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NCLT and NCLAT Are Government's Lifeline, Supreme Court Flags Infrastructure Crisis
The on Monday made a strong observation that the and the serve as the government’s “lifeline,” while expressing deep concern over the chronic shortage of members, inadequate physical infrastructure, and technological deficiencies plaguing NCLT benches across the country. A bench comprising Chief Justice Surya Kant and Justices Joymalya Bagchi and V Mohana underscored that these tribunals handle disputes involving thousands of crores of rupees, yet are forced to operate without basic amenities, permanent staff, or proper technological support.
The Court was hearing a case concerning the appointment of judicial and technical members and the poor state of infrastructure at the NCLT. During the proceedings, the intervened through an application, flagging urgent issues that have crippled the tribunal’s functioning. , appearing for the Bar Association, told the Court that the infrastructure at the NCLT was “in shambles” and that all benches at the principal bench were compelled to sit only for half a day.
“The infrastructure is in shambles. I have highlighted four major broad issues to be addressed at the earliest,” Sen submitted. He warned that the shortage of members required immediate intervention, noting that another 18 vacancies are likely to arise over the next year due to retirements. “Today in the principal bench, all benches are forced to sit half day, all benches! And across the country, this is the problem. Within the next one year there will be 18 more vacancies because members are retiring,” Sen argued. He urged the Court to consider allowing members nearing retirement to continue for some more time until vacancies are filled.
The Court, visibly concerned, questioned how the tribunals could function effectively without basic facilities. “How an institution will function unless you provide the basic amenities? You don't have building, you don't have staff, you don't have judgment writers, you don't have proper, adequate technological inclusion,” the bench remarked. The judges noted that the NCLT routinely deals with disputes involving thousands of crores and that all nationalised banks, the banking sector, and infrastructure projects come before these tribunals. “They are the government's lifeline now. All nationalised banks, banking sector, and all infrastructure projects are also matter of examination before these tribunals only,” the Court said.
Background: A Tribunal Stretched Thin
The NCLT was established under the , and its jurisdiction expanded substantially after the came into force in . The tribunal now handles a vast array of corporate disputes, including insolvency resolutions, company law matters, and other commercial cases. However, its sanctioned strength has remained stagnant at 63 members despite the growing workload. As of , the tribunal had only 26 judicial members and 25 technical members, including the President. This severe understaffing has led to at least 18 NCLT benches holding only half-day sittings under a roster effective from , according to the Bar Association’s submissions.
The association also highlighted that 246 staff members, including court masters, were on temporary appointments, further undermining the tribunal’s efficiency. The lack of permanent support staff, coupled with inadequate physical and technological infrastructure, has created a crisis that directly impacts the timely resolution of corporate disputes. The Bar Association’s intervention application sought to bring these systemic failures to the Court’s attention, arguing that the tribunal’s ability to deliver justice is being severely compromised.
The Court’s Observations and Directions
After hearing the submissions, the Supreme Court directed the to collect comprehensive data regarding infrastructure available at all regional NCLT benches and place it before the Court in a tabulated form. The was separately directed to file a status report detailing the basic amenities provided to the principal bench as well as regional benches. The Court also directed the Union government to identify, in consultation with the President of the NCLT, the amenities that are urgently required.
The bench made it clear that the government cannot continue to treat these tribunals as secondary institutions. “How will the tribunals function if there is no infrastructure? Every day they deal with issues involving thousands of crores of rupees,” the Court observed, underscoring the economic significance of the NCLT and NCLAT. The matter has been posted for further hearing after two weeks.
Legal Implications and Impact on Corporate Dispute Resolution
The Supreme Court’s intervention comes at a critical time for the corporate legal ecosystem. The IBC, which was designed to provide a time-bound resolution framework for stressed assets, relies heavily on the NCLT’s efficiency. Delays caused by member shortages and inadequate infrastructure can lead to prolonged insolvency processes, reduced asset values, and erosion of creditor confidence. The Court’s observations signal that the government must urgently address these deficiencies to uphold the and economic stability.
Legal professionals and corporate counsel have long raised concerns about the NCLT’s capacity to handle the mounting caseload. The lack of dedicated courtrooms, judgment writers, and modern technological tools hampers the tribunal’s ability to conduct effective hearings and deliver timely judgments. The Supreme Court’s direction to assess basic amenities and file a status report is a significant step toward accountability. If the government fails to act, the Court may consider more stringent measures, including possible directions for interim appointments or temporary extensions for retiring members.
Impact on Legal Practice
For lawyers practicing before the NCLT and NCLAT, the infrastructure crisis has become a daily reality. Half-day sittings mean that fewer cases are heard, leading to mounting backlogs and frustrated clients. The temporary nature of staff appointments also results in inconsistent administrative support, making case management cumbersome. The Supreme Court’s cognizance of these issues provides hope for systemic improvement, but legal practitioners will be watching closely to see whether the government’s response translates into concrete action.
The Bar Association’s call for allowing retiring members to continue until vacancies are filled reflects the urgency of the situation. However, such temporary measures are not a substitute for a long-term solution that includes increasing the sanctioned strength, providing adequate infrastructure, and ensuring stable staffing. The Court’s directive to identify urgently needed amenities in consultation with the NCLT President is a practical first step, but the broader reform agenda must include a comprehensive overhaul of the tribunal’s operational framework.
Conclusion
The Supreme Court’s strong observations and directions in this case underscore the critical role that the NCLT and NCLAT play in India’s economic governance. Describing these tribunals as the government’s lifeline, the Court has sent a clear message that they cannot be allowed to function in a state of disrepair. With the next hearing scheduled after two weeks, all eyes will be on the Union government’s response. The legal community expects not just a status report but a concrete roadmap for revitalising the NCLT and NCLAT, ensuring that they can effectively discharge their mandate under the IBC and other corporate laws.
The case serves as a reminder that judicial infrastructure is not a luxury but a prerequisite for the . As the Court itself asked: How can an institution dealing with thousands of crores function without basic amenities? The answer must come from the government, and the clock is ticking.
