Challenges in NCLT Filing Procedures: Advocates’ Perspectives

SUMMARY -This blog describes the challenges faced by advocates in filing and e-filing matters at the National Company Law Tribunals (NCLT) in India. The blog underscores the necessity for immediate reforms, advocating for complete digitisation, elimination of physical filing requirements, and addressing staff shortages to enhance the effectiveness of NCLT.

Key takeaways

Non-Digitised Filing Mechanism: Despite the introduction of e-filing at NCLT, the requirement for hard copies alongside electronic filings raises concerns, defeating the purpose of digitisation.
Operational Issues with NCLAT Accessibility: Advocates face challenges due to the absence of NCLAT Benches in certain regions, coupled with mandates for physical filing, impacting accessibility for practitioners outside Delhi.
Arbitrary Scrutiny by Registries: Cumbersome filing processes and absurd objections during scrutiny contribute to delays.
Administrative Staff Shortages: Inadequate staffing and poor infrastructure, particularly in certain NCLT benches, hinder the effective functioning of the tribunal.
Quantitative Analysis: A quantitative assessment reveals varying delays in the listing-to-registration timeline across different NCLT benches.

Introduction

Under the contemporary regulatory and judicial framework, the NCLT has become adjudication fora of first instance to resolve a range of commercial disputes arising from company law, insolvency laws, securities laws, etc.. The functioning of the NCLT impact the the ease of doing business in India significantly. This blog post explores some of the pain points of practising advocates backed with quantitative data pertaining to the filing of matters before an NCLT.

Pain points

I. Not so digitised filing mechanism

The first stage of initiating a matter before NCLT is filing/e-filing. As per the NCLT Rules 2016, every petition, interlocutory application, caveat, appeal inter alia should be presented in triplicate by the party aggrieved in person or through their lawyer at the filing counter in order for the petition or appeal or concerned application to be entertained. During the year 2019-2020, most of the NCLT benches introduced e-filing of petitions/appeals/replies etc. However, ironically the notification for e-filing also made it mandatory to file two complete sets of hardcopies which dilutes the purpose of digitising the whole process of e-filing. We found that many advocates see it as an additional burden “The rule of hardcopy also doesn’t make any sense. With the Chief Justice of India rooting for digitisation of filing and record filing additional hard copies makes no sense to me” grieves a lawyer appearing regularly before NCLT Delhi. This is not a unique NLCT issue. Several courts also insist on physical copies to be filed along with e-copies.

In an interesting matter filed before the Bombay High Court, the Bench was asked to adjudicate on compounding issues that have arisen related to the mandate of filing physical copies in the absence of an NCLAT Bench for west region coupled. The plea read “That NCLAT/respondent 2 is having its location only in New Delhi, and its Operating Procedure mandates filing of physical/hard copies of Appeal/IA’s etc…thus causing difficulty for Advocates/Petitioner who are outside Delhi…” This is a clear reflection of operational issues and accessibility of NCLATs for the advocates based outside Delhi or with no NCLAT in their region.

II. Arbitrary scrutiny by the registry

When an application/petition is submitted at the registry, the person in charge of the filing counter has to immediately on receipt of such petition/ appeal / application affix the date stamp of Tribunal on the document and return the acknowledgement to the party. Post this process, the filing in charge enters the particulars of all such documents in the register after daily filing and assigns a diary number which is also shared with the party before the pleadings are sent for scrutiny. Thereafter, the registry scrutinises the pleadings filed and if a defect is found, such pleadings are sent back to the party for removing defects. The pleadings have to be re-submitted to the registry within seven days.

In addition, the registrar may allow additional reasonable time to cure the defects. However, after speaking to several advocates practising before NCLT and NCLAT, the researchers found that the filing process in itself was cumbersome and that the registry raised some curious objections. “Filing in NCLT is too technical at times with objections being raised for the most frivolous of issues. I personally have difficulty in getting urgent matters listed without the intervention of the Bench. Sometimes even after the bench permits, there is a delay in the part of the registry for the scrutiny. Delhi in particular has tough issues as they are severely short-staffed.” shared another advocate practising before Delhi NCLT.

In furtherance, when we spoke to advocates appearing before NCLT Bengaluru Bench, we found that during the filing process, advocates have to mandatorily file affidavits which are not even required under law. Such issues have been noticed after NCLT has taken measures to make the scrutiny process uniform.

III.Administrative Staff

The officials in the registry are crucial to the effective working of the tribunal. As per the NCLT and NCLAT Rules 2016 respectively while there is no prescribed number of staff in each tribunal, the working hours of these officials are prescribed as 9:30 AM to 6:00 PM. We were told that the officials start work post 10:45 AM and leave their office by 2 PM. This issue is coupled with a shortage of staff in most of the benches. An article on the staffing condition of NCLAT Chennai reveals that the Bench has one stenographer who doubles up as PA to a Technical Member and the Registrar sits at the Principal Bench in Delhi. The apparent reason cited for the same is “no one wants to shift to Chennai”. A practising advocate who appeared before the bench resonated with the condition of the Chennai Bench and stated that the inadequate staff and poor infrastructure are crippling the working of the NCLAT Chennai bench.

From a quantitative lens, the table below highlights the number of days it takes for a matter to travel from listing to registration in various benches.

Zonal Bench	Year of Filing	Listing-Registration gap within 7 days (inc)	Total cases filed in year	%	List-Reg gap > 7 days
Delhi	2022 & 2023	6930	13489	51%	49%
Mumbai	2022 & 2023	6347	14443	44%	56%
Bengaluru	2022 & 2023	428	2160	20%	80%

IV.Members

There are several challenges when it comes to the members. A shortage of members and their absence are contributing factors to pendency at the tribunals . It is pertinent to mention that the intervention of the Bench in issues arising out of filing has also not proven very effective in many a case. For instance, a senior member of the Bar shared “The Deputy Registrar sometimes comes forward as a knight in the shining armour and expedites the listing. However, the issue with short staffing continues.”

Conclusion

Since the NCLTs are no longer in their teething stage, there is a need to “fix” some of these apparent issues. One of the most immediate changes needed for enhancing the ease of practice before NCLTs is to stop physical filing of matters. The issue of short staffing specially at the registry level must be looked at as a matter of priority in order to improve the filing process and reduce the time taken in registration of cases.

While this piece looks strictly at filing issues, readers are welcome to share their experience of NCLTs and NCLATs at Ritima@dakshindia.org

Reference

Ms. Nicky Pokar v/s. Secretary, Union of India, Ministry of Corporate Affairs & Anr., Writ Petition (L) No.169 OF 2021
Ayesha Arvind, Inadequate staff, infrastructure crippling NCLAT Chennai as lawyers contemplate moving court, Bar and Bench, 5^th of February, 2024 https://www.barandbench.com/news/litigation/nclat-chennai-lawyers-say-the-bench-is-suffering-because-it-is-far-from-delhi-the-seat-of-power