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Tuesday, October 20, 2020


Anticipating the Unintended, an India-focused public policy newsletter completes one year

Anticipating the Unintended, an Indian public policy newsletter, completes one year on October 29th. This newsletter is about frameworks, mental models, and key ideas to help readers think about public policy problems in imaginative ways. 78 editions of the newsletter have gone out thus far.

The newsletter aims to bring insights from economic reasoning to contemporary issues in Indian governance. The target audience is anyone interested in knowing why the Indian governments’ many good intentions often end up having suboptimal consequences.

Anticipating the Unintended has two types of editions. Every weekend goes out a review edition which has mini-essays in four sections: a PolicyWTF section on egregious public policies, India Policy Watch: a section on burning public policy issues in India, A Framework A Week section on tools for thinking about public policy, and Matsyanyaaya on foreign policy. The mid-week edition has long-form essays in public policy.

Some highlight editions:

#39: Dispelling the Many Myths of Our Mythical Readers Part #1
#23: How to Think About the Indian State
#14: Today’s Deficits are Tomorrow’s Tax Hikes
#52: Trade Surplus, Truth Deficit
#35: Market: How Much - How Little - Is Within Its Power

Subscribe to the newsletter here. To collaborate, write to antiunintended[at]gmail[dot]com

Wednesday, October 14, 2020

Judicial triage in the lockdown: evidence from India's largest commercial tribunal

by Anjali Sharma and Bhargavi Zaveri.


An important idea in medical science is triage. It refers to the process of sorting patients for treatment, depending on the severity of their conditon and the likelihood of recovery. The medical triage process is governed by standard operating procedures (SOPs), which allow limited discretion to doctors and surgeons on the prioritisation of patients for treatment. Courts in India also perform a triage function, and they do this every day. They decide which cases will be scheduled for hearing on any given day and which will be heard on later dates. In a world of infinite court capacity, triage would not matter as much because all cases would come up for hearing in a short period of time. However, in the context of limited court capacity, triage becomes a critical element of the adjudication function. Unlike in the medical profession, in the judicial function, there are no settled rules or SOPs on how courts must triage. Given this, the decisions of courts on prioritising and de-prioritising matters are often the subject of intense scrutiny.

In ordinary times, case-scheduling is within the discretion of the judge and the court registry. While some judges pre-announce the manner in which they will prioritise matters for hearing, others do not. The practice of scheduling is often interrupted by matters that are 'urgent'. Urgent matters are taken up out of turn if the judge is convinced that there will be irreparable harm if the matter were not heard urgently. This makes triaging complex and discretionary enough in normal times.

Triaging becomes more complex in exceptional circumstances when courts are functioning at lesser than their usual capacity, such as, in the ongoing pandemic. Triaging in such exceptional circumstances is different from triaging in normal times. First, the nature of the "exceptional circumstance" might inherently offer some prioritisation. For example, during a pandemic, cases involving questions of public health would, at least intuitively, be more important than cases involving criminal defamation or suits for declaration of title to land. Second, unlike in routine triaging where courts prioritise matters, in exceptional circumstances, triaging is about de-prioritising matters. This makes the triaging decision more complex.

One such exceptional circumstance in the recent period was the announcement of the nationwide lockdown on 24th March. At the start of the lockdown, most Indian courts and tribunals restricted themselves to hearing only "urgent cases" through video conferencing (example, example and example). It is hard to pre-define the categories of cases that courts should consider urgent or non-urgent. Yet, there can be a common principal based framework for making this decision that can be applied depending on the kinds of cases that the court adjudicates. For example, in April 2020, when the courts in UK were functioning with limited capacity, the administrative body responsible for supporting the courts published guidance on Priority 1 cases and Priority 2 cases that the courts will hear. In the absence of such a framework in India, judicial triage in India during the pandemic continues to be done by the judges, the court registry or a combination of the two.

In this article, we ask the question: how did Indian courts perform this triage during the lockdown period? There is anecdotal evidence of inconsistency in practice across courts in determining the urgency of serious matters such as bail. Such evidence is valuable. However, data on patterns and the kind of cases that were heard by a court during the pandemic can shed light on how the courts actually perform this 'triage'. Such data-backed discourse on the prioritisation of cases at courts during the lockdown and otherwise, is currently missing.

We focus our question on the National Company Law Tribunal (NCLT), which is the largest commercial tribunal in India in terms of the number of laws it adjudicates. It adjudicates cases under the Companies Act, the Insolvency and Bankruptcy Code and the Limited Liability Partnership Act. It adjudicates a range of firm-related matters such as shareholder disputes, approvals for corporate actions and mergers and acquistions, proceedings against directors and companies and bankruptcy cases. In a previous article, we demonstrated the impact of the lockdown on the functioning of the NCLT. Using daily cause-lists as a source of our data, we found that there was a 95% drop in the number of cases heard by the NCLT during the lockdown period. With the NCLT functioning at such a low capacity, the question of prioritisation of cases at the NCLT is more critical as most of the cases were not likely to be heard during this period.

Data and methods

In order to study the prioritisation of cases at the NCLT and their treatment during the lockdown, we drew upon the daily cause-lists published by the NCLT. This data-set is described here.

Our study period spans three months. To identify whether there were any shifts in the composition of cases scheduled for hearing during the lockdown, we divide the study period into three phases: pre-lockdown, lockdown and unlock (Table 1). The pre-lockdown phase allows us to observe the regular functioning of the NCLT. The lockdown and the unlock phases allow us to observe court functioning in the post-Covid world.

Table 1: Study period

Phase Dates Days of data

Pre-lockdown 1st February to 24th March 34
Lockdown 25th March to 31st May 31
Unlock 1st June to 30th June 22

For our analysis, we classify the matters heard by the NCLT into three categories: matters under the Insolvency and Bankruptcy Code, 2016 ("IBC matters"), matters dealing with schemes of compromise and arrangements between shareholders or creditors and companies ("CA Schemes") under the Companies Act, 2013 and other matters under the Companies Act or the Limited Liability Partnership Act, 2008 ("other matters").

For our analysis period, from the NCLT website, we get data for 22 bench-court combinations. We use 18 of these, namely 6 courtrooms of the NCLT bench in New Delhi (including the Principal Bench), 5 courtrooms of the NCLT bench in Mumbai, 2 courtrooms for the bench in Kolkata, and one each for the benches in Bengaluru, Chandigarh, Cuttack, Guwahati and Jaipur. We exclude 4 bench-court combinations, 2 for Chennai, and one each for Allahabad and Kochi due to sparse causelist availability. Ahmedabad bench is excluded as no data is available.

Prioritization of scheme-related hearings

Table 2 shows the composition of the cases heard by the NCLT across the three phases of our study. Our analysis of the scheduling of cases in the pre-lockdown period shows that the pattern of hearing was being driven by the proportion of matters that were before the court. Since two thirds of the matters before the court were IBC related, the scheduling of hearings also reflected this pattern. Similarly, non-scheme Companies Act matters were getting heard in proportion to such matters being there before the NCLT.

However, we found that during the lockdown there was a sharp decline in the number of IBC cases scheduled for hearing. The share of IBC cases dropped from 68% in the pre-lockdown phase to 11% during lockdown. Even within the Companies Act cases, we found a sharp shift in the mix of prioritisation. In the pre-lockdown phase, the greater focus (22%) was on the Other matters. These comprise of matters such as shareholder disputes, matters involving the approval of corporate actions (such as the reduction of capital), proceedings against directors or the management and the dissolution of companies by striking them off the companies' register of the Registrar of Companies and so on. During the lockdown, CA Scheme-related matters were prioritised, not just above IBC matters but also above Other Companies Act matters. After the lockdown was lifted with effect from 1st June, the prioritisation pattern changed again and we found a near equal distribution of cases heard by the NCLT across these three broad categories.

Table 2: Composition of hearings in the causelist

Share of hearings (in %)

IBC CA Scheme Other matters Total

Pre lock-down 67.8 7.1 21.7 96.6
Lockdown 11.3 57.6 29.7 98.7
Unlock 34.2 32.7 31.1 98.0

The prioritisation of Scheme related matters during the lockdown period was done explicitly through the constitution of special benches in Mumbai and New Delhi for hearing scheme-related matters. This choice could have been driven by the fact that CA schemes are in respect of material corporate actions and are often undisputed. This would make them conducive for quick disposal. However, this does not necessarily mean that they were more urgent than the other two categories of matters. The only other category of matters that were prioritised were cases under Section 252 of the Companies Act. Section 252 of the Companies Act deals with appeals by a company against an order of dissolution passed against it by the Registrar of Companies.

The rationale underyling the prioritisation of cases heard during the lockdown period remains a puzzle. The pandemic and the nearly 10 week nationwide lockdown reportedly increased the financial distress in the economy. On 24th March, the Finance Minister announced the government's proposal to suspend the IBC if the situation did not improve by 3rd April. The IBC is widely perceived as the quickest tool for credit recovery in India. Given this perception, the announcement of a possible suspension of the IBC in March is likely to have accelerated the number of new cases under the IBC after 24th March, 2020.

Finally, on 5th June, 2020, the Central Government promulgated the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2020 ("IBC Suspension Ordinance"), which suspended the operation of the IBC in respect of COVID-related defaults. Simply put, debt defaults committed between 25th March and 24th September could not be used to trigger the IBC. This means that the number of hearings dedicated to the IBC ought to have dropped in the second or third week of June. Our analysis, however, shows that the share of IBC cases heard by the NCLT after 5th June reverted to nearly half its pre-lockdown share.

Old versus new cases

To understand the question of priortisation of cases better, we analyse the purpose for which IBC matters and CA Schemes were scheduled for hearing during the lockdown period.

Fig.1 is a two dimensional matrix graph that shows: (1) the categories of matters that were scheduled for hearing on the y-axis, and (2) the purpose for which matters were scheduled on the x-axis. On each graph, the red line indicates the start of the lockdown and the green line indicates the end of the lockdown. The number on the top of each graph indicate the average number of hearings that took place in each of the periods viz pre-lockdown, lockdown and unlock.

The graph shows us that in the pre-lockdown period, maximum new admissions were happening under IBC, followed by CA-Other matters. During the lockdown period, new admissions came to a near standstill across all categories of matters. However, in respect of old matters being scheduled for hearing, the prioritisation changed. IBC matters' hearings fell from a daily average of 265 in the pre-lockdown period to 2 during the lockdown. Other Companies Act matters fell from 94 to 16. However, Scheme related hearings continued at be scheduled at close their pre-lockdown levels. In the unlock phase, some new admissions started under IBC as well as Companies Act. There was also some improvement in the number of hearings scheduled for pre-existing IBC cases. However, the prioritisation of Companies Act matters over IBC, a pattern very different from the pre-lockdown phase, continued.

Puzzles on de-prioritisation of IBC cases

Our finding that the NCLT had nearly stopped scheduling new IBC matters and reduced the number of substantial hearings for pre-existing IBC matters during the lockdown, is worth analysing in the context of the executive actions in respect of the IBC. On 24th March, 2020, the Finance Minister had announced the government's intention to suspend the IBC. However, the precise contours of this suspension were not clear. One would imagine that the threat of a suspension in the near future would incentivise many categories of creditors to file their IBC cases before the suspension. However, the NCLT data shows that this was not the case.

Our analysis suggests that the IBC Suspension Ordinance might have had a pre-mature effect on the composition of cases heard at the NCLT during the lockdown. While the ordinance was promulgated only on 5th June, there is a sharp drop in the IBC cases heard by the NCLT from 24th March onwards, the date on which the potential suspension of the IBC was first announced by the Finance Ministry. It is possible that the announcement might have altered the behaviour of litigants who stopped pursuing IBC existing proceedings or filing new IBC cases due to the uncertainty caused by the announcement. The de-prioritisation of IBC cases during the lockdown period is suggestive of the extent to which the announcement of a possible suspension of the law affected the triage function in case scheduling.


Our analysis shows that the NCLT used its scarce capacity during the lockdown to dispose of existing, even if less contentious, cases such as the CA schemes. Further, the analysis on new v. old cases indicates that most of the schemes heard during the lockdown were the existing schemes. This is inconsistent with a common understanding of what might constitute an "urgent case". There might have been urgent matters under the IBC. For instance, matters where the resolution plan had been finalised and was awaiting the approval of the NCLT. In such matters, given the possible global impact of the pandemic, it was likely that the resolution plans already finalised might get withdrawn warranting an urgent hearing for the NCLT's approval of the resolution plan.

While our finding is specific to the NCLT, it underscores the need for courts to lay down a principle based approach to triaging in exceptional circumstances when the tribunal is functioning with limited capacity. This framework will need to address two issues: (1) what is an "exceptional circumstance", and (2) what is an "urgent matter" in an exceptional circumstance. This framework can emerge in two possible ways. It could emerge through case-law that acts as precedent or has persuasive value. This is a slow and evolving approach. The other approach is to allow judges to pre-define this framework and publish it. Such a framework will further the cause of the rule of law, transparency and the delivery of justice when courts function with limited capacity during the pandemic.

Central to the triaging problem is also the idea of case management and court administration in normal times. Currently, there is no common framework that informs the average litigant on the manner in which a date will be assigned to her case. Much depends on the court and within the court, the judge to whom the matter is assigned for hearing, the nature of the case, the urgency of the interim relief sought, the existing backlog and the court registry. Exceptional circumstances simply exacerbate the complexity of the judicial triage for courts as resources are even more limited than in ordinary circumstances, but the problem nevertheless exists on a daily basis. In a system constrained by resources, the order of priority assigned to a case has substantive repurcussions for all the stakeholders involved in a case. In the absence of certainty on triaging, the system is vulnerable to abuse. It compels a litigant to rely on the registry, the judge and the lawyer. Resultantly, the system is naturally titled towards litigants who can afford competent lawyers.

Finally, it is common for private organisations that handle work of the scale handled by courts to implement a medium to long term plan outlining the phases in which they will resume full scale functioning. In several jurisdictions, courts have published their medium term strategy to restore full-scale operations (example; example). Given the uncertainty on the time horizons of the pandemic, Indian courts must endeavour to publish their strategy and plan for functioning at full-scale. This is essential for justice delivery and the public confidence in the judiciary's ability and willingness to get back on its feet.

The authors are researchers with the Finance Research Group. They would like to thank Ajay Shah for useful discussions, an anonymous referee for inputs on this article and Rahul Somani for developing the code for constructing the data-set.