Efficacy of Adjudication Process of Corporate Insolvency Resolution Process (CIRP): Law and Economics of National Company Law Tribunal (NCLT)
-
Hiteshkumar Thakkar
,
Pranay Agarwal
Abstract
National Company Law Tribunals (NCLTs) form the backbone of the institutional setup of the corporate law mechanism. The tribunals though were initially given a minimal role in the judicial procedure of the corporate world and were seen with scepticism, their significance could not be ignored for long. With the increase in insolvency disputes, the NCLTs were even given the jurisdiction to handle the cases regarding the Insolvency and Bankruptcy Code (IBC) and Corporate Insolvency Resolution Process (CIRP) . However, the efficiency of these tribunals has to be inspected with respect to CIRP cases for knowing the clear picture. In this paper, an economic analysis of the working of the NCLT Ahmedabad is undertaken to get a better understanding of the efficiency of the NCLTs in general. The study relies on qualitative tools such as interviewers conducted by relevant stakeholders and observing NCLT court proceedings to capture the measurement reality of NCLT efficiency. The study also relies on descriptive statistics of time taken and recovery to measure the efficacy of NCLT.
Funding source: GNLU Faculty Seed Grant Programme (2022–2023)
Award Identifier / Grant number: 200000/- INR (AC-TEB1.2.P4)
Realization of the claims by the financial creditors as approved by the NCLTs between 2017–22. Source – IBBI QY Reports (1st QY 2017 – 3rd QY 2022).
| Realisation by FCs (in % of claims filed) | Ahmedabad | Mumbai | New Delhi | Kolkata |
|---|---|---|---|---|
| Mean | 34.19110295 | 33.15621377 | 45.97307563 | 35.04587785 |
| Median | 26.24332368 | 24.02940734 | 41.86319472 | 23.8289851 |
| Mode | #N/A | 100 | 100 | 100 |
| Standard deviation | 29.61549964 | 30.07360483 | 33.32058358 | 32.03016247 |
| Range | 106.3063063 | 107.6341997 | 145.0818295 | 111.5479076 |
| Minimum | 0 | 0.055800294 | 0.560372304 | 0.279484705 |
| Maximum | 106.3063063 | 107.69 | 145.6422018 | 111.8273923 |
| Sum | 1777.937354 | 3381.933805 | 4045.630655 | 3013.945495 |
| Count | 52 | 102 | 88 | 86 |
| Realisation by FCs (in % of liquidation value) | Ahmedabad | Mumbai | New Delhi | Kolkata |
|---|---|---|---|---|
| Mean | 130.738362 | 709.5265932 | 330.992187 | 1350.836644 |
| Median | 113.7193166 | 120.9472881 | 110.8675943 | 113.0745448 |
| Mode | #N/A | 98.72167345 | 100 | 95.01738123 |
| Standard deviation | 75.07986308 | 5512.897612 | 950.9721065 | 11,195.46133 |
| Range | 438.93 | 55,799.80612 | 6574.718615 | 102,729.5348 |
| Minimum | 29.58 | 0.193877551 | 33.33333333 | 5 |
| Maximum | 468.51 | 55,800 | 6608.051948 | 102,734.5348 |
| Sum | 6536.918101 | 72,371.71251 | 29,127.31246 | 113,470.2781 |
| Count | 50 | 102 | 88 | 84 |
Time taken by the Ahmedabad branch of NCLT (in days) to resolve the insolvency cases successfully between 2017–22. First table shows the average time taken while the second table indicates the quantum of days taken. Source – IBBI QY Reports (1st QY 2017 – 3rd QY 2022).
| Days taken | |
|---|---|
| Mean | 573.22807 |
| Median | 558 |
| Mode | 637 |
| Standard deviation | 215.99951 |
| Range | 1205 |
| Minimum | 191 |
| Maximum | 1396 |
| Number of days | Number of cases |
|---|---|
| Within 180 days | 0 |
| 181–270 days | 2 |
| 271–330 days | 4 |
| More than 330 days | 51 |
| Total cases | 57 |
Comparative analysis of the time taken by NCLTs in various cities (in days) to resolve the insolvency cases successfully between 2017–22. The first table shows the quantum of days taken whereas the average time taken. Source – IBBI QY Reports (1st QY 2017 – 3rd QY 2022). Source – IBBI QY Reports (1st QY 2017 – 3rd QY 2022).
| Number of days | Ahmedabad | Mumbai | New Delhi | Kolkata | Hyderabad |
|---|---|---|---|---|---|
| Within 180 days | 0 | 0 | 0 | 3 | 1 |
| 181–270 days | 2 | 7 | 2 | 10 | 2 |
| 271–330 days | 4 | 7 | 9 | 19 | 5 |
| More than 330 days | 51 | 97 | 86 | 57 | 47 |
| Total number of cases | 57 | 111 | 97 | 89 | 55 |
| Days taken | Ahmedabad | Mumbai | New Delhi | Kolkata | Hyderabad |
|---|---|---|---|---|---|
| Mean | 573.228 | 618.820 | 607.980 | 480.157 | 539.218 |
| Median | 558 | 573 | 553 | 440 | 545 |
| Mode | 637 | 850 | 293 | 323 | #N/A |
| Standard deviation | 215.200 | 277.228 | 258.288 | 233.211 | 209.431 |
| Range | 1205 | 1232 | 1380 | 1022 | 933 |
| Minimum | 191 | 185 | 184 | 175 | 105 |
| Maximum | 1396 | 1417 | 1564 | 1197 | 1038 |
| Sum | 32,674 | 68,689 | 58,974 | 42,734 | 29,657 |
| Count | 57 | 111 | 97 | 89 | 55 |
The table shows the cases dealt by all benches of NCLT year wise between 2017–22. Source – IBBI QY Reports (1st QY 2017 – 3rd QY 2022).
| NCLT city | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | Total |
|---|---|---|---|---|---|---|---|
| Ahmedabad | 3 | 8 | 13 | 22 | 11 | 57 | |
| Allahabad | 1 | 1 | 3 | 4 | 3 | 12 | |
| Amravati | 5 | 5 | 10 | ||||
| Bengaluru | 1 | 4 | 7 | 6 | 3 | 2 | 23 |
| Chandigarh | 10 | 6 | 11 | 5 | 3 | 35 | |
| Chennai | 11 | 20 | 6 | 4 | 10 | 51 | |
| Cuttack | 1 | 8 | 4 | 13 | |||
| Guwahati | 2 | 1 | 3 | 4 | 10 | ||
| Hyderabad | 2 | 4 | 14 | 9 | 20 | 6 | 55 |
| Indore | 2 | 2 | |||||
| Jaipur | 1 | 2 | 4 | 3 | 10 | ||
| Kochi | 3 | 4 | 7 | ||||
| Kolkata | 3 | 19 | 16 | 15 | 21 | 15 | 89 |
| Mumbai | 2 | 16 | 30 | 23 | 28 | 12 | 111 |
| New Delhi | 1 | 7 | 21 | 25 | 26 | 17 | 97 |
| Grand total | 10 | 76 | 125 | 120 | 154 | 97 | 582 |
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Articles in the same Issue
- Frontmatter
- Research Articles
- Make-in-India: Moving from a Monocentric to a Polycentric Response to the COVID-19 Crisis!
- Golf Lobby and Anti-Grafting Law: Evidence from South Korea
- The Middle-Income Trap and Competition Policy: An Institutional Analysis
- An Appraisal of the Legal Framework and the Impact of Administrative Corruption on the Jordanian Economy: An Empirical Evidence
- Efficacy of Adjudication Process of Corporate Insolvency Resolution Process (CIRP): Law and Economics of National Company Law Tribunal (NCLT)
