IBBI likely to push for dedicated NCLT benches for real estate insolvency

The proposal is at an early stage. The IBBI is likely to push for the dedicated benches once the Ministry of Corporate Affairs approves additional courts, sources told the New Indian Express. Every corporate insolvency case in India starts at the NCLT, which makes the tribunal's capacity the constraint on any real estate plan.

A tribunal short of judges

The NCLT has 16 benches with a sanctioned strength of 63 members, including the President, and 28 courts function across 15 cities, according to the latest IBBI data. The government has approved 31 new courts; none is operational yet. The IBBI has sought approval for 50 additional courts since 2022 and says more than 100 are needed nationwide.

"Once we have additional courts, we can plan dedicated benches for real estate insolvency cases," a source told the New Indian Express.

"Given the shortage of members, the tribunal's capacity has been under strain, leading to delays in insolvency proceedings," said Prateek Kumar, a partner in dispute resolution at Khaitan & Co.

Real estate is the second-largest source of insolvency admissions, at 22% of the 8,987 CIRPs admitted under the IBC, behind manufacturing, the IBBI's quarterly report shows. The sector also brings cost overruns and delayed completion on top of ordinary financial stress. The IBBI has proposed specialised benches for real estate, MSMEs and infrastructure, staffed with members who have relevant domain expertise, plus fast-track benches for specific categories of cases.

What the panel proposed in April

A committee chaired by Jayanti Prasad, a whole-time member of the IBBI, submitted its report on 8 April 2026. It examined 55 issues and produced 155 recommendations covering structural, procedural and institutional changes.

The central one is admission. CIRP in real estate should ordinarily be admitted project by project, with each project treated as an independent unit, and solvent, completed or unrelated projects of the same developer left out, the panel said. It suggested the MCA raise the minimum default threshold for real estate from Rs 1 crore to Rs 5 crore to cut premature or tactical admissions, and wanted project-linked escrow accounts to be mandatory.

Resolution plans would have to offer homebuyers a choice between taking possession and exiting with a refund. To keep that from being gamed, the adjudicating authority should sort genuine homebuyers from speculative investors at the admission stage, the panel said. It recommended that the resolution professional appoint an independent technical agency to audit tower-by-tower construction progress, estimate cost-to-complete at current market rates and report the status of all statutory approvals. It further proposed procedural consolidation of the land-holding entity and the development entity into a single economic unit for the limited purpose of a resolution plan.

The scale of the backlog

The IBBI's report on real estate insolvency, released in April 2026, put more than 550 real estate insolvency cases under way, affecting nearly 2.5 lakh individuals.

Finance Minister Nirmala Sitharaman told parliament that of 565 real estate cases admitted under the code, 111 involving 162,320 homebuyers had been resolved and another 210 were still in process. That leaves about two cases in process for every one resolved.

RERA at the table, without a vote

The IBBI is separately considering letting RERA representatives attend committee of creditors meetings, without voting rights, Financial Express reported on 26 May 2026. An official said the aim is to identify approval hurdles, compliance issues and feasibility concerns before lenders vote.

That follows the Supreme Court's February 2026 verdict in the Supertech case, which held that the claims of all creditors, including banks, would be considered only after the promised homes are delivered. At present RERA enters late, often after a resolution plan has been passed, leaving bidders unaware of legacy compliance problems and past promoter violations. Under the proposal, the regulator's role would stay advisory and observational, with the CoC remaining the decision-making body.

"The objective of the proposal is to give resolution applicants and homebuyers greater certainty, reduce avoidable delays, and improve the chances of actual project completion," said Manish Gupta, lead for corporate legal and secretarial at AKM Global.

What happens next

Budget 2024 announced extra NCLT benches, and nearly two years later there has been no implementation, a source told the New Indian Express. The panel's recommendations go to the MCA as suggestions. The Supreme Court's September 2025 order in Mansi Brar Fernandes directed the IBBI, in consultation with the RERAs, to frame real estate insolvency guidelines including timelines for project-wise resolution and safeguards for allottees.