The Supreme Court on Thursday emphasized that appointments to the National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) should not be “political”, even as it raised serious concerns over delays and inefficiencies affecting India’s insolvency process.

“The appointment of new members should be done in a manner that coincides with the retirement date of the incumbent members in a transparent manner to avoid such operational inefficiencies. Persons with high ideals and impeccable integrity should be appointed as members of the NCLT and NCLAT. There should be no political appointment,” said a bench comprising Chief Justice of India Dhananjaya Y Chandrachud and Justices JB Pardiwala and Manoj Misra.

In its judgment ordering the liquidation of debt-ridden Jet Airways, the top court addressed a host of issues relating to the functioning of NCLT and NCLAT, criticizing the courts for “failure to timely admit and dispose of” applications under the Code of Insolvency and Bankruptcy. (CIB).

Noting that prolonged delays harm stakeholders and undermine the very purpose of the Code, the court underlined the need for “time-bound” adjudication as it highlighted that timely resolutions help prevent erosion of corporate value and protect investor confidence, both essential for India’s corporate development. restructuring efforts.

The ruling also noted structural challenges, including membership shortages, inadequate infrastructure and scheduling inefficiencies. According to the court, courts must adopt efficient practices to manage their growing caseload, particularly in high-risk insolvency matters. The court rebuked the courts’ inconsistent working hours and highlighted that “urgent lists” are often overlooked, affecting the effectiveness of the resolution process.

“As a consequence, the strict deadlines provided for in the IBC are not met. Priority should be given to filling such vacancies with experts who have adequate knowledge in the field, besides addressing the infrastructure needs of the courts to avoid any adverse effect on the resolution process. There must be strict mandates on the operation of the courts within their normal working hours,” he maintained.

The apex court further put NCLT and NCLAT “on notice”, stating that any disregard for Supreme Court orders or judicial propriety would not be tolerated, and urged them to move from “mere approvals” to a more robust and responsible approach. .

“The NCLT and NCLAT must seriously rethink their approach towards the admission and disposal of insolvency matters. They should not act as a mere approving authority and should take seriously their role in ensuring time-bound hearings and resolutions. Adequate and effective hearings should be held, both virtually and in courts, for insolvency matters of public importance and the NCLT and NCLAT should work seriously to ensure that the IBC, 2016 achieves its stated objective,” he said.