Supreme Court Critiques Infrastructure Deficiencies at NCLT and NCLAT
The Supreme Court of India has underscored the pivotal role of the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) as essential to the government’s operational framework. On Monday, the Court expressed serious concerns about the lacking infrastructure and the shortage of tribunal members, which are undermining the efficacy of these vital institutions.
A judicial bench led by Chief Justice of India Surya Kant, alongside Justices Joymalya Bagchi and V Mohana, pointed out that institutions handling disputes amounting to thousands of crores cannot be expected to function efficiently without essential amenities, adequate staffing, and modern technological support. The Court remarked, “They are the government’s lifeline now. All nationalized banks, the banking sector, and infrastructure projects are examined by these tribunals.”
Current Challenges Facing the NCLT
This evaluation came during the hearing of a suo motu case addressing the appointment of judicial and technical members and highlighting the inadequate infrastructure at the NCLT. The NCLT Principal Bench Bar Association had filed an intervention application, emphasizing the shortage of members and the deficit in physical and technological infrastructure, as well as the lack of permanent support staff at various NCLT benches.
The Association reported that at least 18 NCLT benches were operating on a half-day schedule due to member vacancies and retirements. Despite the substantial expansion of its jurisdiction following the enactment of the Insolvency and Bankruptcy Code (IBC), the tribunal’s sanctioned strength remains at 63.
Advocate’s Concerns and Court’s Response
Senior Advocate Sanjiv Sen, representing the Bar Association, described the NCLT’s infrastructure as “in shambles”, noting that all benches at the principal bench are compelled to sit for only half a day. He highlighted the urgency of addressing the member shortage, warning that an additional 18 vacancies are expected within the next year due to retirements.
Sen urged the Court to permit members nearing retirement to continue until replacements are appointed. In response, the Supreme Court raised concerns about the lack of basic facilities, questioning, “How will an institution function unless you provide the basic amenities? You don’t have a building, staff, judgment writers, or adequate technological inclusion.”
Next Steps and Court Directives
The Court directed the NCLT Principal Bench Bar Association to compile data on the infrastructure available at all regional NCLT benches, to be presented in a tabulated form. Additionally, the Union of India was ordered to submit a status report detailing the amenities provided both at the principal and regional benches. The Court also instructed the Union government to consult with the President of the NCLT to identify the most urgent infrastructural needs. The matter is scheduled for further review in two weeks.
