No political appointments in NCLT, NCLAT: SC | Latest news India

The Supreme Court on Thursday emphasized that appointments to the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) should not be “political”, even as it expressed serious concerns over delays and inefficiencies affecting India’s insolvency process.

“The appointment of new members should be done in such a way that it coincides seamlessly with the date of retirement of the existing members to avoid such operational inefficiencies. Persons with high ideals and impeccable integrity should be appointed as members of both the NCLT and NCLAT. There should be no political appointment whatsoever,” a bench comprising Chief Justice of India Dhananjaya Y Chandrachud and Justices JB Pardiwala and Manoj Misra said.

In its judgment ordering the liquidation of debt-ridden Jet Airways, the Supreme Court addressed a range of issues relating to the functioning of NCLT and NCLAT, criticizing the tribunals for “lack of timely admission and disposal” of applications under the Insolvency and Bankruptcy Code. (IBC).

Noting that prolonged delays are detrimental to stakeholders and undermine the very purpose of the Code, the committee underlined the need for “time-bound” adjudication as it emphasized that timely resolutions will help prevent the erosion of corporate value and protect investor confidence, both essential for the Indian business world. restructuring efforts.

The judgment also pointed to structural challenges, including a shortage of members, inadequate infrastructure and inefficiencies in planning. According to the court, tribunals must adopt efficient practices to manage their growing caseloads, especially in high-stakes insolvency cases. The court criticized the inconsistent working hours of the tribunals and emphasized that “urgent lists” are often overlooked, affecting the effectiveness of the resolution process.

“As a result, IBC’s strict timelines are not being adhered to. Filling such vacancies by experts with sufficient domain knowledge in this area should be given priority along with addressing the infrastructure needs of the tribunals to avoid any negative impact on the resolution process. There should be strict mandates regarding the functioning of the tribunals within normal working hours,” the report said.

The Supreme Court further “put notice” on NCLT and NCLAT stating that any disregard for Supreme Court orders or judicial propriety would not be tolerated and urged a shift from “mere rubber stamping” to a more robust, responsible approach .

“The NCLT(s) and the NCLAT need to seriously reconsider their approach towards the admission and disposition of insolvency cases. They should not act merely as an authority and should take their role seriously in ensuring time-bound hearings and resolutions. Proper and effective hearings, both virtually and in court, on insolvency matters of public importance should be held and the NCLT(s) and NCLAT(s) should work seriously to ensure that the IBC, 2016 fulfills its stated purpose achieved,” the report said.