JM Financial Asset Reconstruction Company Ltd NCLT delay Corrected

The case arose from a writ petition filed by JM Financial Asset Reconstruction Company Ltd. complaining of extraordinary procedural stagnation before the NCLT Mumbai in a Section 7 insolvency proceeding pending since 2019 involving dues of approximately INR 167 crores. 

The insolvency petition had first been heard and reserved for orders in July 2023 but was subsequently de-reserved after transfer of one of the members. The matter was then reheard and again reserved for orders in December 2023, yet no judgment was delivered for more than two years despite repeated applications seeking listing and directions. 

The Bombay High Court found that the conduct of the proceedings frustrated the core objective of time-bound insolvency resolution under the IBC and relied upon Supreme Court jurisprudence concerning timely pronouncement of reserved judgments. The Court also relied upon an internal NCLT administrative order prohibiting de-reservation of matters merely because a member was transferred. 

The High Court consequently directed constitution of a special bench of the same members and imposed a strict timeline for disposal.