In a significant move aimed at streamlining the insolvency resolution process in India, the Central Government is set to appoint 50 new members to the National Company Law Tribunal (NCLT). These appointments, which include both judicial and technical members, are expected to substantially enhance the tribunal’s capacity to address the growing backlog of insolvency cases across the country.

Background: Delays in Insolvency Resolution

The NCLT plays a pivotal role in the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC). However, in recent years, the tribunal has been bogged down by excessive caseloads, staffing shortages, and inadequate infrastructure. These issues have led to significant delays in resolving insolvency cases, which directly impact the revival of distressed companies and the recovery prospects for creditors.

According to data from the Insolvency and Bankruptcy Board of India (IBBI), the average time taken to conclude a CIRP increased to 716 days in 2023-24, up from 654 days in 2022-23. This is more than double the 330-day time limit mandated under the IBC.

Steps Already Taken: March 2025 Appointments

In March 2025, the Ministry of Corporate Affairs (MCA) filled the existing sanctioned strength of 63 NCLT members by assigning benches to 21 newly appointed members. However, despite the appointment order being issued two months earlier, the actual bench assignment was delayed due to the incomplete induction programme, which is essential to acquaint new members with the functioning of the tribunal. These sessions were held at NCLT Delhi.

Expansion Plan: 50 More Members to be Appointed

As part of the reforms announced in the July 2024 Union Budget, Finance Minister Nirmala Sitharaman had promised measures to expedite insolvency resolution, including increasing tribunal strength and infrastructure. The process to appoint 50 more members is now underway, and the total sanctioned strength is expected to increase from 63 to 113.

Officials have confirmed that the appointment process will likely conclude within the current financial year. This expansion is expected to significantly reduce pendency and speed up case disposal.

Need for the Appointments: Supreme Court’s Concerns

The Supreme Court had, in November 2024, expressed disappointment over inadequate staffing at the NCLT and called for immediate government action. A bench headed by former Chief Justice DY Chandrachud stressed that lack of members and poor infrastructure were hampering the effectiveness of the insolvency framework. This judicial nudge added urgency to the Centre's recruitment and infrastructure-building efforts.

Challenges in Filling Vacancies

Even though the sanctioned strength was previously set at 63, the actual working strength had reduced to just 39 members until February 2025, which meant the tribunal was operating at just over half of its capacity.

A senior government official explained the difficulty in recruiting suitable candidates for the role of members. “There are very few people qualified for the job,” the official noted, suggesting that technical expertise, legal knowledge, and domain understanding make recruitment a challenge.

Impact of Delay on Creditors and Stakeholders

The delays in insolvency resolution don’t just affect companies — they seriously dent the recovery value for creditors.

The IBBI data provides a stark picture:

• When the CIRP concludes within 330 days, the creditor recovery rate stands at 49.2%.

• If it takes between 330 and 599 days, the recovery rate drops to 36%.

• If the resolution takes over 600 days, creditors recover only 26.1%.

These numbers clearly show that timely resolution is crucial to preserving company value and ensuring fair outcomes for all stakeholders involved.

Industry Reaction: Lawyers Welcome the Move

Legal experts and insolvency professionals have hailed the Centre’s decision to strengthen the NCLT. According to Manmeet Singh, Partner at Cyril Amarchand Mangaldas, the NCLT’s effectiveness is central to India’s financial and corporate ecosystem.

Siddharth Srivastava, Partner at Khaitan & Co, added that:

“Increasing the number of NCLT members will not only expedite the resolution under IBC but also prevent successful bidders from backing out of plans due to approval delays.”

Srivastava also emphasised that:

“More benches will mean quicker redressal of stakeholder objections and faster conclusion of CIRPs, ensuring value maximisation.”

Policy Reform Announcements in the Union Budget 2024

In her Union Budget 2024 speech, Finance Minister Sitharaman had outlined a vision for comprehensive IBC reforms, which includes:

• Strengthening NCLT and NCLAT (appellate tribunal) infrastructure

• Setting up additional tribunals

• Designating special benches for handling cases exclusively under the Companies Act

These reforms aim to reduce systemic bottlenecks, enhance transparency, and ensure faster resolution of insolvency and corporate disputes.

Tribunal Infrastructure and Capacity Building

Beyond recruiting new members, upgrading infrastructure to accommodate the expanded strength of 113 members is also a key focus. The MCA is developing the necessary facilities to support a higher member count and ensure smooth operations across the 16 NCLT benches in India.

This includes:

• New chambers and administrative space

• Enhanced digital case management systems

• Streamlined induction and training programmes

Conclusion: A Step Towards Better Insolvency Outcomes

The move to appoint 50 more NCLT members is a critical step towards improving India’s insolvency resolution framework. With rising case loads and recovery rates tied to resolution timelines, these appointments are likely to lead to:

• Faster case disposal

• Improved value preservation for companies

• Better returns for creditors

• Enhanced investor confidence

By ensuring the efficient functioning of NCLTs, the Centre is aiming to align legal infrastructure with India’s economic growth goals, and support distressed businesses in turning around faster.

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