Bombay High Court Orders Special Bench At NCLT To Dispose Of JM Financial's ₹167 Cr Insolvency Plea

On 30 April, the Bombay High Court directed the National Company Law Tribunal (NCLT), Mumbai to constitute a Special Bench and dispose of JM Financial Asset Reconstruction Company Ltd.'s Section 7 petition against Shubh Hospitality Private Ltd. by 30 June 2026, and expressed strong disapproval of how the Tribunal handled the matter.

A Division Bench of Justices Manish Pitale and Shreeram V. Shirsat emphasised that delays at the NCLT defeat the time-bound framework of the Insolvency and Bankruptcy Code, 2016 (IBC), and directed immediate steps to ensure pronouncement of a long-reserved order. They held:

“The NCLT, in the present case, has obviously not taken care of the requirement of quickly disposing of the pending petitions even if the judgements / orders are required to be reserved.”

JM Financial ARC filed the Section 7 petition in 2019 seeking initiation of the corporate insolvency resolution process against Shubh Hospitality Private Ltd. for defaults dating back to 2008, with outstanding dues of about Rs. 167 crore. One Bench heard the matter and reserved orders on 17 July 2023, but later de-reserved it after a member was transferred to Kochi.

Another Bench reheard the matter and reserved it again on 19 December 2023. Despite the lapse of over two years, the Tribunal did not deliver a final order. In the interim, it assigned the two members to different Benches, and a third party filed an intervention application, adding to the procedural complexity.

JM Financial ARC submitted that when it filed interim applications in 2025 and 2026 seeking urgent listing, it received contradictory directions: one Bench stated the matter belonged to another, while the other stated it could not pass orders.

The Court observed that the “very object and purpose of proceedings under the IBC has been frustrated,” and criticised the Tribunal for failing to ensure timely pronouncement of reserved matters.

Relying on the Supreme Court's decisions in Anil Rai v. State of Bihar (2001) and Ravindra Pratap Shahi v. State of UP (2025), the Bench reiterated that courts and tribunals must deliver judgments within a reasonable time after reserving them. It also referred to an NCLT office order dated 3 March 2025 directing that once a Bench reserves a matter, it should not de-reserve it merely because members are transferred.

The Bench noted that both members who reserved the matter on 19 December 2023 continue to serve in Mumbai, and held that no impediment exists to reconstituting the same Bench to pronounce the order.

The Court disposed of the writ petition and directed the NCLT, Mumbai to constitute a Special Bench of the two members within two weeks. It further directed the Tribunal to list the case under the caption “for directions,” and clarified that the Special Bench may consider the pending intervention application filed in 2024 along with the main petition.

Accordingly, the Court directed the NCLT to conclude the proceedings on or before 30 June 2026.

For Petitioners: Advocates Shyam Kapadia and Maynk Samuel and Neelanshu Roy