India’s corporate insolvency system is facing a crisis of capacity and independence. With thousands of cases pending and businesses waiting years for resolution, the Supreme Court has questioned whether excessive government control is undermining the very institution meant to settle corporate disputes efficiently.
On Thursday, the Supreme Court strongly criticised the Ministry of Corporate Affairs (MCA) for allegedly taking excessive control of the National Company Law Tribunal (NCLT), compromising its administrative autonomy and affecting its functioning.
Chief Justice of India Surya Kant observed that the tribunal had been "completely hijacked" by the ministry, adding that the government's desire to maintain a firm grip over the institution was unfortunate.
The remarks came during suo motu proceedings examining administrative shortcomings at the NCLT, which handles corporate insolvency cases under the Insolvency and Bankruptcy Code (IBC) and disputes under the Companies Act.
The court identified several issues affecting the tribunal's independence and efficiency:
Excessive administrative control by the corporate affairs ministry, potentially undermining the NCLT's autonomy.
Shortage of judicial and technical members, restricting the number of regular hearings.
Greater priority given to insolvency proceedings, delaying cases filed under the Companies Act.
Poor infrastructure, inadequate courtrooms and insufficient permanent support staff.
Technical disruptions affecting the tribunal's document management system.
The NCLT Bar Association brought these concerns before the court, highlighting the growing strain on the tribunal's functioning.
According to the association, 18 NCLT benches have been conducting only half-day sittings because of a shortage of members.
As of June 30, 2026, the tribunal had 26 judicial members and 25 technical members, including its president, against a sanctioned strength of 63.
The association also pointed to 246 proposed support staff positions that had not become operational. Court masters, bench officers and other employees largely continue to work under temporary or contractual arrangements.
At the principal bench in Delhi, deteriorating building conditions have reportedly forced the closure of certain floors, further restricting courtroom availability.
Attorney General R Venkataramani informed the court that appointment recommendations were being processed. He also proposed a joint meeting involving government officials, the NCLT president and representatives of the Bar Association.
The Supreme Court subsequently directed the presidents of the NCLT and the National Company Law Appellate Tribunal (NCLAT) to submit comprehensive proposals outlining their staffing, infrastructure and administrative requirements.
The institutional shortcomings come at a time when India's insolvency resolution process is already struggling with prolonged delays.
Key figures illustrate the scale of the problem:
30,600 cases: Pending before the NCLT as of March 2025.
713 days: Average duration of ongoing corporate insolvency resolution processes.
78%: Share of ongoing insolvency cases exceeding the statutory 270-day timeline.
853 days: Average time taken to complete insolvency cases during FY25.
30 benches: Number of NCLT benches handling both insolvency and Companies Act matters, according to the Economic Survey 2025-26.
Delays at the NCLT have consequences beyond the courtroom. For banks, prolonged insolvency proceedings mean delayed recovery of outstanding loans. For businesses, they can lock up capital, increase legal expenses and complicate restructuring plans.
Potential investors seeking to acquire distressed companies also face uncertainty when resolutions remain pending for years.
The Supreme Court's intervention has therefore brought two fundamental issues into focus: whether the NCLT has sufficient resources to function efficiently and whether it enjoys the institutional independence required to deliver timely decisions.