INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Tasked with a key job of helping recover unpaid corporate loans, the NCLT has helped resolve insolvency and bankruptcy
proceedings involving more than Rs 80,000 crore in the year passing-by and the kitty is expected to swell beyond Rs 1 lakh crore in 2019
with several big-ticket default cases pending.
Plans are afoot to further strengthen the National Company Law Tribunal (NCLT) by increasing
number of judges and benches and provide adequate infrastructure to fast-track the process, according to government officials.
The new year
will not only test the mettle of the Insolvency and Bankruptcy Code (IBC), but also of the NCLT and its appellate body NCLAT, as several
high-profile cases need to be resolved -- Essar Steel (involving over Rs 80,000 crore alone) and Bhushan Power Steel (about Rs 45,000 crore
due to its lenders) are just a few, experts said.
In 2018, over Rs 80,000 crore was recovered from various corporate debtors, which had
defaulted payments, under the IBC through various insolvency proceeding at the NCLT and the NCLAT (National Company Law Appellate Tribunal),
Ministry of Corporate Affair Secretary Injeti Srinivas told PTI.
As per estimates, the IBC has helped address stressed assets worth
approximately Rs 3 lakh crore -- directly or indirectly -- since the new law came into force in December 2016.
"The estimated amount
includes recoveries made through resolution plan and cases settled before admission by the NCLT," he added.
In 2019, the NCLT is expected to
finalise corporate insolvency resolution process of several stressed assets through its 11 functional benches across India
These cases would include Essar Steel, Bhushan Power Steel, Videocon Group, Monnet Ispat, Amtek Auto, Ruchi Soya, Lanco Infratech, Jaypee
Infratech among others.
Acording to law firm Lakshmikumaran Sridharan Executive Partner Punit Dutt Tyagi, the new year is likely to "test
the mettle of the IBC as well as of the NCLT and NCLAT".
"Most of the major cases pending before the NCLT are likely to be resolved and
these debtors are likely to come into hands of successful bidders," he added.
In 2018, insolvency proceedings against some companies
including Bhushan Steel, ElectroSteel Steel, Binani Cement were almost completed and the new management from their successful bidders --
Tata Steel, Vedanta group and Adity Birla-led UltraTech, respectively -- have taken over the management control of the stressed assets.
Big
Corporate houses including Arcelor Mittal, Tata Steel, Reliance Industries, UltraTech Cement, UK-based Liberty Group, Vedanta group, Dalmia
Bharat group were among the leading companies which had submitted their resolution plans to acquire the debt ridden firms.
Other major
insolvency cases being handled by the NCLT and the NCLAT include RCom, Videocon group, Alok Industries, Lanco Infrateck, Jaypee Infratech,
Jyoti Structures and ABG Shipyard.
Although, the IBC mandates completion of insolvency proceedings within 180 days of appointment of a
resolution professional by the NCLT, with provision for a further extension of 90 days totalling to 270 days, several matters are running
behind the schedule.
"Although the 270-day deadline could not be met in a majority of the cases, the NCLTs and the NCLAT have largely
delivered well-reasoned decisions
It is commendable since these tribunals are not just applying the settled law, but also interpreting new legislation such as the IBC," Tyagi
said.
Senior advocate Abhishek Manu Singhvi, who has appeared in some major IBC cases including of Essar Steel, said there is a shortage of
staff and the government should appoint more judges.
"The NCLAT is managing well despite the odds
Judicially, they need many more members, at least double more
They are also hugely under-staffed
It's more quantity (that is required), but quality of staff also needs serious up-gradation," Singhvi said.
He also said the NCLAT
premises are cramped and squeezed.
The senior lawyer said a huge workload is difficult to handle with such severe infrastructure problems
and these issues must be addressed immediately by the government.
"There is no point in creating institutions and then crippling them," he
added.
According to Srinivas, there are around 10,000 cases pending before the NCLT and the NCLAT at different stages and most of the new
cases coming at these quasi-judicial forums are from the insolvency side.
"The government is focusing on these issues by increasing the
number of members at NCLT and NCLAT
We would open more benches as per requirement and provide them more support in terns of trained staff, specially the young professionals and
assistants, who would help the benches directly by doing research etc," Srinivas said.
He further said, "We are putting a lot of emphasis on
capacity building because these are all complex laws and new challenges keep coming
Whatever best capacity development can be done by holding seminars, conferences, all that has been done We have tried to de-clog the
NCLT."
In 2017, the RBI had issued its first list of 12 companies defaulting on loan payments and bankruptcy proceedings were initiated
Later, a second list was also issued and these matters are given a high priority in the NCLT hearings.
