Supreme Court flags NCLT delays in insolvency resolution plans, seeks nationwide data
April 20, 2026
“It has come to our notice that many such approval applications are pending with the NCLT Principal Bench, New Delhi and also other Benches past several years,” the Supreme Court said.
In a pointed intervention on delays in insolvency proceedings, the Supreme Court has expressed concern over prolonged pendency in approval of resolution plans by the National Company Law Tribunal (NCLT), describing the situation as “very unfortunate” and indicative of a wider systemic problem.
A bench comprising Justices JB Pardiwala and KV Viswanathan, while hearing connected appeals, noted that a resolution plan approved by the Committee of Creditors (CoC) has remained pending for nearly two years before the adjudicating authority.
The court has now sought detailed, nationwide data on such delays from both the National Company Law Tribunal (NCLT) and the Insolvency and Bankruptcy Board of India (IBBI), in a 10-page order seen by Moneycontrol.
Background of dispute
The matter arises from insolvency proceedings involving AVJ Developers (India) Pvt. Ltd., where a claim of Rs 85 crore by IIFL Finance Limited was initially rejected by the Resolution Professional in January 2020 due to lack of verification from the corporate debtor’s records.
The creditor challenged this rejection before the NCLT, which allowed the claim. The decision was subsequently upheld by the National Company Law Appellate Tribunal (NCLAT) in January 2023.
Appeals were then filed before the Supreme Court by the AVJ Heightss Apartment Owners Association and a suspended director of the corporate debtor, both challenging the inclusion of IIFL’s claim.
During the hearing, multiple arguments were raised questioning the legitimacy of the claim, with the appellants contending that it was “sham and bogus.”
Meanwhile, the CoC approved a resolution plan on July 4, 2024, and the application for its approval was filed before the NCLT Principal Bench in Delhi, on July 12, 2024. However, the plan has not yet been adjudicated upon.
Court’s concern over delay
Taking note of this prolonged inaction, the bench observed: “We take a very serious note of the matter that the plan as approved by the CoC is awaiting approval of the adjudicating authority past almost two years.”
The court further remarked, “It is very unfortunate that there is no adjudication on the approval past approximately two year,” underlining that such delays defeat the time-bound framework envisaged under the Insolvency and Bankruptcy Code (IBC).
The judges indicated that once a resolution plan is approved by the CoC, timely approval by the adjudicating authority is essential. Any undue delay, they suggested, undermines the objective of completing the Corporate Insolvency Resolution Process (CIRP) within prescribed timelines.
Call for nationwide data
Expanding the scope beyond the present case, the bench acknowledged that the issue may not be isolated. “It has come to our notice that many such approval applications are pending with the NCLT Principal Bench, New Delhi and also other Benches past several years,” the court stated.
Accordingly, it directed the NCLT Principal Bench to furnish key details, including the number of pending applications for approval of resolution plans, the duration of such pendency, and the reasons for non-adjudication.
The IBBI has also been impleaded as a party and asked to provide comprehensive nationwide statistics addressing the same queries. The court has granted two weeks for submission of these reports, after which it will consider further steps.
Arbitral award adds complexity
The proceedings also took note of an arbitral award dated July 3, 2024, which casts doubt on the Rs 85 crore claim by IIFL. The arbitral tribunal recorded several findings pointing to irregularities in loan documentation and disbursal.
Among the observations highlighted before the court were issues relating to inconsistencies in loan disbursal accounts, questionable execution of documents, and anomalies in financial records. The tribunal noted that certain documents appeared “tainted,” raising doubts about their authenticity.
It also flagged discrepancies such as the use of stamp papers allegedly purchased on dates when the signatory was in judicial custody, and unexplained entries in loan accounts, including credits labeled as “TDS amount credited,” which the tribunal found difficult to reconcile with standard lending practices.
Additionally, the award suggested that certain financial arrangements may have been structured to avoid classification of accounts as non-performing assets (NPAs), describing it as a “stratagem” to circumvent regulatory norms.
Senior counsel appearing in the matter informed the court that the arbitral award is currently under challenge before the Delhi High Court under Section 34 of the Arbitration and Conciliation Act.
Directions and next steps
In light of the broader concerns, the Supreme Court has directed the Registrar of the NCLT Principal Bench, New Delhi, to compile and submit the required data. It has also requested counsel for the parties to assist with relevant information.
Senior advocates Gopal Jain and Navin Pahwa have been appointed as amicus curiae to aid the court in examining the issue.
The bench clarified that, after reviewing the data and statistics, it will decide “what further course of action, if any, is to be adopted.”
The matter has been posted for further hearing on April 29, and is to be treated as part-heard.
A bench comprising Justices JB Pardiwala and KV Viswanathan, while hearing connected appeals, noted that a resolution plan approved by the Committee of Creditors (CoC) has remained pending for nearly two years before the adjudicating authority.
The court has now sought detailed, nationwide data on such delays from both the National Company Law Tribunal (NCLT) and the Insolvency and Bankruptcy Board of India (IBBI), in a 10-page order seen by Moneycontrol.
Background of dispute
The matter arises from insolvency proceedings involving AVJ Developers (India) Pvt. Ltd., where a claim of Rs 85 crore by IIFL Finance Limited was initially rejected by the Resolution Professional in January 2020 due to lack of verification from the corporate debtor’s records.
The creditor challenged this rejection before the NCLT, which allowed the claim. The decision was subsequently upheld by the National Company Law Appellate Tribunal (NCLAT) in January 2023.
Appeals were then filed before the Supreme Court by the AVJ Heightss Apartment Owners Association and a suspended director of the corporate debtor, both challenging the inclusion of IIFL’s claim.
During the hearing, multiple arguments were raised questioning the legitimacy of the claim, with the appellants contending that it was “sham and bogus.”
Meanwhile, the CoC approved a resolution plan on July 4, 2024, and the application for its approval was filed before the NCLT Principal Bench in Delhi, on July 12, 2024. However, the plan has not yet been adjudicated upon.
Court’s concern over delay
Taking note of this prolonged inaction, the bench observed: “We take a very serious note of the matter that the plan as approved by the CoC is awaiting approval of the adjudicating authority past almost two years.”
The court further remarked, “It is very unfortunate that there is no adjudication on the approval past approximately two year,” underlining that such delays defeat the time-bound framework envisaged under the Insolvency and Bankruptcy Code (IBC).
The judges indicated that once a resolution plan is approved by the CoC, timely approval by the adjudicating authority is essential. Any undue delay, they suggested, undermines the objective of completing the Corporate Insolvency Resolution Process (CIRP) within prescribed timelines.
Call for nationwide data
Expanding the scope beyond the present case, the bench acknowledged that the issue may not be isolated. “It has come to our notice that many such approval applications are pending with the NCLT Principal Bench, New Delhi and also other Benches past several years,” the court stated.
Accordingly, it directed the NCLT Principal Bench to furnish key details, including the number of pending applications for approval of resolution plans, the duration of such pendency, and the reasons for non-adjudication.
The IBBI has also been impleaded as a party and asked to provide comprehensive nationwide statistics addressing the same queries. The court has granted two weeks for submission of these reports, after which it will consider further steps.
Arbitral award adds complexity
The proceedings also took note of an arbitral award dated July 3, 2024, which casts doubt on the Rs 85 crore claim by IIFL. The arbitral tribunal recorded several findings pointing to irregularities in loan documentation and disbursal.
Among the observations highlighted before the court were issues relating to inconsistencies in loan disbursal accounts, questionable execution of documents, and anomalies in financial records. The tribunal noted that certain documents appeared “tainted,” raising doubts about their authenticity.
It also flagged discrepancies such as the use of stamp papers allegedly purchased on dates when the signatory was in judicial custody, and unexplained entries in loan accounts, including credits labeled as “TDS amount credited,” which the tribunal found difficult to reconcile with standard lending practices.
Additionally, the award suggested that certain financial arrangements may have been structured to avoid classification of accounts as non-performing assets (NPAs), describing it as a “stratagem” to circumvent regulatory norms.
Senior counsel appearing in the matter informed the court that the arbitral award is currently under challenge before the Delhi High Court under Section 34 of the Arbitration and Conciliation Act.
Directions and next steps
In light of the broader concerns, the Supreme Court has directed the Registrar of the NCLT Principal Bench, New Delhi, to compile and submit the required data. It has also requested counsel for the parties to assist with relevant information.
Senior advocates Gopal Jain and Navin Pahwa have been appointed as amicus curiae to aid the court in examining the issue.
The bench clarified that, after reviewing the data and statistics, it will decide “what further course of action, if any, is to be adopted.”
The matter has been posted for further hearing on April 29, and is to be treated as part-heard.