Panel makes dedicated IBC benches at NCLT mandatory, doubles summary liquidation threshold

The Joint Committee of Parliament on the Corporate Laws (Amendment) Bill, 2026 has recommended that dedicated IBC benches at the National Company Law Tribunal (NCLT) for insolvency cases be constituted as a binding statutory obligation rather than left to administrative discretion, and has doubled the monetary threshold for summary liquidation to Rs 2 crore.

In its report presented to the Lok Sabha on 4rd August, the 31-member panel chaired by Sudheer Gupta recommended substituting the words “may, if he considers appropriate” with “shall” in the proposed sub-section (4A) of Section 419 of the Companies Act, 2013, which Clause 96 of the Bill inserts to empower the NCLT President to constitute special benches. The clause also extends Section 419(4) to cover all provisions of the Insolvency and Bankruptcy Code, 2016.

The Committee held that dedicated IBC benches must be established through a binding statutory obligation rather than an enabling administrative option, arguing that a clear statutory separation of judicial architecture is essential to enforce institutional accountability and balance workload distribution. Benches focused solely on insolvency, it said, would guarantee strict adherence to statutory resolution timelines and significantly help avoid value erosion of distressed assets, while insulating regular benches from unplanned procedural urgencies so they can handle routine reorganisations, mergers and conversions in a predictable manner. A proviso retains the President’s discretion to constitute special benches for cases arising only under the Companies Act.

Separately, the Committee recorded that time is of the essence in corporate restructuring and insolvency resolution and that procedural delays inevitably lead to severe asset value erosion, recommending that the Ministry of Corporate Affairs take urgent steps to increase the number of tribunal benches.

On summary liquidation, the Committee said the Ministry has agreed to raise the threshold under Section 361(1) from Rs 1 crore to Rs 2 crore or such higher amount as may be prescribed. Clause 78 also permits registered insolvency professionals to be appointed alongside Official Liquidators. The panel made its acceptance conditional on the Ministry notifying rules covering operational guidelines for insolvency professionals, digitised workflows on MCA21 and the revised thresholds, in consultation with professional bodies.

The appellate route against summary liquidation orders was modified. Clause 80 inserts Section 365A providing a 45-day appeal to the NCLAT against orders of the Central Government. The Committee held that an unyielding limitation period could prejudice genuine litigants facing unforeseen impediments, and the Ministry agreed to add a proviso allowing the appellate tribunal to entertain appeals within a further 45 days on sufficient cause being shown.

The panel also proposed a new Clause 94A amending Section 415 to insert the word “judicial” after “senior-most” in both sub-sections, so that the senior-most judicial member discharges the functions of NCLT President or NCLAT Chairperson during a casual vacancy. It said express identification of the acting head would strengthen institutional certainty and uphold the judicial character and independence of the specialised fora. Clause 95, resolving tied decisions in appellate benches through reference to additional members with a cumulative majority, was accepted unchanged.

Routine restoration appeals filed within three years shift from the NCLT to the Regional Director under Clause 76, with complex cases involving wider stakeholder rights under Section 252(3) remaining with the Tribunal. Addressing stakeholder concerns that Section 271(c) overlaps with the IBC, the Committee recorded the Ministry’s clarification that the two serve distinct functions — the Code governs creditor-led insolvency for debt defaults, while Section 271(c) allows statutory authorities to intervene in cases of corporate fraud and misfeasance.

On director disqualification, the Committee cut the cooling-off period under the proposed Section 164(1)(j) to two years for auditors, secretarial auditors, cost auditors, registered valuers and insolvency professionals of a company or its holding, subsidiary or associate company. It said two years would adequately safeguard board independence while avoiding undue restrictions on such professionals, and recommended omitting the “fit and proper person” criterion as excessive delegation. Where services are rendered through a firm or LLP, the bar attaches to the specific partners who provided them.

The Committee endorsed designating the Insolvency and Bankruptcy Board of India as the Valuation Authority under Section 247, noting it leverages an established statutory regulator and avoids constituting a separate body, with the NCLAT as the appellate forum under Clause 94.

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