Supreme Court Flags Systemic Delays in NCLT Resolution Plan Approvals
The Supreme Court on April 29, 2026 took suo motu cognizance of chronic delays in approving resolution plans by the NCLT Principal Bench, New Delhi. The Court also highlighted a critical shortage of judicial and technical members across all NCLT benches.
Key Developments
- Pending approval applications: 383 cases, with pendency ranging from 48 days to 738 days, and some extending up to four years.
- Staffing deficit: Out of a sanctioned strength of 63 members, only 28 judicial and 26 technical members are in post.
- The bench, comprising Justice J.B. Pardiwala and Justice K.V. Viswanathan, described the situation as “grim and dismal.”
- Frequent bench re‑constitution has led to half‑day sittings, further aggravating delays.
- Objections by stakeholders and limited interim relief have added to the backlog.
- The Court directed the issue to be placed before the CJI for urgent orders.
Important Facts
The matter arose from an insolvency dispute involving IIFL Finance. The claim was rejected in 2020, reinstated by the NCLT, and upheld by the National Company Law Appellate Tribunal in 2023. The IBBI approved a resolution plan on July 4, 2024, filed before the NCLT on July 12, 2024, but it remains pending.
An arbitral award dated July 3, 2024 questioned the validity of IIFL’s loan documents, alleging fraud, thereby complicating the approval process.
Exam Relevance
Understanding the functioning of the IBC and the institutional architecture of the NCLT is essential for GS‑II (Governance) and GS‑III (Economy) papers. The case illustrates challenges in judicial capacity, the impact of procedural delays on asset preservation, and the role of the Supreme Court’s suo motu powers in safeguarding public interest.
Way Forward
- Immediate augmentation of judicial and technical members to achieve the sanctioned strength of the NCLT.
- Streamlining the appointment process for tribunal members to prevent future shortages.
- Introducing a statutory timeline for resolution‑plan approvals, with penalties for non‑compliance.
- Enhancing coordination between the IBBI and NCLT benches to monitor pendency.
- Utilising technology‑driven case management systems to reduce half‑day sittings and improve efficiency.
Addressing these systemic gaps is crucial to ensure that the IBC fulfills its purpose of timely corporate restructuring, preserving creditor value, and maintaining macro‑economic stability.