NCLT Admission Lag: 14 Day Rule of Admission

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NCLT Admission Lag: 14 Day Rule of Admission

I. Abstract

For almost a decade, the 14 day timeline under Section 7(4)¹ of the Insolvency and Bankruptcy Code, 2016 (IBC) was treated by the Adjudicating Authority(AA) as directive rather than mandate. This delay led to the Admission Lag, where corporate insolvency applications took months even years in some cases for admissions. Following the Insolvency and Bankruptcy Code (Amendment) Bill, 2025², the NCLT’s discretionary borders have been fortified, transforming the admission stage from a substantive trial into a streamlined verification process. This shift transforms the admission stage from a mini trial into a time bound default establishment process, supported by a new accountability mechanism where Benches must record written reasons for any delay.

II. Introduction

The Insolvency and Bankruptcy Code, 2016³ has served as a cornerstone of Indian credit markets. Its primary goal was to upgrade previously followed insolvency resolution mechanisms with a time bound resolution process⁴. However the past 10 years have revealed a significant problem at the very entrance of the procedure – Admission of the Corporate Insolvency Resolution Process. The Insolvency and Bankruptcy Code (Amendment) Bill, 2025, represents an attempt to fix this by mandating the 14 day rule, the amendment aims to ensure that the entry point of insolvency does not become the reason for asset value decay.

III. Framework for Admission of CIRP

Under Section 7(4) of the IBC, the Adjudicating Authority which is NCLT must establish the existence of default within 14 days of receiving an application. This timeline has been treated as directory than mandatory as in the initial year of enforcement of the code in a landmark judgement of Surendra Trading Company v. Juggilal Kamlapat Cotton Spinning and Weaving Mills (2017)⁵, the Supreme Court upheld the decision by NCLAT in JK Jute Mills Company Ltd. v. M/s Surendra Trading Company⁶ of making the first step, which is the admission stage, mainly the timeline as directory than mandatory and held that procedural requirements should not obstruct the cause of justice, unaware that this would lead to a long delay in admissions. It can be seen in cases having their resolution plans approved from January to December 2025 that of all cases, 99% have faced delay at the admission stage⁷ .

IV. Problem: Establishing Default to Pre- Admission Trials

One of the core reasons for delay is expansion of scope of inquiry by AA at the time of admission stage⁸. Instead of merely identifying the defaults, the AA has often allowed multiple rounds of pleading and rejoinder and also entertained previous disputes of the company even before admitting the case⁹. What should be a simple check of default often evolves into a complex trial without even being admitted causing admission stage pendency. The NCLT in its defence has the judgement of Surendra Trading Company v. Juggilal Kamlapat Cotton Spinning and Weaving Mills which makes the timeline a directive. But this goes against the core design principle of time bound resolution under which the IBC was drafted.¹⁰

V. Admission Delays: Mandate vs Reality

The mandate under IBC requires admission in 14 days but in reality it takes far more. An empirical research was conducted to find the actual time taken for admission under which sample cases which had their resolution plan approved from January to December of 2025 were taken.¹¹

Total Number of Cases- 252
CIRP initiated by-
Financial Creditor	Operational Creditor	Corporate Debtor
183	59	10
Findings-
Average Time taken (From Filling to Admission)- 526 Days
Number of cases that follow statutory timeline- 2
Number of cases that deviate from statutory timeline- 250
Percentage of Cases that breach timeline- 99.2%

This empirical data provides a validation of the delay at admission of the insolvency process. By analyzing the 252 cases, it can be concluded that for the cases having their resolution plan approved in 2025, the 14 day rule for admission has transitioned from a statutory mandate to a procedural bottleneck and has caused delay to the overall procedure. These data problems do not arise in a vacuum. The NCLT’s sanctioned strength is 62 members; in September 2021, actual strength had fallen to 28. DAKSH’s Time and Motion Study found that only 64 per cent of sanctioned members were actively presiding during the observation period, and that members frequently failed to sit for the required number of hours.⁸ Vacancy rates are not evenly distributed across benches or time periods, but this information does not appear in published data. This means that any regression model treating NCLT bench as a fixed effect without controlling for contemporaneous vacancy levels is misspecified. A further complication is that NCLT benches do not apply the IBC uniformly. Divergences in approach on contested issues, the treatment of related-party creditors, and the interpretation of timelines have been flagged repeatedly. As the IBC Brief published by IICA observed, “the divergences in approach among NCLT benches erode the integrity of the insolvency process.”⁹ For econometric research, this means that a resolution outcome at the Mumbai bench and one at the Hyderabad bench may not be comparable observations drawn from the same institutional process.

VI. Transition from 2019 Amendment to 2025 Amendment Bill

Aspect	2019 Amendment	2025 Amendment (Proposed)
Admission	Section 7(4) proviso	Section 7(5) operative clause and 7(4) proviso shall be omitted
Proof of Default	Financial records were used, but often contested, leading to long pre-admission trials.	Section 7(5) Explanation 2 provides Information Utility (IU) records are now treated as sufficient evidence of default
Record Reasons for Delay	Section 7(4) proviso states If the Adjudicating Authority does not ascertain the existence of default within 14 days, it shall record reasons in writing for delay.	Section 7(5)(b) If the Adjudicating Authority has not passed an order for admission within a period of fourteen days from the date of receipt of the application, it shall record the reasons for such delay in writing.

The main change in admissions from the 2019 Amendment to the 2025 Amendment lies in the strengthening of the language regarding the NCLT’s obligation to admit a case. The 2019 Amendment added a proviso to Section 7(4) stating if NCLT does not ascertain default within 14 days, it must record reasons in writing for delay. While in practice it can be seen through the empirical research provided above that still 99.2% of cases fail to adhere to the timelines. In the 2025 Amendment the language used in Sec 7(5) in the operative clause for AA makes it stricter and shifts focus from ‘why delay’ to’ must admit’. Also the reliance on IU taken in 2025 amendment as deciphered in Insolvency law committee reports of 2020 and 2022 aims to provide easement in admission of cases and elimination of multiple admission hearings.¹²¹³

VII. Challenges in Implementation

Despite the legislative intent, NCLT remains the hurdle. The behavioural issue that has been set due to the timeline being made directory and not mandatory in nature by the apex court has impacted the working of NCLT. Cases are often being handled in the same way as adversarial matters with multiple hearings, while the goal is to resolve the insolvency in a timely manner so that asset value does not erode¹⁴.

VIII. Conclusion

The 14 day rule is a timeline which defines entry in Insolvency resolution. If the 2025 Amendment succeeds in shrinking the average time taken of 526 days for admission, it would ensure the principle of IBC which is time bound resolution. The transition from long trials at admission to verification of default for admission is something which was long pending to ensure that the entry gate of the insolvency procedure does not become a hurdle for the whole insolvency regime in India.

¹The Insolvency And Bankruptcy Code, 2016, ss 7(4)
²The Insolvency and Bankruptcy Code (Amendment) Bill, 2025: https://prsindia.org/files/bills_acts/bills_parliament/2025/The_Insolvency_and_Bankruptcy_Code_(Amendment)_Bill,2025.pdf
³The Insolvency And Bankruptcy Code, 2016, Available at: https://www.indiacode.nic.in/bitstream/123456789/15479/1/the_insolvency_and_bankruptcy_code%2C_2016.pdf Accessed on 7th March, 2026
⁴Bankruptcy Law Reforms Committee, Report of the Bankruptcy Law Reforms Committee, Vol I (2015), Available at: https://ibbi.gov.in/BLRCReportVol1_04112015.pdf Accessed on 7th March, 2026
⁵Surendra Trading Co. v. Juggilal Kamlapat Jute Mills (2017), 16 SCC 143.
⁶JK Jute Mills Company Ltd. v. M/s Surendra Trading Company,CA(AT) No. 9 Of 2017, Available at: https://ibbi.gov.in/1stMay17JKJuteMills_SurendraTradingALD2017.pdf Accessed on 8th March, 2026
⁷Empirical Research Dataset https://docs.google.com/spreadsheets/d/1gDmLhrOckZ8wH6bTmr-Lv-OLM6fdSc9ToJFW7zm7hDY/edit?gid=0#gid=0
⁸K. Bansal, Financial Creditors and their Stake in the IBC Process (2023), IBC Evolution, Learnings and Innovation, IBBI,Pg 5 Available at: https://ibbi.gov.in/uploads/whatsnew/525cbe1dd3b1f9fd9866fe77676a96ae.pdf
⁹Innoventive Industries Ltd. v. ICIC Bank Ltd., (2018) 1 SCC 407.
¹⁰Swiss Ribbons Pvt. Ltd. v. Union of India, (2019) 4 SCC 17.
¹¹Empirical Research Dataset https://docs.google.com/spreadsheets/d/1gDmLhrOckZ8wH6bTmr-Lv-OLM6fdSc9ToJFW7zm7hDY/edit?gid=0#gid=0

NCLT Admission Lag: 14 Day Rule of Admission

Table of Contents

I. Abstract

II. Introduction

III. Framework for Admission of CIRP

IV. Problem: Establishing Default to Pre- Admission Trials

V. Admission Delays: Mandate vs Reality

VI. Transition from 2019 Amendment to 2025 Amendment Bill

VII. Challenges in Implementation

VIII. Conclusion

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NCLT Admission Lag: 14 Day Rule of Admission

Table of Contents

I. Abstract

II. Introduction

III. Framework for Admission of CIRP

IV. Problem: Establishing Default to Pre- Admission Trials

V. Admission Delays: Mandate vs Reality

VI. Transition from 2019 Amendment to 2025 Amendment Bill

VII. Challenges in Implementation

VIII. Conclusion

SHARE

RECENT ARTICLES

GSTAT’s Real Challenge Is Not Backlog – It Is Transition!

National Judicial Reforms Commission: A proposal we ignore at our peril [Part II]

National Judicial Reforms Commission: A proposal we ignore at our peril [Part I]

We’re not ready for ‘One Case One Data’. Court records are too unorganised for digitisation

Satyansh Singh Parmar ​

Satyansh Singh Parmar