Over 21,000 cases pending with NCLT, government informs parliament

The government has informed parliament that 21,205 cases are pending with different benches of National Company Law Tribunal (NCLT) as on 31 January 2023. Of the total pending cases, 12,963 cases are under Insolvency and Bankruptcy Code (IBC), 1,181 cases are related to merger and amalgamation (M&A), and 7,061 other cases.

Responding to a query in Lok Sabha, Minister of Corporate Affairs Rao Inderjit Singh informed the lower house of parliament that as on 31st December, 2022, 611 Corporate Insolvency Resolution Processes (CIRPs) have yielded resolution, where the realizable value to the financial creditors have been approximately Rs. 2.44 lakh crore. Since the inception of the Insolvency and Bankruptcy Code, 2016, a total of 6199 CIRPs have commenced as on 31st December, 2022.

NCLT has 15 benches across the country and has 40 members – 20 judicial and 20 technical members. Often high pendency as well as delay in cases are attributed to poor strength of NCLT benches as well as limited number of NCLT.

Meanwhile, in a query related to harassment of customers by banks and NBFCs under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, minister of finance told parliament that any aggrieved debtor/borrower has recourse to filing of Securitisation Application in the Debts Recovery Tribunal (DRT) against action of secured creditor/financial institution under the SARFAESI Act. The decision of DRT can be challenged before the Debts Recovery Appellate Tribunal (DRAT).

The minister said that the SARFAESI Act provides an enabling legal framework for banks and financial institutions to recover their dues exceeding Rs 1 lakh by proceeding against secured assets of the borrower/guarantor without the intervention of the court/tribunals.

In order to address any concerns regarding property valuation, there are adequate provisions under Rule 8 (5) of the Security Interest (Enforcement) Rules, 2002 under the SARFAESI Act, that cast a duty on the Authorised Officer of the secured creditor (bank or financial institution) to obtain the valuation of the property from an approved valuer, which is taken in to consideration while fixing reserve price in consultation with secured creditor before putting the property on sale.

He further said that the Act provides that, where any action has been taken against a borrower under the provisions of sub section (4), all costs, charges and expenses which in the opinion of the secured creditor, have been properly incurred by him or any expenses incidental thereto, shall be recoverable from the borrower and the money which is received by the secured creditor shall , in the absence of any contract to the contrary, be held by him in trust, to be applied firstly, in payment of such costs, charges and expenses and secondly in discharge of the dues of the secured creditor and the residue of the money so received shall be paid to the person entitled thereto in accordance with his rights and interests.

Also Read: NCLT performance in insolvency & bankruptcy cases