Mumbai: A five-member bench of the National Company Law Tribunal (NCLT) has stayed the approval of Zee Group founder Subhash Chandra’s repayment plan.
The plan, approved on August 25, allowed payment of Rs 6.25 crore against creditor claims exceeding Rs 22,006.57 crore.
The tribunal also restrained Chandra from directly or indirectly selling, transferring or creating third-party rights over any of his assets. Notices have been issued to all parties concerned.
This is reportedly the first time that a five-member bench has been constituted in NCLT’s history. It is headed by NCLT President Justice Anoopinder Singh Grewal.
Why was the plan stayed?
The larger bench observed that the August 25 order did not reflect a clear majority opinion. All three members who had considered the case earlier expressed different views.
Judicial member Ashok Kumar Bhardwaj supported approving the plan only for consenting creditors. Technical member Reena Sinha Puri rejected it because of procedural deficiencies, while member Nilesh Sharma approved it with modifications.
The absence of a majority led the NCLT president to constitute the special five-member bench.
Claims linked to personal guarantees
The Rs 22,006.57 crore amount does not represent loans personally taken by Chandra. It relates to personal guarantees provided by him for loans raised by Essel Group companies.
When the principal borrowers defaulted, creditors invoked the guarantees and filed claims against Chandra.
Chandra has maintained that some creditors filed claims even after receiving their entire dues.
Lenders challenge settlement
LIC Housing Finance led the opposition to the repayment plan, calling it “unviable and illegal”. Against its admitted claim of Rs 1,322.39 crore, the lender was reportedly offered only Rs 38.09 lakh.
The plan had received support from creditors holding 80.81% of the voting share. Dissenting lenders, including LIC Housing Finance, HDFC Bank, Canara Bank, Axis Bank, RBL Bank and Union Bank of India (UK), held comparatively smaller voting shares.
Some dissenting lenders also approached the National Company Law Appellate Tribunal (NCLAT). Solicitor General Tushar Mehta, appearing for LIC Housing Finance, Canara Bank and Union Bank, argued that approving such a small settlement against Rs 22,000 crore of claims would undermine the purpose of insolvency law.
The stay means Chandra cannot presently dispose of his assets, while the proposed settlement remains suspended pending further proceedings.
