This year’s Economic Survey contains a figure that should trouble all stakeholders in the Indian insolvency system: approximately 30,600 cases are still pending before the National Company Law Tribunal, with a projected resolution time nearing a decade at the present rate of disposal.
The Insolvency and Bankruptcy Code was meant to transition India out of the ‘creditor’s graveyard’ era, wherein recoveries took anywhere between 6-8 years and resulted in no more than 15%-20% of the claim. What the Survey revealed was the NCLT’s transformation from a platform for resolution to a war zone for litigation.
Ironically, S&P Global Ratings has upgraded the Indian insolvency framework from Group C to Group B, recovery percentages have increased to 30% from the pre-IBC levels, and resolution-to-liquidation ratios risen to 91%. However, a paradox persists. The success of the IBC in establishing creditor rights and commercial certainty has made NCLT jurisdiction exceptionally precious. The Survey reports that of the CIRP cases resolved by September 2025, 57% resulted in going-concern orders. Think about the numbers: 1,223 cases withdrawn under Section 12A and 1,342 cases resolved through ‘appeal, review, or settlement’. Withdrawals at
such late stages under Section 12A indicate the fact that creditors agree to settle
not because the system is working but because the cost of institutional delay has become higher than disputing claims.
The Survey correctly identifies capacity issues with only 30 benches of the NCLT dealing with cases under both the IBC and the Companies Act, and almost 24 operating on half-day timings as of early 2025. However, the numbers obscure a far more fundamental issue. Section 60(5) of the IBC, designed to centralise jurisdiction by conferring the NCLT’s jurisdiction over all matters, has become a delay multiplier. Every commercial dispute between parties with a tangential relationship to the corporate debtor is thereby transformed into an insolvency dispute that must be adjudicated by the NCLT. The result is that tribunals originally designed to supervise time-bound resolutions are instead bogged down in adjudicating an endless stream of interlocutory applications, challenges to jurisdiction, and appeals.
This is a design problem. When procedure becomes sufficiently complex, delay becomes a tool. Sophisticated parties can afford to fight an endless battle and thereby derive strategic benefits: they can time their exits, outlast smaller creditors, and reshape the Committee of Creditors through attrition rather than merit.
The guarantee of procedural fairness under Article 21 is not merely about access to tribunals; it is also
about the reasonableness of the process. A decade to dispose of insolvency is
not delay; it is a denial of the justice promised by the statute.
Even more disturbing is the Article 14 issue that the Survey implicitly raises. The same statute, with the same neutral language, leads to vastly different results based on litigants’ capacity to withstand delay. Institutional creditors with in-house counsel always do better than operational creditors who cannot afford constant representation.
The Survey’s admission that the Pre-Packaged Insolvency Resolution Process has admitted only 14 cases since 2021 is particularly illuminating. The purpose of the PPIRP was to relieve congestion in the NCLT for MSMEs. The fact that it has failed so miserably proves that innovation is no match for institutional failure.
The Survey’s solution to add more benches, more members, better infrastructure is symptom-focused. What is needed is a radical re-reading of the NCLT’s adjudicatory function. Should it adjudicate all jurisdictional disputes or should it adopt a presumption of limited intervention?
India’s insolvency regime no longer disciplines time, it is disciplined by litigation. The IBC is failing because procedural complexity has made temporal predictability a tradable commodity.
Akhil Yadav studies at Gujarat National Law University, Gandhinagar