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NEW DELHI: Despite efforts by the government and the Insolvency and Bankruptcy Board of India (IBBI), there is fresh slippage in the share of corporate insolvency cases going beyond the mandated 270 days for resolution, with an average 521 days taken for conclusion of the process.
Data released by IBBI showed at the end of June, 65% of the cases have dragged on for over 270 days, compared to 61% a year ago and 75% at the end of June 2021.
IBBI, however, said it is seeking to close various processes at the earliest and several steps are being taken to improve the overall outcome of the code. A key concern for most stakeholders is the delay in the resolution process as cases have gone to multiple forums and several objections have been raised during the exercise.
“The continuing increase in the percentage of cases pending for more than 270 days before the tribunals stems from the jurisprudence established by the courts whereby the time limit prescribed in the code has been held to be directory and contingent on the facts of each case. This has diluted the essence of time in the resolution process. This further gets exacerbated by the plethora of interlocutory applications filed during each resolution process for various reasons. Thus, the time expended in adjudication of such applications causes an accumulation of delays. Given the steadily increasing number of actions/ applications before the tribunals, it is crucial that the courts revisit the jurisprudence surrounding the timelines mandated under the Code such that the prescribed timelines are strictly adhered to. Thus, it will be a welcomed move if the courts can categorise various applications on the basis of gravity and a set time limit and mode of disposal for each such category. Furthermore, any deviance from prescribed time-limits may be liable to attract strict consequences,” said Yogendra Aldak, partner at Lakshmikumaran & Sridharan.
Data released by IBBI showed at the end of June, 65% of the cases have dragged on for over 270 days, compared to 61% a year ago and 75% at the end of June 2021.
IBBI, however, said it is seeking to close various processes at the earliest and several steps are being taken to improve the overall outcome of the code. A key concern for most stakeholders is the delay in the resolution process as cases have gone to multiple forums and several objections have been raised during the exercise.
“The continuing increase in the percentage of cases pending for more than 270 days before the tribunals stems from the jurisprudence established by the courts whereby the time limit prescribed in the code has been held to be directory and contingent on the facts of each case. This has diluted the essence of time in the resolution process. This further gets exacerbated by the plethora of interlocutory applications filed during each resolution process for various reasons. Thus, the time expended in adjudication of such applications causes an accumulation of delays. Given the steadily increasing number of actions/ applications before the tribunals, it is crucial that the courts revisit the jurisprudence surrounding the timelines mandated under the Code such that the prescribed timelines are strictly adhered to. Thus, it will be a welcomed move if the courts can categorise various applications on the basis of gravity and a set time limit and mode of disposal for each such category. Furthermore, any deviance from prescribed time-limits may be liable to attract strict consequences,” said Yogendra Aldak, partner at Lakshmikumaran & Sridharan.
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