NCLT, NCLAT Are Government’s ‘Lifeline’, Need Basic Facilities: Supreme Court

The Supreme Court on Monday expressed concern over inadequate infrastructure and staff shortages at National Company Law Tribunal (NCLT) benches across the country, observing that institutions handling disputes involving thousands of crore of rupees cannot be expected to function without basic facilities.

A Bench of Chief Justice of India Surya Kant and Justices Joymalya Bagchi and V Mohana was hearing a suo motu case concerning the appointment of judicial and technical members and inadequate infrastructure at the NCLT. The NCLT Principal Bench Bar Association has filed an intervention application highlighting member vacancies, half-day sittings, inadequate physical and technological infrastructure and the absence of permanent support staff, Live Law and Bar & Bench report.

‘Government’s Lifeline’

“They are the government’s lifeline now. All nationalised banks, banking sector, and all infrastructure projects are also matter of examination before these tribunals only,” the Court observed.

The observation underlined the crucial role the tribunals play in resolving high-value commercial and insolvency disputes. With matters involving thousands of crore of rupees coming before the NCLT, the concerns raised over basic facilities and staffing assume particular significance for the tribunal’s efficient functioning and the government’s ease-of-doing-business objectives.

Senior Advocate Sanjiv Sen, appearing for the Bar Association, told the Court that the NCLT’s infrastructure was “in shambles” and required urgent attention.

“The infrastructure is in shambles. I have highlighted four major broad issues to be addressed at the earliest,” Sen said.

Vacancies Hit Sittings

The Bar Association said at least 18 NCLT benches were holding only half-day sittings under the roster effective from August 24 because of vacancies and the retirement of members.

It also pointed out that the sanctioned strength of the NCLT remained 63 despite the substantial expansion of its jurisdiction after the Insolvency and Bankruptcy Code (IBC) came into force.

Sen said all benches at the Principal Bench were being forced to sit for only half a day and warned that another 18 vacancies were likely to arise over the next year as members retire.

“Today in the Principal Bench, all benches are forced to sit half day, all benches! And across the country, this is the problem. Within the next one year there will be 18 more vacancies because members are retiring,” Sen submitted.

The Bar Association urged the Court to consider allowing members nearing retirement to continue for some more time until the vacancies are filled. Sen referred to the course adopted in proceedings concerning the Revenue Bar Association.

Court Questions Basic Facilities

The Court questioned how an institution could function effectively without buildings, adequate staff, judgment writers and proper technological support.

“How will the institution function unless you provide the basic amenities? We don’t have buildings, we don’t have staff, we don’t have judgment writers,” the Chief Justice observed, while referring to the financial significance of matters coming before the tribunal.

Sen also highlighted the shortage of permanent staff and told the Court that 246 staff members, including court masters, were temporary.

The concerns over vacancies and infrastructure are closely linked. Even as the tribunal handles commercially significant disputes, shortages of members and support staff, coupled with inadequate facilities, risk affecting its ability to deal with cases efficiently.

Centre Asked To File Status Report

After hearing the submissions, the Supreme Court directed the NCLT Principal Bench Bar Association to collect data on infrastructure available at all regional NCLT benches and place it before the Court in a collated, tabulated form.

The Court also directed the Union Government to file a status report detailing the basic amenities provided to the Principal Bench and regional benches.

It further asked the government to identify, in consultation with the NCLT President, the amenities that are urgently required.

Sen clarified that the proceedings were not adversarial and said the Bar Association intended to assist the Court in its capacity as an officer of the Court. He submitted that the efficient functioning of the tribunals was important for the government’s ease-of-doing-business objectives as well as the functioning of nationalised banks and infrastructure projects.

The matter will be taken up for further consideration after two weeks.