Bring clear statutory timelines for NCLAT: Select committee on IBC Bill
New Delhi, Dec 17, 2025
A parliamentary select committee has flagged the absence of timelines for the NCLAT in the IBC Amendment Bill, 2025, and proposed a three-month statutory deadline to curb appellate delays
The Insolvency and Bankruptcy Code (IBC) Amendment Bill, 2025, has failed to introduce any specific timelines for the National Company Law Appellate Tribunal (NCLAT), a parliamentary select committee said in its report, while recommending the introduction of a clear statutory deadline for the appellate tribunal. The panel suggested that the Bill be revised to include a new clause stating: “The National Company Law Appellate Tribunal shall dispose of an appeal within three months from the date of its receipt.”
Why does the panel want statutory timelines for NCLAT?
“Given that the effectiveness of the Code rests on a strict time-bound framework… undue appellate delays risk undermining the efficiency and certainty of the insolvency resolution process,” the committee said in its report.
What other key changes has the select committee recommended?
The select committee has asked the government to codify the basic tenets of the cross-border insolvency framework directly within the Code to provide clear legislative guidance, and to tailor the group insolvency framework to India’s institutional environment. It has also suggested decriminalisation of certain IBC provisions and measures to ensure an effective and accessible creditor-initiated insolvency resolution process (CIIRP), including lower voting thresholds.
What did the panel say about the role of resolution professionals?
In the report tabled in Parliament on December 16, 2025, the BJP MP Baijayant Panda-led committee recommended revising the Bill to bar a resolution professional (RP) from becoming the liquidator. The Bill had proposed replacing the existing system of automatic appointment of a liquidator with one based on the proposal and approval of the Committee of Creditors. The panel said the change was necessary to address potential “perverse incentives” for RPs to favour liquidation over resolution, as a liquidator’s remuneration is often linked to a percentage of the liquidation estate, unlike the RP’s fixed monthly fee.
How does the panel want to safeguard the ‘clean slate’ principle?
To prevent misuse of the “clean slate” provision of the IBC, the committee asked the Ministry of Corporate Affairs (MCA) to clarify in the Bill that this provision would not absolve any person, including erstwhile promoters or officers, from criminal liability for offences under Section 69, which deals with punishment for transactions defrauding creditors.
What changes were suggested for group and cross-border insolvency?
On group insolvency, the panel said operational rules, regulations and notifications should account for domestic factors such as promoter-driven litigation, related-party influence and the complexity of cross-entity claims. “The committee, therefore, recommends that the rule-making process should ensure that procedural coordination enhances efficiency without inadvertently introducing greater complexity or fostering scope for legal disputes,” it said.
The panel also proposed two changes to Section 240C, which provides the enabling framework for cross-border insolvency. These include broadening the definition of a corporate debtor to cover any person incorporated with limited liability outside India, and specifying that rules should detail processes for recognising proceedings involving specific foreign countries and judicial cooperation.
What did the MCA say about the proposed electronic IBC portal?
Regarding the proposed electronic portal to facilitate IBC processes, the MCA told the committee that the provision inserted under Section 240B is only an enabling one, and not a mandate for immediate implementation. The ministry said the operationalisation of the platform would follow a phased approach, including extensive testing, trial runs and mandatory stakeholder consultation.
[The Business Standard]
