Shift from legal design to institutional capacity
Why India May Need a Dedicated National Insolvency Tribunal: Nearly a decade after the Insolvency and Bankruptcy Code (IBC), 2016 came into force, India’s insolvency debate has moved beyond legislative intent. The Code fundamentally reshaped creditor–debtor relations and prioritised time-bound resolution. However, its outcomes are now constrained by the forum responsible for implementation — the National Company Law Tribunal (NCLT).
The challenge today is not the quality of the law, but whether the existing adjudicatory structure can deliver speed, certainty, and commercial outcomes as envisaged under the IBC.
How the NCLT’s dual role emerged
The NCLT was created under the Companies Act, 2013 as a specialised forum for company law matters. These include oppression and mismanagement cases, mergers, capital restructuring, and shareholder disputes.
With the enactment of the IBC in 2016, corporate insolvency resolution was also placed under the NCLT. Initially, this consolidation appeared efficient and administratively convenient.
Over time, however, the two jurisdictions evolved differently. Insolvency cases demand urgency and strict timelines, while company law disputes often involve prolonged hearings, valuation complexities, and equitable considerations.
Static GK fact: The NCLT replaced the Company Law Board and absorbed certain High Court company law powers in 2016.
Why insolvency requires a specialised forum
Insolvency proceedings are time-sensitive by design. The IBC assumes that swift intervention preserves asset value and maximises creditor recovery. Delays directly erode enterprise worth and undermine confidence in the system.
Recent data released by the Insolvency and Bankruptcy Board of India (IBBI) highlights systemic stress. The average time taken to complete a Corporate Insolvency Resolution Process (CIRP) now exceeds 800 days, far above the statutory outer limit of 270 days.
A large proportion of ongoing cases have crossed two years, indicating structural overload rather than isolated inefficiency.
Limits of the current reform approach
The Parliamentary Standing Committee on Finance has acknowledged persistent delays before the NCLT and its appellate body. It has recommended increasing benches, filling vacancies, and improving procedures.
While necessary, these steps assume the institutional framework itself is adequate. They do not address the deeper design issue of combining fast-paced insolvency resolution with slower company law adjudication within a single tribunal.
When judicial time is shared between fundamentally different processes, neither achieves optimal outcomes.
The case for a National Insolvency Tribunal
A dedicated National Insolvency Tribunal would allow insolvency cases to be handled independently of company law disputes. This separation would enable focused expertise, consistent jurisprudence, and predictable timelines.
Specialisation also improves decision quality. International experience shows that dedicated bankruptcy courts promote efficiency and commercial certainty.
Static GK Tip: In the United States, bankruptcy matters are handled by specialised federal bankruptcy courts, separate from general civil courts.
Reimagining company law adjudication
Separating insolvency does not weaken company law enforcement. Matters such as oppression and mismanagement require detailed factual analysis and doctrinal depth.
These cases can be effectively handled by Commercial Divisions of High Courts, which already follow structured timelines and possess constitutional authority. This redistribution would improve outcomes on both fronts.
Reform urgency and long-term risks
Creating a separate insolvency tribunal would require amendments to key provisions of the Companies Act, 2013. India has successfully managed similar transitions before, including the shift to the NCLT framework.
The greater risk lies in delay. If institutional congestion continues, the IBC risks becoming a strong law weakened by execution failure. The evidence now suggests that structural reform is no longer optional.
A dedicated insolvency forum is essential to restore speed, reinforce creditor confidence, and align institutional design with legislative intent.
Static Usthadian Current Affairs Table
Why India May Need a Dedicated National Insolvency Tribunal:
| Topic | Detail |
| IBC enactment | Implemented in 2016 to enable time-bound insolvency resolution |
| Adjudicating forum | NCLT handles both insolvency and company law matters |
| Statutory CIRP limit | 270 days including extensions |
| Average resolution time | Exceeds 800 days in many cases |
| Monitoring authority | Insolvency and Bankruptcy Board of India |
| Key reform proposal | Creation of a dedicated insolvency tribunal |
| Company law alternative | Transfer to Commercial Divisions of High Courts |
| Core objective | Speed, certainty, and value preservation in insolvency |
