It’s a humid day at the end of June, and the discomfort is showing among the 60 people crammed into a room designed to hold no more than 25. In an earlier avatar, this room might have been a conference room. Today, it is functioning as a courtroom of the National Company Law Tribunal (NCLT), Mumbai.
Despite the crowd interest, the case being heard isn’t anything sensational, but a mundane corporate matter where a director of a firm and his promoter are fighting over a Rs 2.5 crore compensation. But since the passage of the bankruptcy law in 2016, the NCLT office, at Mahatma Gandhi Road at Fort, is as central to the Mumbai corporate world as the iconic BSE building or Bombay House, the headquarters of the Tata group.
Under the law, the NCLT is the adjudicating authority for bankruptcy and corporate cases, and a massive influx of cases means it is now as busy as the rest of India’s overburdened judicial system. It is also as short of infrastructure and staff strength. Apart from bankruptcy cases, the NCLT also hears matters such as allegations of oppression and mismanagement against companies.
Since January 2017, the tribunal has admitted 1,858 cases under the bankruptcy law. Till March 2019, only 715 had seen some kind of closure. Of the rest that are pending, 362 cases have been pending beyond 270 days, the time limit set by the bankruptcy law for closure.
The burden of numbers is evident at the NCLT, with its walls plastered with notices like “Kindly give seats to Advocates and lawyers/professionals during proceedings… Others may occupy seats if they are empty”.
The contesting parties include lenders and borrowers, buyers and suppliers, as well as employers and employees. Just like lawyers seeking customers outside regular courts, the NCLT has ‘resolution professionals’ chasing clients handing out business cards.
On this June day, the cause list has 52 cases, and all of them are called out. It is no surprise that the “judicial members (equivalent to judges)” begin the proceedings asking litigants, “Any chance of a settlement?”
Seeking to push the parties towards settlements rather than lengthy trials, the judicial members use humour to prodding and reprimand. Hearing the case of the director versus the company promoter, the judicial member tells the latter’s son, “I know that in courts joh jeeta wahi Sikandar, but babu, tell your father to be considerate. Going to court is like going to a graveyard.”
In another case, involving the division of a family business, an aunt is told to invite a warring nephew and make lunch for him as the means to reach a settlement. The suggestion does not go down well with either party.
Unlike other courts, the NCLT regularly hears litigants who come without lawyers, like a 69-year old today who has approached the tribunal against a firm to whom she had let out her property and which has gone bankrupt. She says the company owes her
Rs 1 crore in rent and interest and was refusing to vacate. At the hearing, a company official offers to pay Rs 10 lakh within a week but the judicial members ask the firm to revise it or be ready for an adverse judgment.
A soft-spoken young lawyer, struggling to make herself heard over the din, is offered help in filing an affidavit. “When did you pass your law? After Class 10th?” a judicial member remarks. “You look like a 15-year-old.”
Not everyone is treated as gently. Snapping at a lawyer for frequent interruption, a judicial member says, “I think your fees is fixed on the basis of the number of words you speak.” The room bursts out laughing.
An hour-long lunch break follows, and one of the first cases to be taken up after it is a bankruptcy case that has resulted in a potential environment hazard. Thirteen vessels of a shipping firm that owes Rs 1,500 crore to its lenders have been floating unmanned at one of the country’s busiest ports in Mumbai, with at least two oil ships lying tangled at the Bombay Port Trust (BPT). The BPT and Jawaharlal Nehru Port Trust have approached the NCLT to seek removal of the ships, fearing chances of an oil spill off the Mumbai coast.
During the course of the hearing, a bemused judicial member tells the BPT, “Can we visit these ships? We have never been on one.”
With 32 new judicial members joining after a government notification in May, more than doubling the NCLT’s strength, perhaps they may have time now to fulfill that wish.