The National Company Law Tribunals (NCLT) were constituted in 2016 for adjudication of matters arising out of the Companies Act, 2013, and exclusive jurisdiction under the Companies Act was vested with the NCLTs. After the enactment of the Insolvency and Bankruptcy Code, 2016 in December 2016, NCLT has been vested with exclusive jurisdiction to deal with cases arising out...
The National Company Law Tribunals (NCLT) were constituted in 2016 for adjudication of matters arising out of the Companies Act, 2013, and exclusive jurisdiction under the Companies Act was vested with the NCLTs. After the enactment of the Insolvency and Bankruptcy Code, 2016 in December 2016, NCLT has been vested with exclusive jurisdiction to deal with cases arising out of IBC.
However, like any other tribunal, NCLTs have also received indifferent treatment from the government and were left out in the open sun to survive on their own without any basic support in terms of infrastructure, staff, and facilities from the government.
Vacancy Of Members At NCLT
As informed in parliament last week by the Ministry of Corporate Affairs, 21,089 cases are pending in various NCLTs across the country, however the adjudication of these matters is in a sad state of affairs as there are huge vacancy of judicial and technical members. The government itself acknowledges that these NCLT benches are heavily loaded but still no appointment of members at NCLTs is forthcoming from the government.
The latest appointment of 21 members at NCLT in September 2021 was only made by the Government after the Supreme Court specifically directed the Government to appoint members to NCLT/NCLAT within a period of two months. Furthermore, the Government faced huge embarrassment when NCLT had 5 different acting presidents within a period of 11 days in June 2021 due to the retirement of members.
However, even after the appointment of 21 members, had it not been for virtual hearing, NCLTs would not have been able to function across the country and in the absence of virtual hearings, there would have been no other option but to close some NCLTs. Recently, while hearing a matter concerning Delhi Gymkhana Club, Supreme Court remarked that the time has come to declare the tribunals defunct. There are various benches of NCLTs which have no judicial members and judicial members of other NCLTs are holding those courts either in the second half of the day or on alternate days. A few examples of such temporary arrangements are as follows;
· There is no judicial member at NCLT Allahabad and the Judicial member, NCLT Kolkata Mr. V K Rajasekhar sit at NCLT Kolkata in the first half and then sits at NCLT Allahabad during the second half.
· Judicial Member, NCLT, Kolkata Mr. Rohit Kapoor is holding Bench II, NCLT Kolkata in first half and then sitting at NCLT Guwahati in the Second half.
· Similarly, there is no judicial member in NCLT Bench V, New Delhi, and the Judicial Member, Mr. ARK Sinha is holding Bench II NCLT, Delhi in the first half and then holding Bench V in the second half.
· The Judicial Member, NCLT Ahmedabad Bench sits in Ahmedabad on Monday-Wednesday and then sits in NCLT Indore on Thursday and Friday as well.
The situation is no less different at NCLAT which is functioning only with two judicial members. Justice Venugopal first holds court in New Delhi and then at NCLAT Chennai again thanks to virtual hearing. Three judicial members namely Justice Bansi Lal Bhat, AIS Cheema, and Jarat Kumar Jain have retired but not a single appointment is being made to the NCLAT by the Govt. and then these institutions are being burdened to hear complex commercial matters.
Lack Of Infrastructure
The infrastructure at NCLT specifically at NCLT New Delhi is in shambles. The courtrooms are cramped and NCLT Bench V, New Delhi is functioning from a room similar to the size of a small chamber. There is no space for the registry to keep files, the library has a sitting capacity of merely 10 people. There is no parking facility for lawyers and litigants at NCLT, New Delhi, and no canteen as well.
The same was the situation with NCLAT New Delhi until January 2020 which was highlighted by the NCLT Bar Association by filing a writ petition before the Delhi High Court wherein the High Court in its order dated 17.09.2019 recorded the lack of infrastructural facilities at NCLT & NCLAT. The Court further observed that;
"5. Looking to the work assigned to the aforesaid two institutions, namely, NCLT and NCLAT, under - (a) The Companies Act, 2013; (b) The Insolvency and Bankruptcy Code, 2019; and (c) The Competition Act, 2002, this work cannot be done without the availability of proper infrastructure and at a place where there is space for lawyers to stand, and the sitting arrangements are made for the lawyers"
Thereafter, the Govt allocated a different space to NCLAT but no action is being taken with regard to any improvement in the infrastructure of NCLT Delhi. The writ petition is still pending which was last heard on 29.03.2022 wherein the Delhi High Court directed the govt. to file an affidavit as whether they are allocating any additional space to NCLT New Delhi situated at the first floor of CGO Complex, New Delhi. The High Court further directed the Govt. to state whether it has identified a plot where both NCLT and NCLAT can be located.
As the pandemic is receding and the Courts are opening for physical hearings, the infrastructure of NCLT assumes significance as it is impossible to follow social distancing at NCLT. The NCLT Bar Association moved an application in the pending writ petition highlighting the same and other terrors
Lack Of Court Staff
The other major problem that NCLTs are facing, specifically NCLT New Delhi, is that they are crippled with huge vacancy of court staff. There is hardly any permanent staff at NCLT, New Delhi and the tribunal is being managed only by contractual staff.
A bare perusal of the notification section of the NCLT website will testament to the fact as on today the post of the registrar is lying vacant. Assistant is assigned to perform the functions of Asst. Registrar (In-Charge). Stenos and PS are getting recruited on a contractual basis. There are no permanent court masters at NCLT, New Delhi, and the tribunal is run by assistants and temporary staff.
Therefore, in totality, the NCLT & NCLAT though branded as the epicenter of economic legislation are crippled with various problems in every aspect due to the ignorant treatment of the Government. On one side, the Govt. is directing financial institutions to take actions against the defaulter corporate debtors and personal guarantors whereas the forum where this action will be taken is not in a position to bear the burden of the same.
Hence, there is a dire need to improve the infrastructure of NCLTs across the country and all stakeholders are required to take immediate measures to make the functioning of the tribunal effective.
The author is an Advocate practicing at New Delhi. Views are personal.