT has also taken over from the Board for Industrial and Financial Reconstruction (BIFR), the Appellate Authority for Industrial and Financial Reconstruction. From BIFR and Company Law Board, it has inherited around 4,700 pending cases.

Another 5,200 cases are likely to land in NCLT's doors. In addition, consulting firm Alvarez & Marshal has estimated about 15,000 pending cases from debt recovery terminals are likely to move the NCLT.

"Assuming 25,000 cases move to NCLT and the judicial bench strength ramps up to 50 in three years and a judge can handle 60 cases at any given point in time, it will take more than seven years to clear the current backlog," Alvarez & Marshal said in its report earlier this year.

The tribunal, which came into being in June last year, has already handled high-profile cases such as the Tata-Mistry dispute under the company law. However, it began hearing insolvency cases only in January. The various benches have taken up around 100 insolvency cases already.

 

 

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