NCLT Stays Approval of Subhash Chandra’s ₹6.25-Crore Repayment Plan

The newly constituted five-member Bench of the National Company Law Tribunal (NCLT), New Delhi, on September 1, stayed the NCLT Order on Subhash Chandra 22000 Crore Debt. The said order approved a repayment plan proposed by Essel Group founder Dr. Subhash Chandra, under which creditors were to receive ₹6.25 crore against admitted claims of ₹22,006.57 crore. 

The Bench, headed by NCLT President Justice Anupinder Singh and comprising Judicial Members Bachu Venkat Balara Das and Mahendra Khandelwal, and Technical Members Atul Chaturvedi and Ravindra Chaturvedi, also restrained Chandra from directly or indirectly alienating or transferring his properties. 

The direction followed Solicitor General Tushar Mehta’s submission, appearing for the creditors, seeking protection against any alienation of the guarantor’s assets. The Tribunal has also issued notices to the parties. 

Repayment Plan of Nearly 99.9% Haircut 

Subhash Chandra’s repayment plan proposed payment of ₹6.25 crore to creditors along with ₹25 lakh towards insolvency resolution process costs, against admitted claims aggregating ₹22,006.57 crore. 

The proposal represented a haircut of nearly 99.9%. Despite the substantial reduction, creditors representing 80.814% of the voting share had voted in favour of the plan. 

Divergent Views Before NCLT 

The matter reached the five-member Bench after the original two-member Bench failed to arrive at a majority view on the validity and scope of the repayment plan under the Insolvency and Bankruptcy Code, 2016 (IBC). 

Judicial Member Ashok Kumar Bhardwaj had favoured approval of the plan, while Technical Member Reena Sinha Puri rejected it. The matter was subsequently placed before Judicial Member Nilesh Sharma as the third Member. 

In his August 25 order, Sharma supported approval of the repayment plan, holding that the statutory voting threshold had been satisfied. He observed that opposition by certain creditors or concerns regarding Chandra’s financial dealings, by themselves, were insufficient to reject the plan. 

Section 419(5) Companies Act Reference 

The reference to the larger Bench was made under Section 419(5) of the Companies Act, 2013, which permits a matter to be referred when Members hearing it differ in their opinions. 

The original Bench noted that the third Member had passed an independent order rather than specifically resolving the points of disagreement between the two Members. With no majority opinion emerging, the matter was consequently placed before the newly constituted five-member Bench. 

The larger Bench will now consider the validity and scope of the repayment plan, while the interim restraint on alienation of Chandra’s properties remains in place.