A seven-year-old insolvency petition under the Insolvency and Bankruptcy Code, 2016, languishing without a final order despite two hearings and reservations, has prompted the Bombay High Court to issue strict directions for immediate adjudication. The judgment underscores the judiciary’s non-negotiable duty to avoid undue delay in IBC proceedings, reinforcing that procedural inertia undermines the statute’s core objective of time-bound resolution.
Background & Facts
The Dispute
The petitioner, JM Financial Asset Reconstruction Company Ltd., initiated corporate insolvency resolution proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) against respondent No.2, alleging default in repayment obligations dating back to 2008. As of the filing of the petition, the outstanding debt amounted to approximately Rs.167 crores. The Company Petition was filed on 2019, initiating a process that has since been marred by procedural stagnation.
Key Facts
- The petitioner filed C.P.(IB)/3500(MB)/2019 under Section 7 IBC in 2019
- The respondent defaulted on repayment obligations from 2008 onwards
- The outstanding debt as alleged: Rs.167 crores
- An intervention application (IA No.9 of 2024) was filed after the matter was reserved for orders
- Two separate benches of the NCLT heard the petition and reserved orders on two occasions: 17.07.2023 and 19.12.2023
- The first reservation on 17.07.2023 was de-reserved on 18.08.2023 due to the transfer of one member to Kochi
- The second reservation on 19.12.2023 remains undecided as of the date of the writ petition
- Both members of the bench that reserved the matter on 19.12.2023 continue to be posted in Mumbai
- Two interim applications were filed by the petitioner: IA No.3764 of 2025 and IA No.507 of 2026
- IA No.3764 of 2025 was mistakenly listed before Court II instead of Court VI due to website misclassification
- Court II, on 10.10.2025, directed the petitioner to approach Court VI, acknowledging the matter belonged to the original bench
- IA No.507 of 2026 was heard by Court VI on 05.02.2026, where the court expressed inability to pass orders despite having heard the matter
Procedural History
- 2019: Company Petition filed under Section 7 IBC (C.P.(IB)/3500(MB)/2019)
- 17.07.2023: First reservation of the petition by NCLT Bench (Court VI)
- 18.08.2023: Petition de-reserved due to transfer of one member to Kochi
- 19.12.2023: Petition re-heard and reserved for orders by the same two members (now both in Mumbai)
- 2024: Intervention Application No.9 of 2024 filed
- 22.08.2025: IA No.3764 of 2025 listed before Court II
- 10.10.2025: Court II directs petitioner to approach Court VI
- 05.02.2026: IA No.507 of 2026 heard by Court VI; court expresses inability to decide
- 30.04.2026: Writ Petition filed before Bombay High Court
The Parties' Positions
The petitioner contends that the NCLT’s failure to deliver a final order after two hearings, coupled with administrative confusion over bench allocation, constitutes a violation of the statutory mandate under IBC for expeditious resolution. The petitioner asserts that the transfer of a member cannot justify indefinite delay, especially when both members remain in Mumbai.
The respondent, the Registrar of NCLT and the corporate debtor, did not file any written submissions. The court noted that no opposition was raised to the petitioner’s factual assertions.
Relief Sought
The petitioner sought directions to:
- Constituting a special bench of the same two members who reserved the matter on 19.12.2023
- Listing the petition for final disposal within a fixed timeframe
- Disposing of the intervention application filed in 2024
- Setting a final deadline for disposal
The Legal Issue
The central question was whether prolonged inaction by the NCLT in deciding a petition reserved for over two years, despite the availability of the original bench and statutory obligations under the IBC, constitutes a violation of the right to timely adjudication and warrants judicial intervention under Article 226 of the Constitution.
Arguments Presented
For the Petitioner
The petitioner relied on Anil Rai v. State of Bihar (2001) 7 SCC 318 and Ravindra Pratap Shahi v. State of U.P. (2025 SCC OnLine SC 1813) to argue that even constitutional courts are bound by the principle of timely disposal of reserved matters. The petitioner further cited the NCLT’s own office order dated 03.03.2025, which explicitly prohibits de-reservation of cases due to member transfers, to demonstrate that the NCLT itself recognizes the imperative of finality. The petitioner emphasized that the IBC’s entire architecture is premised on time-bound resolution, and delay of this magnitude defeats the statute’s purpose.
For the Respondent
No arguments were presented by the respondents. The court noted the absence of any opposition or explanation from the NCLT regarding the delay.
The Court's Analysis
The Bombay High Court observed that the IBC is a socio-economic legislation designed to ensure swift resolution of insolvency, with strict timelines embedded at every stage. The court noted that the petition had been heard and reserved twice, with the second reservation occurring on 19.12.2023 - over two years prior to the writ petition. The fact that both members of the bench remain stationed in Mumbai renders the earlier justification for de-reservation (transfer of a member) wholly inapplicable.
"The very object and purpose of proceedings before the NCLT under the IBC has been frustrated. A petition of this nature filed under Section 7 of the IBC about seven years ago is languishing before different Benches, even after having been heard finally on two occasions."
The court further held that the NCLT’s internal administrative confusion - including mislisting of interim applications and failure to maintain accurate case status - cannot be permitted to prejudice the rights of a financial creditor. The court emphasized that the NCLT’s own office order dated 03.03.2025, which prohibits de-reservation on account of transfer, implicitly acknowledges that reserved matters must be decided by the same bench unless exceptional circumstances exist - none of which were present here.
The court rejected the notion that the intervention application filed in 2024 could justify further delay, noting that such applications must be considered alongside the main petition, not as grounds for indefinite postponement.
The Verdict
The writ petition was disposed of with the following directions:
- The NCLT shall constitute a Special Bench comprising the same two members who reserved the petition on 19.12.2023 within two weeks from the date of judgment (by 14.05.2026)
- The Special Bench shall list the petition for directions within two weeks from the date of constitution (by 28.05.2026)
- The Special Bench may refresh itself on the record and hear the parties on the intervention application (IA No.9 of 2024)
- The entire matter, including the intervention application, shall be disposed of on or before 30.06.2026
- The Registrar of NCLT, Mumbai, shall ensure compliance and transmit a copy of this order to the concerned bench
What This Means For Similar Cases
Timely Disposal Is a Statutory Imperative Under IBC
- Practitioners may now invoke this judgment to seek judicial intervention where NCLT proceedings remain reserved beyond six months without justification
- Delay beyond the statutory timelines under IBC (180+90 days) is no longer merely procedural - it becomes a ground for writ relief
- The burden shifts to the NCLT to justify any delay in reserved matters, not to the petitioner to prove prejudice
Administrative Errors Cannot Override Judicial Accountability
- Misclassification of case status on NCLT portals or mislisting of applications cannot be used to evade responsibility
- Courts will not permit bureaucratic confusion to frustrate statutory rights under IBC
- NCLT’s internal office orders can be cited as binding norms in judicial proceedings
Intervention Applications Must Be Integrated, Not Delayed
- Applications filed after reservation must be heard and decided concurrently, not used as a pretext for further postponement
- The court’s directive to consider IA No.9 of 2024 alongside the main petition sets a precedent for integrated disposal
- Practitioners should file applications for urgent listing when interventions are filed post-reservation
