March 23, 2021 3:01:35 am
The National Company Law Appellate Tribunal (NCLAT) has asked for a “provision in the legal framework” that would give the appellate tribunal “superintendence and control” over the various National Company Law Tribunal (NCLT) benches functioning across the country.
“There is need to introduce provision in the legal framework to vest power of superintendence and control qua National Company Law Tribunals in this Appellate Tribunal. Due to lack of supervisory jurisdiction, many aggrieved persons are compelled to adopt the route of filing the appeal though there is no order on merit,” a two-member Bench of NCLAT headed by Acting Chairperson Justice Bansi Lal Bhat said.
The judgment by the NCLAT came in the insolvency resolution of International Recreation and Amusement Limited (IRAL), the erstwhile promoters of famous recreational park, Appu Ghar.
A financial creditor of the company approached the appellate tribunal seeking that it direct the NCLT to hear the case soon after the principal Bench of the NCLT in Delhi had adjourned the matter as many as 18 times since 2019.
The NCLAT, while calling for a change in law to give it superintendence and control over the working of various NCLTs, also asked the principal Bench in Delhi to “take a call and pass an order on merit” with respect to the resolution plan submitted for the company within two weeks.
The insolvency against IRAL commenced on August 3, 2018 and was supposed to be finished by February 2019.
The principal Bench of the NCLT, however, kept postponing the hearing and re-notifying the matter, which prompted the financial creditor to approach the NCLAT. The issue of lengthy insolvency resolution trials has been a cause of worry for the Insolvency and Bankruptcy Board of India (IBBI) as well as the Ministry of Corporate Affairs (MCA).
As per latest data available from IBBI, of the 1,942 ongoing insolvency resolution cases as of September 30, 2020, as many as 1,442 have been stretched beyond 270 days, while 349 such cases have been pending for periods of more than 180 days but less than 270 days.
On March 25, 2020, the MCA had suspended initiation of new insolvency processes initially for six months until September, and then extended it twice, first until December and now till March 31, 2021. This was done to protect companies defaulting on their debt repayments due to slowdown of a Covid-19 induced pandemic.
While experts believe that this would protect several companies from going into liquidation, they are also of the opinion that there could be a very high volume of companies being sent into insolvency once the insolvency moratorium is ended by the MCA.
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