Why India May Need a Dedicated National Insolvency Tribunal

Nearly a decade after the Insolvency and Bankruptcy Code (IBC) transformed India’s creditor-debtor landscape, attention is shifting from statutory design to institutional capacity. While the Code altered lending behaviour, recovery expectations, and the culture of corporate distress resolution, its effectiveness is now being constrained by the forum that administers it — the National Company Law Tribunal (NCLT). The question confronting policymakers is no longer whether the IBC is sound in principle, but whether the current adjudicatory architecture can deliver on its promise of speed and certainty.

How the NCLT’s dual mandate took shape

The National Company Law Tribunal was originally envisaged under the Companies Act, 2013 as a specialised forum for company law disputes — oppression and mismanagement, mergers, capital reduction, and shareholder remedies. Within months of its operationalisation, however, a policy decision placed corporate insolvency resolution under the same forum through the Insolvency and Bankruptcy Code.

At the time, the consolidation appeared administratively efficient. Over the years, however, the volume and complexity of the two jurisdictions have grown in very different ways. Insolvency proceedings demand speed, tight timelines, and commercial decisiveness; company law disputes often require prolonged judicial engagement, valuation exercises, and careful balancing of shareholder interests. Housing both within a single tribunal has produced systemic strain.

Why insolvency cannot be treated as routine company law

Insolvency is not merely another subset of corporate regulation. The IBC is built on the assumption that value is preserved through swift intervention. Delays erode enterprise value, distort creditor recoveries, and undermine confidence in the resolution process.

Recent data from the Insolvency and Bankruptcy Board of India’s Q2 2025–26 newsletter makes this dysfunction visible. The average time from commencement to approval of a resolution plan now stretches to 821 days. Even after excluding time spent in litigation or stayed proceedings, the average remains 688 days — far beyond the statutory limit of 270 days. Of nearly 1,900 ongoing corporate insolvency resolution processes (CIRPs), over three-fourths have breached the outer timeline, and more than 60 per cent have been pending for over two years.

These figures point less to individual inefficiency and more to structural overload. A tribunal juggling insolvency alongside complex company law disputes is poorly positioned to deliver the tempo the Code presupposes.

What the Parliamentary review acknowledges — and what it misses

The recent report of the Parliamentary Standing Committee on Finance examining the working of the IBC recognises many of these pressures. It flags chronic delays before the NCLT and the appellate tribunal, notes shortages of members and benches, and recommends capacity augmentation and tighter procedural discipline.

Yet the report rests on an implicit assumption: that the existing institutional framework is fundamentally sound, and that delays are primarily a matter of resources and process. What it does not squarely address is whether a time-sensitive insolvency regime can coexist indefinitely with slower-moving company law adjudication within the same forum without compromising both.

The institutional design problem at the heart of the delay

Institutional design matters as much as legislative intent. When a single adjudicatory body is pulled in opposing directions — speed on one hand, depth on the other — it struggles to meet the demands of either. Insolvency cases end up competing for judicial time with mergers, governance disputes, and shareholder litigation.

A dedicated National Insolvency Tribunal would resolve this tension at its root. By focusing exclusively on insolvency and bankruptcy, such a body would allow specialised expertise to develop, stabilise jurisprudence, and normalise predictable timelines. Comparative experience bears this out: jurisdictions such as the United States, with dedicated bankruptcy courts, demonstrate how specialisation improves consistency and outcomes.

What happens to company law disputes?

Creating a separate insolvency forum inevitably raises concerns about the future of company law adjudication. These matters, particularly oppression and mismanagement proceedings, demand careful factual scrutiny and doctrinal development. They are ill-suited to the compressed timelines of insolvency.

India already possesses an alternative institutional pathway. Transferring company law matters to the commercial divisions of High Courts would ensure that such disputes receive sustained judicial attention under structured timelines. This reallocation would simultaneously unclog the insolvency system and improve the quality of corporate adjudication.

The path to reform — and why delay carries risks

Implementing such a restructuring would require amendments to sections 408 to 434 of the Companies Act, alongside procedural changes. This is neither radical nor unprecedented. India successfully managed the transition from the Company Law Board and High Courts to the NCLT in 2016 through a phased approach that minimised disruption.

The larger risk lies in inaction. Allowing the present congestion to persist threatens to reduce the IBC to a well-drafted law undermined by poor execution. The Code’s architecture remains coherent; what is misaligned is the forum tasked with enforcing it.

A dedicated National Insolvency Tribunal would restore clarity of purpose, reinforce creditor confidence, and bring the insolvency ecosystem closer to the speed and predictability the law was designed to achieve. The latest data is not merely a warning — it is evidence that institutional recalibration can no longer be postponed.