Specialist tribunal in India for corporate insolvency: New beginnings
By Rajas Kasbekar, Little & Co.
Corporate insolvency in India was always governed by multiple laws. This led to multiple adjudicating bodies, for example the High Court, Debt Recovery Tribunal, Company Law Board (CLB) and the Board for Industrial and Financial Reconstruction (BIFR). The multiplicity resulted in long delays, copious paperwork and high costs.
As a part of insolvency reform, the Government amended company law in 2002 to provide for the creation of a composite specialist tribunal called the National Company Law Tribunal (NCLT). Unfortunately, the creation of the NCLT was delayed due to litigation which challenged its constitutional validity.
In May 2015, the Supreme Court upheld the constitutional validity of the NCLT and directed the Government to take measures so that it starts functioning in the near future. The NCLT as a quasi-judicial body will subsume the powers and jurisdiction of the CLB, BIFR and High Courts with regard to corporate insolvency and related matters. It will be headed by a President and will have 63 judicial and technical members. It will have 21 benches with a principal bench in Delhi. Appeals against the NCLT will be heard by the National Company Law Appellate Tribunal (NCLAT) and appeals from the NCLAT judgements will be heard in the Supreme Court.
Subject to some pending legal hurdles being cleared, the NCLT is most likely to be operational very soon. Once that happens, it will truly be a new beginning for the insolvency framework in India.
Rajas KasbekarLittle & Co., Mumbai, India
T: + 91 22 2265 2739
Rajas Kasbekar is an advocate and solicitor and a partner with the law firm, Little & Co. in Mumbai. She is a corporate lawyer and has more than 15 years of postqualification experience in corporate advisory and documentation work.
The firm,Little & Co. is a full service law firm based in Mumbai with offices in Delhi and Pune. Established in 1856, it is the oldest law firm in India and is well known and respected. It has an extensive pan India civil practice. It also advises international clients in various sectors.
Published: September 2015 l Photo: Galyna Andrushko - Fotolia.com