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India’s Insolvency and Bankruptcy Code (IBC) has been a remarkable reform, bringing much-needed structure to resolving distressed assets. It has successfully transformed how businesses, creditors, and investors approach insolvency, marking a significant step forward in India’s economic evolution. However, its achievements could have been even more pronounced if they were complemented by targeted judicial reforms.
The judiciary plays a pivotal role in the success of the IBC. Yet, delays caused by case backlogs, a lack of specialized knowledge, and limited judicial capacity have often slowed its implementation. As Prime Minister Narendra Modi envisions Viksit Bharat—a developed India by 2047—strengthening our judicial framework is no longer an option but a necessity. The time has come to address these gaps and ensure that the judiciary becomes a true enabler of economic growth.
Building a Judiciary for a Modern Economy
One of the biggest hurdles facing the judiciary is its sheer workload. With over 47 million cases pending across various courts, delays have become the norm rather than the exception. These delays not only undermine the IBC’s effectiveness but also discourage investment and hinder business recovery.
To tackle this, a key reform could be to extend the retirement age of judges. Currently, Supreme Court and High Court judges retire at 65. Raising this to 75, with an assessment of health and capability at 70, would allow the judiciary to retain its most experienced minds for longer. This simple step could go a long way in addressing the capacity crunch.
The Case for Specialized Insolvency Courts
Insolvency cases require a deep understanding of financial restructuring, business operations, and economic principles—areas that often go beyond traditional legal training. While our judges are skilled, they may not always have the technical expertise needed to navigate such complexities effectively.
Countries like the US, Germany, Brazil, and South Korea have specialized courts for insolvency cases, and their success offers valuable lessons. India, too, could benefit from specialized insolvency courts or appointing judges trained specifically in commercial and insolvency laws. Such reforms would not only speed up case resolutions but also enhance the confidence of investors in India’s economic framework.
Blending Legal Expertise with Practical Knowledge
While the judiciary excels in interpreting laws, insolvency cases often require insights that come from real-world business experience. To bridge this gap, the judiciary could take inspiration from tribunals like the National Company Law Tribunal (NCLT), which includes technical members.
However, many of these technical members are retired bureaucrats or tax officials. While their contributions are valuable, the judiciary could expand its pool to include professionals from finance, accounting, and business leaders. Senior professionals willing to contribute their expertise could add significant depth to judicial decisions, ensuring they align with both legal principles and economic realities.
Expanding Capacity and Quality
Beyond expertise, the judiciary needs to focus on sheer numbers. India needs more judges across all levels of the judicial system to tackle the mounting backlog. But quantity alone isn’t enough—the quality of judges is equally important.
This means recruiting individuals with diverse expertise and providing continuous training. Judges must stay updated on global best practices, especially in emerging areas like insolvency and commercial law. While commercial courts were introduced to handle such cases, their effectiveness has been limited due to a lack of specialized training. It’s time to change that.
The Economic Cost of Delays
Every delay in resolving an insolvency case is a missed opportunity for economic growth. Businesses lose value, jobs are at risk, and investor confidence takes a hit. These are not abstract issues—they directly impact people’s lives and livelihoods.
As PM Modi’s vision of Viksit Bharat shows, economic growth and social progress go hand in hand. A swift and specialized judiciary can provide businesses with the clarity and confidence they need to thrive, ultimately contributing to the nation’s development.
Looking Ahead: A Call for Bold Reforms
Judicial reform isn’t just about fixing backlogs—it’s about creating a system that empowers businesses, supports economic recovery, and instils trust. Raising the retirement age of judges, establishing specialized insolvency courts, and integrating technical expertise are practical steps that could transform India’s judiciary into a true enabler of growth.
The IBC has already proven its potential. Now, it’s time to build on that success by ensuring the judiciary can rise to the occasion. A modern, efficient judiciary isn’t just an economic necessity—it’s a cornerstone of India’s aspiration to become a global leader.
India has the talent, the vision, and the ambition. With the right reforms, our judiciary can become a catalyst for a stronger, more resilient nation.
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Views expressed above are the author’s own.
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