Expert committee examining company law says threshold of cases heard by NCLT must be raised
As of now, the tribunals hear violations involving fines of over Rs 5 lakh. Some 9,000 cases are pending before NCLT benches.
A committee set up by the government has suggested a higher threshold for cases referred to the National Company Law Tribunal (NCLT), according to a media report.
The 14-member committee has also suggested decentralisation of power to the Registrar of Companies (RoCs), regional directors and an in-house adjudication mechanism to free-up the overburdened NCLT benches, The Economic Times reported. The report said that changes suggested by the committee could be implemented via a modification of rules and won’t require amendments to the law.
As of now, the tribunals hear violations involving penalties of over Rs 5 lakh. A decision on what the new limit must be has been left to the Centre. Some 9,000 cases are pending before NCLT benches, the newspaper added.
In March this year, the State Bank of India (SBI) said that the NCLT, adjudicating on insolvency cases, requires superior infrastructure that allows the benches to be set up in proportion to the number of companies active in the region.
The central government has set up 11 benches of the NCLT. Of the 11, two are in Delhi including the principal bench, and one each at Ahmedabad, Allahabad, Bengaluru, Chandigarh, Chennai, Guwahati, Hyderabad, Kolkata and Mumbai.
"We suggest that the number of NCLT benches be set up in proportion to state-wise active companies operating in the region," said SBI, some of whose large non-performing assets (NPAs), or bad loans, had already been referred to the NCLT.
The NCLT was set up under the Insolvency and Bankruptcy Code (IBC) for speedier resolution of non performing assets (NPAs) in the Indian banking system, which have crossed Rs 9 lakh crore.
"Areas with high concentration of active companies, namely, Mumbai, Delhi, Kolkata etc. require commensurate bench strength for efficient disposal of cases," the SBI Ecowrap report, authored by Chief Economist Soumya Kanti Ghosh, had said.
With inputs from IANS
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