Assess how well the NCLT–NCLAT framework delivers time-bound insolvency resolution. Suggest reforms.

Under the Insolvency and Bankruptcy Code (IBC), 2016, the NCLT decides insolvency cases and the NCLAT hears appeals from it. A 2019 amendment set a 330-day limit for the corporate insolvency resolution process (CIRP), including time spent in litigation [1]. The framework has improved recovery, but it has only partly delivered on its central promise of speed.

Achievements

• A statutory deadline: the 330-day cap, which includes litigation, makes timely resolution a legal duty and not just a goal [1].
• Better value than a break-up sale: creditors recover about 170% of liquidation value [2].
• Promoter accountability: in Dilip B. Jiwrajka v. Union of India (2023), the Supreme Court upheld the personal guarantor provisions. It held that no judicial decision takes place at the Section 95–99 stage, which keeps the early stages simple and quick [3].

Shortfalls

• Deadlines breached: CIRPs that ended in a resolution plan took 459 days on average, well above the 330-day cap [1].
• Low recovery: creditors get back only 32.8% of admitted claims, because assets lose value while cases wait [2].
• Capacity gaps: Parliament's Standing Committee on Finance flagged a shortage of NCLT benches and judicial and administrative vacancies [2].
• Layers of litigation: the Committee named "value-eroding frivolous litigation" by promoters as a main cause of delay [2]. In Subhash Chandra's personal insolvency case, a split bench led to a tie-breaker judge. A five-member larger NCLT bench then stayed that judge's order, and an appeal to the NCLAT followed. About two months have gone on procedure alone, before the dispute itself has been examined [4].

Reforms

• Capacity: set up additional NCLT benches quickly and fill vacancies on time [2].
• Technology: start a centralised case management platform to track how long each case has been stuck, and at which stage [2].
• Deterrence: raise penalties for frivolous applications and require upfront deposits from unsuccessful resolution applicants [2].
• Procedural clarity: write the route for split verdicts into the NCLT rules, and introduce early-stage mediation [2].

Overall, the NCLT–NCLAT structure has improved recovery and promoter discipline, but capacity gaps and repeated litigation keep resolution slower than the law requires. More benches, digital case tracking and penalties for weak litigation, as the Standing Committee recommended, can make the 330-day deadline achievable in practice and support a stronger credit culture.