Lenders may be allowed to change NCLT bench

Lenders may be allowed to change National Company Law Tribunal benches if they face prolonged delays in insolvency resolution cases, according to a proposal being worked out by the ministry of corporate affairs. About 90% of the cases referred to the tribunal under Insolvency and Bankruptcy Code are being handled by benches in New Delhi and Mumbai, which has caused the process to slow down. 

The ministry proposes to allow banks to make a request to shift a case from one bench to another after getting the consent of all involved parties. It is also looking for ways to quicken the resolution process, which often gets delayed due to routine legal formalities. “We will soon come out with rules allowing parties to transfer the cases if they wish to do so. Lenders will have to get other parties in the case, including the resolution professionals, on board,” a top government official said. 

“The move could curtail the period of resolution significantly. However, what needs to be seen is how it is implemented and if all parties would agree on one common bench as there are cases in which the number of parties is very high. More clarity would emerge when the ministry releases the rules,” said Anshul Jain, partner at Luthra & Luthra Law Offices. 

Transfers will be allowed only to speed up the resolution of cases, the official said. 

“The move could expedite the resolution process as the benches other than Delhi and Mumbai are not as clogged. The ministry is suggesting full flexibility and cases can be moved to the bench in the area where the company has no operation,” the official said. 

Currently, about 9,000 cases are pending with NCLT benches for insolvency and other matters. Over 5,000 cases are in Mumbai and about 2,100 are in New Delhi. The ministry is also working out one-time resolution of cases on deregistration, liquidation, restoration and relief to ease pressure on NCLT and free up the benches to handle insolvency cases. #casansaar (Source - Economic Times)