Five-member NCLT bench stays on Subhash Chandra’s ₹6.5 crore installment plan, says earlier order was not majority view | Today’s news

In a setback for Zee Group founder Subhash Chandra, a five-judge special panel of the National Company Law Tribunal (NCLT) on Tuesday upheld an earlier order approving his ₹Installment plan of 6.5 million crowns.

The Special Bench clarified that the earlier opinion of the third member, Nilesh Sharma, could not be applied as it did not represent the majority opinion of the tribunal.

The NCLT issued a notice to the stakeholders and sought their responses. The court said it will hear all parties thoroughly before making a final decision on the repayment plan. The outcome will determine the future of Chandra’s proposal, which was approved last week.

Minutes after the NCLT special trial concluded, Solicitor General Tushar Mehta appeared before the National Company Law Appellate Tribunal (NCLAT) for lenders including LIC Housing Finance, HDFC Bank and Union Bank of India. Lenders challenged the NCLT order approving Chandra’s repayment plan.

Mehta asked the NCLAT to consider whether its intervention was necessary now that the NCLT stayed the earlier order. The NCLAT posted the matter on Wednesday to consider whether it needs to examine issues related to the approval of Chandra’s repayment plan.

Quick answers to key questions

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A five-member special panel of the NCLT stayed Subhash Chandra’s installment plan, making it clear that the earlier approval did not represent a majority view of the tribunal.

The NCLT formed the five-member panel after finding that the previous three-member panel had failed to reach a majority consensus on how Chandra’s installment plan should work.

Before taking a final decision on the repayment plan, the NCLT will thoroughly hear all the parties involved and assess whether the dissenting creditors can recover their claims separately.

One member supported the application of the repayment plan only to beneficial creditors, while another was of the opinion that it should bind all creditors, including those who do not agree to it.

Yes, if the NCLT decides that the dissenting creditors are not bound by Chandra’s approved repayment plan, they can make independent recovery claims.

The special bench was constituted by NCLT president Justice Anupinder Singh Grewal on Monday evening after the previous tribunal found that there was no majority view on how the installment plan should work.

The five-judge bench comprises Justice Grewal, Justices Bachu Venkat Balaram Das and Mahendra Khandelwal Das and technical members Atul Chaturvedi and Ravindra Chaturvedi.

The development came on the same day lenders including LIC Housing Finance, HDFC Bank and Union Bank of India filed an urgent petition before the NCLAT challenging the NCLT order approving the Chandra repayment plan.

Different views

The NCLT, in its clarifying order on Monday, said its erstwhile members took different views on whether the repayment plan should be binding only on creditors who support it or on all creditors, including those who oppose it.

One member advocated allowing dissenting banks and financial institutions to pursue separate enforcement proceedings, while another argued that the approved plan should apply to all creditors.

The plan assumes ₹6.25 crores to be distributed among the creditors and ₹25,000,000 towards the costs of the insolvency proceedings, the total repayment being equal ₹6.5 million.

Mint announced that Sharma, who was appointed as the NCLT’s third member president in February, approved the repayment plan on August 25.

The plan received 80.81% support from lenders by value, but several major lenders, including HDFC Bank, Axis Bank, Canara Bank, RBL Bank and Union Bank of India, voted against it.

Read also | Subhash Chandra’s installment plan hits a snag; The NCLT consists of a 5-member bench

The case concerns Chandra’s liability as a personal guarantor for loans taken by several companies associated with Essel and Zee.

Government officials previously said that Mint that the case should not be taken to mean that Chandra personally borrowed thousands of crores of rupees. According to them, I guess ₹2,574 million in claims relate to loans for which Chandra had given personal guarantees when the loans were originally taken, while many other guarantees were subsequently provided as additional collateral.

The central issue before the larger bench is whether creditors who opposed Chandra’s repayment proposal can still pursue their claims separately or would be bound by the approved plan.

In approving the plan, Sharma noted that creditors had participated in the process and that no sufficient prejudice had been shown. It also held that the tribunal should not substitute its own business judgment for a decision supported by the requisite majority of creditors.

However, the NCLT clarification means that the earlier approval did not lead to a final majority decision on the matter.