Summary: The National Company Law Tribunal was created to consolidate fragmented corporate dispute resolution into a unified forum. However, the tribunalisation experiment has proven contentious, with critics questioning the adjudication quality, consistency, and constitutional validity. The absence of horizontal precedent between co-equal NCLT benches has created conflicting rulings and legal uncertainty. The Supreme Court has criticised the tribunal’s lack of domain expertise and judicial discipline. Successful international models in the UK and US suggest specialised court divisions, not separate tribunals, may have been a more effective approach.
Introduction
The enactment of the Companies Act, 2013, marked a fundamental transformation in the landscape of Indian corporate law, significantly reconfiguring the architecture of corporate dispute resolution. This transition entailed the dismantling of a century-old court-based adjudicatory framework in favour of a specialised, quasi-judicial framework focussed on the National Company Law Tribunal (“NCLT”) and its appellate body, the National Company Law Appellate Tribunal (“NCLAT”). The creation of the NCLT and the NCLAT was conceived as a comprehensive remedy for the deficiencies inherent in a fragmented and protracted dispute resolution process. By consolidating the jurisdictions of the erstwhile Company Law Board (“CLB”), the Board for Industrial and Financial Reconstruction (“BIFR”), and the High Courts into a single, unified forum, the reform aimed to provide a “single-window” clearance system for all corporate matters, encompassing mergers and acquisitions, insolvency proceedings, and shareholder disputes. The introduction of the Insolvency and Bankruptcy Code, 2016 (“IBC”), which designated the NCLT as the sole adjudicating authority, further cemented the tribunal’s central role in India’s economic and legal ecosystem.
However, this ambitious project of “tribunalisation” has proved contentious since its inception. The reform has engendered sustained and vigorous debate concerning its performance, jurisprudential impact, and most critically, its constitutional validity. Whilst proponents extol the tribunals for their specialised focus and expeditious resolution, critics harbour significant reservations about the quality and consistency of adjudication, the erosion of the doctrine of precedent, and the potential encroachment upon judicial independence. These debates interrogate whether the transition has genuinely remedied the problem of delay or merely transposed it to a new, centralised institution beset by its own distinctive challenges. This analysis proceeds by tracing the historical and policy imperatives that catalysed this change and comparing the Indian model with international best practices.
Evolution of the Adjudicatory Framework
The architecture of Indian corporate law remains deeply rooted in its colonial past, with its foundational principles and structures being directly derived from English common law. The Companies Act, 1956, which governed Indian corporations for nearly six decades, was substantially modelled on the United Kingdom’s Companies Act, 1948. This inheritance extended beyond substantive legal principles, such as separate legal personality and limited liability, to the very mechanism of adjudication. The UK model placed the judiciary, specifically the High Court, at the heart of interpreting and enforcing company law, a tradition that India adopted in its entirety.
Under the 1956 Act, the High Courts were vested with exclusive original jurisdiction over the most significant and complex corporate actions. This included the power to sanction schemes of compromise, arrangement, and amalgamation; approve reductions of share capital; and, most crucially, oversee the winding-up of companies. This court-centric paradigm ensured that corporate law developed within established judicial hierarchy. Judgments delivered by High Courts carried significant precedential weight, thereby contributing to a coherent and predictable corpus of jurisprudence integrated with broader principles of civil and constitutional law. The system rested upon the premise that generalist judges, trained in the rigorous application of legal principles, evidence, and procedure, were best equipped to adjudicate these intricate matters.
The Indian judiciary has long been plagued by a substantial backlog of cases, and corporate matters were not immune to this systemic paralysis. The adjudicatory framework for corporate disputes was perilously fragmented. A single distressed company could find itself embroiled in parallel proceedings before multiple authorities. The High Courts handled winding-up petitions and schemes of arrangement; the CLB, a quasi-judicial body, dealt with matters of oppression and mismanagement; and the BIFR and its appellate authority, AAIFR, established under the Sick Industrial Companies Act, 1985, managed the revival and rehabilitation of sick industrial units. This labyrinthine structure engendered jurisdictional overlaps, invited conflicting orders, and compelled litigants to engage in forum shopping and protracted litigation across disparate bodies for what was frequently a single, unified commercial dispute. This multiplicity resulted in inefficiency, expense, and delay, which characterised the pre-2013 regime. The cumulative effect was a system that proved dilatory, inefficient, and ill-suited to support a dynamic and expanding economy. The failure was not one of judicial competence per se, but rather one of institutional design and systemic capacity.
The manifest dysfunction of the existing framework prompted the Government of India to constitute high-level expert committees, i.e., The Eradi Committee in 1999 and the 2005 J. J. Irani Committee, tasked with diagnosing systemic deficiencies and prescribing comprehensive reforms.
International Benchmarking: A Comparative Analysis of Corporate Adjudication
A comparative analysis with other major common law jurisdictions reveals that India’s decision to establish a separate tribunal system represents an exception rather than the norm. Most leading economies have addressed the need for specialisation in corporate law by creating specialised divisions within their existing superior court systems, thereby preserving judicial authority, institutional independence, and jurisprudential coherence.
United Kingdom: As the progenitor of India’s legal framework, the United Kingdom’s continued adherence to a court-centric model is particularly instructive. The UK has not established a separate tribunal for core company law matters. Instead, complex commercial and corporate disputes are handled by specialist courts within the High Court’s Business and Property Courts. The Insolvency and Companies List (formerly the Companies Court) is a prime example, staffed with experienced commercial judges who adjudicate exclusively upon such matters. This model successfully combines the benefits of specialisation with unimpeachable authority, robust precedential value, and constitutional independence of the High Court. While the courts actively encourage and can even compel the use of Alternative Dispute Resolution, they remain the ultimate arbiters of disputes.
United States (Delaware Court of Chancery): The United States offers a globally renowned model of judicial specialisation in the form of the Chancery Courts (famously in Delaware) and Business Courts. As a non-jury court of equity, Chancery Court has exclusive jurisdiction over matters of corporate internal affairs for the vast number of companies incorporated in Delaware, including over two-thirds of the Fortune 500. For over two centuries, the Court of Chancery has cultivated an exceptionally deep, sophisticated, and predictable body of case laws that exercise considerable influence across the United States and internationally. Its judges, comprising a Chancellor and six Vice-Chancellors, are experts in corporate law, which ensures high-quality and efficient adjudication. The success of this model demonstrates that a dedicated court, integrated within the formal judicial structure, can be both highly specialised and remarkably efficient.
The consistent theme across these successful international models is a preference for enhancing existing judicial machinery rather than creating entirely new quasi-judicial institutions. This approach leverages the established strengths of the judiciary like independence, authority, and a disciplined system of precedent, whilst introducing the requisite element of specialisation. India’s tribunalisation path, therefore, represents a significant departure from this global consensus, a choice that carries profound implications for its corporate legal framework.
Binding Authority: High Court Judgments vs. NCLT/ NCLAT Orders
Within the traditional Indian judicial hierarchy, the authority of precedent is clear and well-established. A Supreme Court judgment is binding on all courts and tribunals in the country. A High Court judgment is binding on all subordinate courts and tribunals within its territorial jurisdiction. This vertical and horizontal discipline ensures uniform application of the law.
The tribunalised framework operates on a fundamentally different basis. A Supreme Court order is naturally binding upon the NCLAT and all NCLT benches. An NCLAT order is binding on all NCLT benches, providing a crucial layer of appellate discipline. However, the critical vulnerability lies at the NCLT level. The NCLT is comprised of multiple co-equal benches located in different cities. An order rendered by one NCLT bench is not binding upon another co-equal bench. This creates a “horizontal” system wherein each bench may, and frequently does, arrive at its own interpretation of the law, independent of the rulings of its counterparts. This institutional design, which lacks any mechanism for ensuring horizontal consistency, constitutes a primary source of legal uncertainty. The sole corrective measure is a vertical NCLAT appeal, a time-consuming and costly process, which undermines the tribunal’s core objective of expeditious resolution.
The foreseeable consequence of this absence of horizontal precedent has been a proliferation of conflicting rulings from different NCLT benches on identical or analogous questions of law. This has engendered a confusing and unpredictable legal landscape for companies, creditors, and legal practitioners alike. Several key areas of corporate and insolvency law have been afflicted by such contradictory interpretations.
- Inclusion of Interest for IBC Threshold: A recurring point of contention has been whether an operational creditor can include the amount of interest on a delayed payment to meet the minimum default threshold (currently INR 1 crore) required to initiate insolvency under Section 9 of the IBC. Different NCLT benches have rendered divergent rulings on this issue. Certain benches have held that interest stipulated in an invoice forms part of the “operational debt” and may be included, whilst others have adopted a stricter view, ruling that unless there is a specific, signed agreement to pay interest, it cannot be utilised to satisfy the threshold. This has resulted in circumstances where the admissibility of an insolvency petition depends entirely upon the bench before which it is filed, a manifest example of legal uncertainty. While the NCLAT has provided some clarity in certain cases, the initial conflict at the NCLT level creates significant risks for litigants.
- Applicability of Contempt Powers: Whether the NCLT possesses the power to punish for contempt of its orders in IBC proceedings has been the subject of intense debate and conflicting decisions. Section 425 of the Companies Act, 2013, grants the NCLT the same contempt powers as a High Court. However, the IBC itself does not contain a similar provision. One school of thought among NCLT benches is that since the NCLT is the designated adjudicating authority under the IBC, it inherently carries all its powers from the Companies Act into IBC proceedings. The opposing view maintains that powers must be explicitly conferred by the statute under which the proceeding is initiated, and in the absence of such a provision in the IBC, the NCLT lacks contempt jurisdiction in insolvency matters. This has created ambiguity surrounding the enforceability of NCLT orders and settlement agreements under the IBC.
- Status of Statutory Dues: The Supreme Court’s judgment in State Tax Officer v. Rainbow Papers Ltd.[1] has created significant confusion. It ruled that statutory dues under the Gujarat Value Added Tax Act should be treated as a secured debt under the IBC’s waterfall mechanism, contradicting the explicit hierarchy prescribed in Section 53 of the IBC, which places government dues substantially below secured creditors. Subsequently, NCLT benches applied this precedent inconsistently, with some following it strictly and others attempting to distinguish it, leading to conflicting outcomes in resolution plans regarding the treatment of government claims. The uncertainty was so profound that the Supreme Court was subsequently compelled to clarify in Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat Pvt. Ltd.[2] that Rainbow Papers did not consider the waterfall mechanism in Section 53 and that statutory dues do not have priority over secured debts and that the Rainbow Papers judgement should be confined to the facts of that particular case only. This episode illustrates how a single ambiguous precedent can engender widespread confusion within a tribunal system lacking robust internal jurisprudential discipline.
- Insolvency of Personal Guarantors: IBC introduced a framework for initiating insolvency proceedings against personal guarantors of corporate debtors. A critical legal question that arose was whether a creditor must first formally “invoke” the guarantee, in accordance with the contract, before filing an application under Section 95 of the IBC. Different NCLAT benches have rendered conflicting rulings on this point. For instance, in SBI v. Deepak Kumar Singhania[3], the NCLAT held that invocation of guarantee is a mandatory precondition.However, other benches have entertained petitions where the invocation was not as clearly established, thereby creating significant uncertainty for lenders seeking to enforce guarantees and guarantors seeking to ascertain their liabilities.
Critique of Competence, Consistency, and Judicial Discipline
The NCLT and NCLAT have faced strong criticism, mainly regarding the competence and conduct of its members. These are not isolated complaints but rather recurring themes in judicial observations and expert commentary.
- Lack of Domain Expertise and Judicial Temperament: In a scathing observation in the high-profile Jet Airways[4] insolvency proceedings, the Supreme Court explicitly remarked on the “lack of domain expertise” among tribunal members and their failure to appreciate “nuanced complexities involved in high-stake insolvency matters”. This critique from the apex court constitutes a powerful indictment of the quality of adjudication. It suggests that the intended benefit of specialisation has not been fully realised and that certain members may lack the requisite depth of knowledge to adjudicate complex corporate litigation.
- Pervasive Judicial Indiscipline: Beyond questions of competence, there have also been widespread reports and judicial findings of lack of judicial discipline. The Supreme Court, in the same Jet Airways judgment, noted with disapproval that “…that there is a serious lack of timely admission and disposal of the applications filed as regards the initiation of CIRP, approval of the resolution plan and liquidation. This only adds to the uncertainty of the process and prolongs the dispute thereby jeopardising the interest of all the stakeholders involved”. Further, it noted that NCLT and NCLAT benches frequently “don’t have the practice of sitting for the full working hours. They are particularly lacking in the capacity to manage the growing number of cases and giving undivided attention required in such matters”. NCLT’s inefficiency was also noted in the Economic Survey of India 2025-26, which stated that “Notwithstanding the structural shifts brought about by IBC, the bankruptcy regime still offers scope for significant improvement. Primary among the issues is the presence of a binding institutional constraint, leading to insolvency proceedings that often stretch beyond their mandated timelines. The Code mandates CIRP completion within 330 days, including extensions; actual average duration is 713 days overall and 853 days for cases closed in FY25. This represents a deviation of over 150 per cent from the statutory limit. Compounding the insolvency timelines, the National Company Law Tribunal (NCLT) holds a pendency of nearly 30,600 cases (as of March 2025) with an estimated clearance time of nearly 10 years at current disposal rates. Such extended timelines can trigger value erosion — assets deteriorate, employees depart, customers shift to competitors, and supplier relationships break down”.
- Inconsistent Quality and Clashes of Culture: The inclusion of technical members from non-judicial backgrounds, such as retired civil servants (who reportedly constitute approximately 23% of technical members), has engendered concerns regarding a deficit in judicial experience. Adjudication requires more than mere technical knowledge; it demands a profound understanding of legal principles, procedural fairness, the law of evidence, and the discipline of crafting a reasoned judgment. The absence of systematic judicial training for technical members represents a significant institutional lacuna. This has reportedly led to a clash of cultures within the benches, exemplified by a widely reported incident at the Chandigarh Bench wherein a judicial member reprimanded a technical member for misconduct in open court, an incident that reveals fundamental problems with professional conduct and institutional oversight.
A Concluding Perspective: Reconsidering the Tribunal Model
The NCLT experiment, now several years into its implementation, presents a narrative of mixed success. It has successfully achieved its structural objective of consolidating multiple, fragmented forums into a single adjudicatory body. Through the IBC, it has introduced a modern insolvency regime that has demonstrably improved the credit landscape. However, in its pursuit of efficiency, the reform has engendered significant new problems pertaining to quality of justice, jurisprudential consistency, and constitutional propriety. The concerns regarding member competence, conflicting rulings, and judicial independence are not mere “teething problems”, they constitute systemic deficiencies rooted in the institutional design of the tribunal model itself.
This gives rise to a critical forward-looking question: Was India’s wholesale adoption of a quasi-judicial tribunal model the optimal path? The continued and successful reliance on specialised divisions within the constitutional court system by the United Kingdom and the United States (Delaware), suggests that a viable and perhaps superior alternative existed. These jurisdictions have demonstrated that specialisation and efficiency can be achieved without sacrificing the foundational principles of judicial independence, authority, and doctrinal coherence that are the hallmarks of a constitutional judiciary.
For India to establish a truly world-class corporate law regime that commands global confidence, the policy focus must shift from merely augmenting resources within the existing NCLT framework to fundamentally reconsidering its institutional design. The long-term vitality of India’s corporate ecosystem depends on an adjudicatory system that is not only specialised and efficient but also independent, consistent, and authoritative. The challenge is not necessarily to abandon the NCLT, but to reform it such that it truly embodies the high standards of a superior court of record, as envisaged by the Supreme Court in Union of India v. R. Gandhi. This may require a bold reimagining of its structure, perhaps by reintegrating it more closely with the constitutional judiciary, thereby creating a hybrid model that captures the best of both worlds — the specialisation of a tribunal and the unimpeachable authority of a court.
[1] 2022 SCC OnLine SC 1162
[2] 2023 SCC OnLine SC 842
[3] Comp. App. (AT) (Ins.) No. 191 of 2025
[4] State Bank of India & Ors. v. The Consortium of Mr. Murari Lal Jalan And Mr. Florian Fritsch & Anr., Civil Appeal Nos. 5023-5024 OF 2024