'Situation Is Grim' : Supreme Court Takes Suo Motu Case On NCLT Delays In Approving Resolution Plans

The Supreme Court on Wednesday (April 29) took suo motu cognizance of systemic delays in approval of resolution plans by the National Company Law Tribunals, particularly at its Principal Bench in New Delhi. Also, the Court took note of the shortage of judicial and technical members across all NCLT benches. Taking note of a report submitted by the Registrar of the NCLT Principal Bench, as directed on the previous date of hearing, a Bench of Justice J.B. Pardiwala and Justice K.V. Viswanathan described the situation as “grim and dismal.” The Court recorded that 383 applications for approval of resolution plans are currently pending, with delays ranging from 48 days to 738 days, and in some cases extending up to four years. It observed that such prolonged delays defeat the very purpose of the Insolvency and Bankruptcy Code, as they undermine its core objective of ensuring time-bound resolution, preserving asset value, and maintaining economic efficiency. Further, the Bench was informed that the tribunal is grappling with a severe shortage of judicial and technical members, significantly affecting its capacity to adjudicate matters within prescribed timelines. While the sanctioned strength of the NCLT benches stands at 63 members, only 28 judicial members and 26 technical members are currently in position. The Court noted that this deficit has led to frequent changes in bench composition, resulting in half-day sittings and further delays. Additionally, a large number of objections filed by stakeholders against resolution plans have contributed to prolonged pendency, with limited interim relief being granted in most cases. Also, when informed about the contractual nature of the Registrar's post, the Court described the situation as “unheard of,” underscoring that such arrangements are incompatible with the role of a tribunal entrusted with high-stakes commercial adjudication. Resultantly, the Court directed the matter to be placed before the Chief Justice of India for passing of an appropriate order. “…we take suo motu cognisance of the aforesaid in larger public interest. The issues need to addressed on war footing. Otherwise, the purpose of enacting IBC would stand frustrated. As we have taken suo motu cognisance let the matter be placed before CJI for further orders.”, the court said. Background The bench heard the dispute that arises from insolvency proceedings where IIFL's ₹85 crore claim was initially rejected by the Resolution Professional in 2020 but later allowed by the National Company Law Tribunal and upheld by the National Company Law Appellate Tribunal in 2023, prompting appeals before the Supreme Court. Meanwhile, the CoC approved a resolution plan on July 4, 2024, which was filed for approval before the NCLT on July 12, 2024. However, the application has remained pending for nearly two years, stalling the insolvency resolution process. The delay is further complicated by a July 3, 2024 arbitral award that casts doubt on IIFL's claim, finding the underlying loan documents to be tainted by fraud. In this backdrop of a disputed claim and prolonged inaction, the Supreme Court flagged the delay as indicative of a broader systemic issue in NCLT approvals. Therefore, on April 16, 2026, the Court directed both the NCLT Principal Bench, New Delhi and the Insolvency and Bankruptcy Board of India (IBBI) to furnish comprehensive nationwide data on pending approval applications and reasons for such delays, and posted the matter for today for further deliberation, where it took suo motu cognizance of the delay in approval of the resolution plan pending before the NCLTs. Cause Title: AVJ HEIGHTSS APARTMENT OWNERS ASSOCIATION VERSUS IIFL FINANCE LIMITED & ANR. Click Here To Read/Download Order

'Situation Is Grim' : Supreme Court Takes Suo Motu Case On NCLT Delays In Approving Resolution Plans

Yash Mittal

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'Situation Is Grim' : Supreme Court Takes Suo Motu Case On NCLT Delays In Approving Resolution Plans

Yash Mittal

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