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  • Sonu Kumar

Enhancing Efficiency and Equity The Role of NCLT in India's Insolvency Landscape

By: Sonu Kumar, 4th year(8th Semester) BBA LL.B. , Lovely Professional University, Phagwara, Punjab.


This article talks about the role of the National Company Law Tribunal (NCLT) in insolvency proceedings in terms of the evolving landscape of corporate insolvency and bankruptcy in India. In India, the NCLT emerged as a top institution entrusted with the responsibility of adjudicating insolvency matters. This article analyzes how efficient NCLT is in creating a leading insolvency framework, which resolves issues of companies which are on the verge of collapsing and also protects stakeholders' interests. It enlightens the NCLT's jurisprudential developments, its procedures, and challenges faced while it is operated. Conclusively this article looks analyzes the role of NCLT, its impact on corporate insolvency, and also lays down potential areas for reform and improvement in the Indian insolvency ecosystem.

Keywords: National Company Law Tribunal (NCLT), insolvency proceedings, Insolvency and Bankruptcy Code, 2016, corporate insolvency, bankruptcy, jurisprudential developments, procedural complexities, stakeholders' interests, effectiveness, efficiency, reform, Indian insolvency ecosystem.


Enhancing Efficiency and Equity: The Role of NCLT in India's Insolvency Landscape


It is a new thing for India whereby the legislatory framework which addresses the insolvency of corporate bodies is mainly focused on liquidation. The IBC (Insolvency and Bankruptcy Code) success has been greatly determined by the NCLT, a quasi-judicial body that plays a major role in resolving insolvency issues.[1] 

The IBC was known for its time-consuming procedures to settle insolvencies, which often led to erosion of assets and hampered economic activities. In relation to traditional courts, the NCLT provides a process that is streamlined and time bound. It also allows businesses to continue operating while waiting for an outcome on their cases due to the emphasis by NCLT on strict timelines. The accelerated pace makes it possible to either come up with a quicker rebooting plan for the firm or carry out fast liquidation and asset distribution among creditors.

Not only do these efficiency gains sped up recovery process benefit creditors but they also lead to healthier corporate environment characterized by reduced uncertainties and potential losses associated with long insolvency episodes.


Ensuring Equitable and Open Creditor RecoveryThe NCLT gives priority to fair treatment of creditors when dealing with insolvency matters, because they are the backbone of any company. The interests of creditors are protected by the NCLT through:

Transparent Claim Adjudication: The NCLT oversees a transparent system for admitting and determining the validity of claims submitted by creditors. This ensures a fair process that is easy to predict, thus minimizing disputes as well as enhancing the chances for recovery.Level Playing Field: In its insolvency proceedings, NCLT adheres to certain uniform procedures. Such an approach narrows down the opportunity for undue influence from one creditor or stakeholder group; hence ensuring that all creditors can recover their credit balances justifiably.Restructuring Plans: The NCLT actively promotes and supports the development and implementation of restructuring plans. These plans are mainly focused to help companies to become solvent againwhich may include mergers and acquisition.

Saving jobs and economic value: A restructuring plan that has been successfully executed will not only result in the upliftment of recoveries for creditors but also save jobs and economic value associated with a going concern. The court’s approach to rescue transcends recovery encourages turnarounds whenever possible thus promoting sustainable corporate culture.  


Role and Functions of the NCLT 

Major functions of the NCLT include filing of applications after which insolvency professionals are appointed that can be interim or final. NCLT also looks how Resolution process is done and takes shareholders interest into consideration. When liquidation has to take place, NCLT orders the distribution of assets.[2]

1.      Acceptance of Insolvency Application: Creditors or the company may file an application to NCLT where they have filed for insolvency proceedings. This means that it approves whether CIRP should be commenced or not.


2.      Appointment of Insolvency Professionals: To manage insolvency processes, the NCLT chooses skilled persons such as Interim Resolution Professional (IRP)and Resolution Professional (RP). These people are assigned tasks such as asset valuation, communicating with creditors and developing resolution plans.


3.      Supervision of Resolution Processes: The CIRP is overlooked by NCLT to ensure compliance with the IBC timelines. It also addresses any disputes and permits extensions when appropriate.

4.      Safeguarding Stakeholders’ Interest: The NCLT acts as an unbiased authority guarding creditors, shareholders and the concerned company amongst other stakeholders in a just manner. It ensures that a fair process which results into optimum resolution is employed.[3]

5.      Ordering Distribution of Assets and Liquidation: If there is no workable resolution plan within the set time frames, then NCLT can order liquidation of company’s assets.

The NCLT is a major institution for Insolvency, but it does face operational challenges that slow down its work and the appellate court for NCLT decisions is NCLAT (National Company Law Appellate Tribunal).[4] There are delays due to backlogs, infrastructure constraints and the impact of legal reforms on timely resolution of insolvency cases.

Jurisprudential Developments and Legal Precedents 

The NCLT's decisions have contributed significantly to shaping insolvency jurisprudence in India. In the case of Prowess International Pvt. Ltd. Vs. Parker Hannifin India Pvt. Ltd[5], it was held that CIRP is not a recovery proceeding to recover the dues of the creditors. The Code is an Act relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons and to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including the Government dues.

One of the principal objects of the Code is providing for revival of the CD and to make it a going concern. Every attempt has to be first made to revive the concern and make it a going concern, liquidation being the last resort held in the case of K.N. Rajakumar Vs. V. Nagarajan & Ors.[6]

In the case of Manipal Media Network Ltd. Vs. Vishwakshara Media Pvt. Ltd. It was held that the law is very clear that it is enough if under section 4 of the Code the unpaid debt is more than the threshold value of ₹ 1 lakh for acceptance of application under section 9 of the Code.[7] 



Insolvency and Bankruptcy law of India has been strengthened by the National Company Law Tribunal (NCLT). The NCLT has made corporate insolvency resolution (CIRP) more equitable and efficient by simplifying processes and treating creditors fairly. Creditors benefit a lot from this emphasis on faster resolution through quick recoveries, besides avoiding uncertainties linked to lengthy insolvency procedures that may assist in generating a healthier business environment.This role of the NCLT in shaping jurisprudence through land mark decisions is less significant when viewed against the challenges associated with backlog and infrastructure constraints. Core objectives of the Insolvency and Bankruptcy Code (IBC) are in line with efforts to revive potentially viable companies and maximize asset value. Going forward, it will be essential for NCLT to keep growing and working efficiently as this will act as a crucial foundation for a strong and effective insolvency framework that encourages business rescue, credit availability, as well as maintaining a sound corporate culture in India.Top of Form



[1] National Company Law Tribunal (NCLT) Official Website. Retrieved from

[2] National Company Law Tribunal (Procedure for Admission of Application, Reply to the Notice and Rejoinder, Filing of Documents, and Conduct of Proceedings Before the Tribunal) Rules, 2016.

[3] National Company Law Tribunal (Amendment) Rules, 2022.

[4] National Company Law Appellate Tribunal (NCLAT) Official Website. Retrieved from

[5] Prowess International Pvt. Ltd. Vs. Parker Hannifin India Pvt. Ltd. [CA (AT) (Ins.) No. 89 of 2017] NCLAT 18.08.2017

[6] K.N. Rajakumar Vs. V. Nagarajan & Ors. [Civil Appeal No. 2901 of 2021] SC 15.09.2021

[7] Manipal Media Network Ltd. Vs. Vishwakshara Media Pvt. Ltd. [CA (AT) (Ins.) No. 369 of 2020] NCLAT 21.06.2021.



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