New Delhi, September 1: The National Company Law Tribunal (NCLT) has put a stay on its previous decision regarding the personal bankruptcy case of Essel Group founder Subhash Chandra. The tribunal has decided to rehear the case.
A five-member bench led by Justice (Retd) Anupinder Singh Grewal stated that there was no clear majority opinion on the ruling made on August 25. Notices have been issued to all parties involved in the matter.
Additionally, the NCLT has prohibited Chandra from transferring or selling his property directly or indirectly, following an appeal from Solicitor General Tushar Mehta representing the creditors. The NCLT remarked, “We also direct that the guarantor cannot transfer or sell his property directly or indirectly to anyone else.”
The bench included judicial members Bachu Venkata Balaram Das and Mahendra Khandelwal, along with technical members Atul Chaturvedi and Ravindra Chaturvedi.
This case arose after several contradictory orders in the bankruptcy proceedings initiated against Chandra by Indiabulls Housing Finance Limited. Previously, a two-member bench of the NCLT had delivered a split decision on the repayment plan, which was subsequently referred to a third member, judicial member Nilesh Sharma, under Section 419(5) of the Companies Act, 2013.
On August 25, Sharma approved the repayment plan under Section 114 of the Insolvency and Bankruptcy Code (IBC), instructing that claims submitted by Anil Kumar on behalf of 960 individuals and Sunil Jain on behalf of 300 individuals be excluded. He also directed that the allocated amount for these claims be redistributed among the remaining eligible creditors.
Sharma further stated that the approved plan would be binding on all creditors under the provisions of the IBC, including those who opposed it. However, when the matter returned to the original two-member bench, it was found that the disagreement among the original members had not been resolved, and no majority opinion was reached.
The technical member had rejected the repayment plan, while the judicial member attempted to limit its benefits to only subordinate creditors. Meanwhile, the third member had approved the plan, stating that it would apply to all creditors.
Due to the lack of consensus, the case was presented to the NCLT President, who formed a five-member bench for a fresh hearing.
This bankruptcy case has garnered significant national attention, as it involved a repayment plan of merely ₹6.5 crore against accepted claims of approximately ₹22,006.57 crore. This meant that creditors would face a staggering loss of about 99.97%. Several creditors, including LIC Housing Finance, Union Bank of India, and Canara Bank, opposed this plan, arguing that the proposed recovery was far too low.
LIC Housing Finance, with an approved claim of ₹1,322.39 crore, contended that the proposed payment of around ₹38.09 lakh represented only 0.028% of its approved dues. Union Bank of India has stated that it will challenge the NCLT’s approval before the National Company Law Appellate Tribunal (NCLAT), while HDFC Bank is also considering an appeal.
However, Chandra has objected to the proceedings being characterized as a massive personal debt write-off. He asserts that he did not personally borrow money from lenders and was only involved as a personal guarantor for loans taken by companies associated with the Essel Group.
Chandra also clarified that the ₹22,006 crore figure reflects the claims filed in the proceedings and should not be considered his personal outstanding debt. According to his statement, claims amounting to ₹21,696 crore were approved, while the total claims of creditors opposing the payment plan were approximately ₹3,992 crore.
Of this, claims worth ₹620 crore have already been settled, leaving around ₹3,372 crore remaining. He further noted that the borrowing companies had offered to pay approximately ₹1,113 crore to several objecting creditors, and negotiations are ongoing.
Leave a Comment