Resolving India Inc.’s disputes: Contracts, IBC and the road to a mature resolution culture

In this Leading Questions piece, Akshat Khetan reflects on India’s contractual dispute landscape, the journey of the Insolvency and Bankruptcy Code, the rise of mediation and arbitration and how dispute resolution is reshaping mergers, acquisitions and the wider economy.

Question: You have spent decades at the intersection of corporate debt restructuring, insolvency and litigation. What drew you to this space and how would you describe India’s dispute landscape today?

Answer: My entry into this field was shaped by a simple observation: in India, the fate of a business is often decided not in the boardroom but in the dispute that follows the boardroom decision. Early in my career, working on debt restructuring matters, I saw viable enterprises collapse not because their businesses had failed, but because the machinery for resolving their financial and contractual stress was slow, fragmented and adversarial.

That is what drew me in the conviction that dispute resolution is not a peripheral legal service but a core economic infrastructure. A country’s ability to enforce a contract, resolve insolvency and complete a merger on predictable timelines is as important to investment as its roads and ports

Today, the landscape is at an inflection point. We have a modern insolvency code, an increasingly arbitration-friendly judiciary, a new mediation framework and tribunals that are maturing. At the same time, we continue to grapple with delay, capacity constraints and a litigation culture that too often treats a dispute as a battle to be won rather than a problem to be solved. The tension between reformist legislation and institutional capacity is where most of the real action lies.

Question: The Insolvency and Bankruptcy Code is now approaching a decade in operation. How do you assess its journey and where has it fallen short?

Answer: The IBC is, in my view, the most consequential economic legislation of its generation. Its greatest achievement is not measured in recovery percentages but in behaviour. The credible threat of losing control of the company has fundamentally altered promoter conduct. A significant volume of debt is now settled before a case is ever admitted the shadow of the Code does as much work as the Code itself. Creditor-in-control has replaced debtor-in-possession and that single shift changed the balance of power in Indian credit markets.

That said, honesty demands we acknowledge the gaps. Timelines remain the Code’s weakest link resolution processes that were designed for 180 to 330 days routinely stretch far beyond and every month of delay erodes asset value. Haircuts in some cases have been painful, though I would caution against judging the Code solely by recoveries in legacy accounts where value had eroded years before admission. Tribunal capacity is the structural constraint: the NCLT and NCLAT need more benches, more members and better technology, because a world-class law administered through an overburdened forum will always underdeliver.

The next phase of the IBC must focus on three frontiers: a genuine framework for group insolvency, an effective cross-border insolvency regime and making pre-packaged resolution work at scale not just for MSMEs but across the corporate spectrum. Speed is not a procedural nicety under the IBC; it is the entire point of the statute.

Question: The judiciary has played a defining role in shaping the Code. How do you view the evolving jurisprudence?

Answer: The Supreme Court has, by and large, been the IBC’s institutional guardian. It upheld the Code’s constitutionality, protected the primacy of the committee of creditors’ commercial wisdom and drew a firm line against defaulting promoters reentering through the back door. The clean-slate principle that a successful resolution applicant takes the company free of past claims has been vital for giving acquirers confidence.

At the same time, jurisprudence is a living thing and some questions continue to generate uncertainty: the treatment of government and statutory dues, the rights of homebuyers and other classes of creditors and the scope of judicial review over commercial decisions. My consistent position is that courts should police process rigorously and defer on commerce. The moment adjudication begins to second-guess the commercial judgment of creditors, the predictability that attracts resolution applicants begins to erode. Certainty, even more than generosity, is what capital rewards.

Question: Arbitration and mediation are increasingly positioned as the answer to court congestion. Are we genuinely becoming a dispute resolution-friendly jurisdiction?

Answer: Directionally, yes and more decisively than sceptics admit. Legislative amendments have narrowed judicial interference; courts have repeatedly affirmed minimal intervention at the enforcement stage and institutional arbitration in India has grown from aspiration to reality. The days when every arbitral award was treated as merely the first round before three tiers of court challenge are, slowly, receding.

The Mediation Act is, to my mind, quietly revolutionary. Indian business culture has always resolved disputes through dialogue the statute finally gives that instinct legal architecture and enforceability. For commercial disputes particularly ongoing relationships like joint ventures, supply chains and family businesses mediation will often deliver what litigation cannot speed, confidentiality and a preserved relationship.

What still holds us back is culture more than law. Too many parties arbitrate as if they were litigating endless adjournments, procedural skirmishes, challenges to everything. And government entities, who are the largest litigants in the country, must lead by example in accepting awards and settling early. A jurisdiction becomes arbitration-friendly not when it amends its statute, but when its litigants change their habits.

Question: How is the dispute and insolvency landscape reshaping mergers and acquisitions in India?

Answer: Profoundly. The IBC has created an entirely new M&A market distressed acquisitions. Some of the most significant changes of corporate control in the last decade have happened through resolution plans rather than negotiated deals. For strategic and financial investors alike, the Code offers something Indian M&A has rarely offered before: the ability to acquire assets clean of legacy liabilities, with judicial sanctity.

This has also changed how conventional M&A is done. Diligence today is dispute-centric, as acquirers scrutinise pending arbitrations, contingent liabilities, related-party transactions and potential avoidance actions with far greater rigour. Deal documents devote real attention to indemnities, escrow structures and dispute resolution mechanics, because buyers have learnt that in India, the deal is only as good as its enforceability.

The frontier issues now are the interplay between the IBC and other regimes competition approvals within resolution timelines, tax treatment of haircuts and the rights of operational creditors in resolution-driven acquisitions. Harmonising these frameworks is the next great task of policy.

Question: Stepping back from the law what do you see as the larger economic stakes of getting dispute resolution right?

Answer: Everything, ultimately, comes back to trust. An economy is a network of promises between lenders and borrowers, promoters and investors, buyers and suppliers. The legal system’s job is to make those promises credible. When contract enforcement is slow, credit becomes costlier, equity demands a risk premium and honest businesses subsidise dishonest ones.

India’s ambition of becoming a developed economy will not be achieved by capital alone it requires legal certainty that matches the pace of commerce. That means adequately staffed tribunals and commercial courts, technology-enabled case management, regulatory frameworks that are enabling rather than prohibitive and a decisive shift from a culture of litigation to a culture of resolution.

I have always believed that economic development is largely dependent upon the legal landscape of a country. Laws should serve the greater good they should enable enterprise, protect the honest and hold the willful defaulter accountable, all at once. When resolution replaces attrition as the default instinct of Indian commerce, the economy will feel the difference in its cost of capital, its investment flows and its confidence.

Question: Finally, what is your advice to young professionals entering corporate law and insolvency practice?

Answer: Learn the business before you learn the brief. The best insolvency and dispute professionals I know can read a balance sheet as fluently as a bare act. The IBC, in particular, sits at the confluence of law, finance and strategy; mastery of any one alone is insufficient.

Second, build a reputation for fairness. In a recurring, interconnected practice like insolvency and dispute resolution, credibility with tribunals, creditors and counterparties compounds like interest. You are only as good as your last matter

And finally, remember why this work matters. Behind every resolution plan are employees, creditors and communities whose livelihoods depend on the outcome. Approach the work with that seriousness and the practice becomes not just a career but a contribution.

Akshat Khetan is the Founder of AU Corporate Advisory and Legal Services (AUCL), a Mumbai-headquartered corporate advisory and litigation services firm specialising in corporate strategy, mergers and acquisitions, debt restructuring, IBC and NCLT matters and dispute resolution across forums in India.