NCLT puts Subhash Chandra repayment plan on hold, bars him from alienating properties

A five-member special bench of the National Company Law Tribunal (NCLT) on Tuesday issued notices to all parties in the personal insolvency case of Essel Group chairman Subhash Chandra and directed him not to alienate his properties, directly or indirectly.

The bench, headed by NCLT President Justice Anupinder Singh Grewal, said there was no majority view on the proposed repayment plan and, therefore, no final order could be given effect to at this stage.

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"Let notice be issued to all the parties," the NCLT said.

The tribunal further directed, "We also direct that the guarantor shall not alienate the properties, either directly or indirectly. Respectful submissions."

The case centres on a repayment plan under which creditors are set to recover about Rs 6.25 crore from Chandra's personal estate against admitted claims of roughly Rs 22,006 crore.

Chandra has said the Rs 22,006 crore figure has been widely misunderstood, as the claims arise from personal guarantees he had provided for loans taken by companies associated with the Essel Group and do not represent money he personally borrowed.

Justice Grewal said the special bench wanted to examine the scope of the dispute and hear all parties, including the dissenting creditors.

"You can address your concerns, whatever they are. Then we will, around the next date, take up whatever questions have come up," he said.

The matter reached the five-member bench after a two-member NCLT division bench comprising Ashok Kumar Bhardwaj, Member (Judicial), and Reena Sinha Puri, Member (Technical), delivered differing views on the repayment plan.

The case was subsequently referred to a third member. The third member approved a plan under which creditors would recover about Rs 6.25 crore from Chandra's personal estate against claims of around Rs 22,006 crore.

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However, the PSU banks and other dissenting creditors challenged the third member's order before the National Company Law Appellate Tribunal (NCLAT).

The five-member NCLT bench on Tuesday said that since no majority view had emerged among the tribunal members, including the third member, there was no final order that could be implemented.

The dispute also centres on how the provisions of the Insolvency and Bankruptcy Code governing repayment plans and personal guarantees should be interpreted, particularly in relation to the rights of creditors who opposed the plan.

The dissenting creditors had argued that the proposed recovery was inadequate against their admitted claims and challenged the extinguishment of their rights under the plan.

Meanwhile, shortly after the NCLT hearing concluded, NCLAT took up the appeal filed by the dissenting creditors.

Solicitor General Tushar Mehta, appearing for LIC Housing Finance, Canara Bank and Union Bank, among others, sought an early hearing.

The appellate tribunal has now directed that the matter be listed on Wednesday.