NCLT Five-Member Bench Stays Subhash Chandra's ₹6.5 Crore Repayment Plan, Says Earlier Order Was Not Majority View

(MENAFN- Live Mint) In a setback for Zee Group founder Subhash Chandra, the National Company Law Tribunal's (NCLT) five-member special bench on Tuesday stayed an earlier order approving his ₹6.5 crore repayment plan.

The special bench clarified that the earlier opinion of the third member, Nilesh Sharma, cannot be given effect as it did not constitute a majority view of the tribunal.

The NCLT issued notices to the parties involved and sought their replies. The bench said it would hear all parties at length before taking a final decision on the repayment plan. The outcome will determine the future of Chandra's proposal, which was approved last week.

Quick answers to key questions

.5 QUESTIONS1What is the current status of Subhash Chandra's ₹6.5 crore repayment plan?⌵

The NCLT's five-member special bench has stayed Subhash Chandra's repayment plan, clarifying that the earlier approval did not represent a majority view of the tribunal.

2Why did the NCLT constitute a special five-member bench for Chandra's case?⌵

The NCLT formed a five-member bench after discovering that the previous three-member bench could not reach a majority consensus on how Chandra's repayment plan should operate.

3How will the NCLT decide the future of Subhash Chandra's repayment proposal?⌵

The NCLT will hear all parties involved extensively before making a final decision on the repayment plan, assessing whether dissenting creditors can recover their claims separately.

4What differing views emerged among members regarding Chandra's repayment plan?⌵

One member supported applying the repayment plan only to creditors in favor of it, while another held that it should bind all creditors, including those who opposed it.

5Should creditor institutions that opposed the repayment plan consider pursuing separate recovery proceedings?⌵

Yes, if the NCLT determines that dissenting creditors are not bound by Chandra's approved repayment plan, they may pursue independent claims for recovery.

The special bench was constituted by NCLT president Justice Anupinder Singh Grewal on Monday evening after the tribunal's earlier bench found that there was no majority view on how the repayment plan should operate.

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

The development came on the same day that creditors including LIC Housing Finance, HDFC Bank and Union Bank of India moved an urgent plea before the National Company Law Appellate Tribunal (NCLAT) challenging the NCLT's order approving Chandra's repayment plan.

Different views

The NCLT, in its clarification order on Monday, said its earlier members had taken different views on whether the repayment plan should bind only creditors who supported it or all creditors, including those who opposed it.

One member had favoured allowing dissenting banks and financial institutions to pursue separate recovery proceedings, while another held that the approved plan should apply to all creditors.

The plan provides for ₹6.25 crore to be distributed to creditors and ₹25 lakh towards insolvency process costs, taking the total repayment to ₹6.5 crore.

Mint had reported that Sharma, who was appointed as the third member by the NCLT president in February, approved the repayment plan on 25 August.

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

Also Read | Subhash Chandra's repayment plan hits hurdle; NCLT forms 5-member bench

The case concerns Chandra's liability as a personal guarantor for loans taken by several Essel and Zee-linked companies.

Government officials had earlier told Mint that the case should not be understood as Chandra personally borrowing thousands of crores of rupees. According to them, about ₹2,574 crore of the claims relate to loans for which Chandra had provided personal guarantees when the loans were originally taken, while many other guarantees were subsequently given as additional security.

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

While approving the plan, Sharma had held that creditors had participated in the process and that no sufficient prejudice had been established. He also held that the tribunal should not substitute its own commercial assessment for the decision supported by the required majority of creditors.

However, the NCLT's clarification means that the earlier approval did not result in a final majority order on the issue.

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