Challenges with the IBC's Implementation
The Insolvency and Bankruptcy Code (IBC) was introduced to resolve insolvencies efficiently but has faced challenges over time.
Institutional capacity and procedural efficiency, especially with the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT), are significant concerns.
The recent Jet Airways case revealed structural weaknesses in the insolvency system.
Institutional and Procedural Issues
NCLT faces a "temporal disjunction" as its structure, established in 1999, struggles to meet current demands.
With a limited number of members and inconsistent operation of benches, delays have increased, making insolvency resolutions take longer (716 days in FY2023-24).
NCLT members often lack the necessary domain expertise to handle complex insolvency cases, affecting decision-making.
Need for Structural and Procedural Reforms
Bureaucratic inefficiencies, like poor management of urgent listings, and ignoring court orders have undermined institutional integrity.
The current framework’s procedural rigidity, including mandatory hearings for progress reports, causes delays.
There is insufficient use of alternative dispute resolution methods to reduce strain on the system.
Future Directions and Recommendations
Reform proposals like mandatory mediation before insolvency applications bring hope for improvements.
A hybrid model combining judicial experience and domain expertise is needed for more effective case resolution.
Specialized benches and better infrastructure, such as qualified support staff and courtrooms, can enhance system efficiency and sustainability.
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