NCLT Delhi Approves Zee Founder Subhash Chandra's ₹6.5 Cr. Repayment Plan Against ₹22,006 Cr. Claims

The National Company Law Tribunal (NCLT), New Delhi, on 25 August approved the repayment plan of Dr. Subhash Chandra, chairman of the Essel Group and founder of Zee TV, under Section 114 of the Insolvency and Bankruptcy Code, 2016 (IBC), subject to the exclusion of two unsupported claims.

A Bench comprising Judicial Member Nilesh Sharma, acting as the Third Member after the Judicial and Technical Members delivered conflicting opinions, held that the requisite majority of creditors had approved the plan and directed that the matter be placed before the Original Division Bench for passing appropriate orders in terms of the majority opinion. Sharma observed:

“The requisite majority of creditors voted in favour of the Repayment Plan. The fact that certain creditors have opposed the Plan or have raised objections regarding the financial affairs of the PG does not, by itself, render the Plan incapable of approval.”

Indiabulls Housing Finance Ltd. initiated the insolvency process against Dr. Chandra in 2022 under Section 95 of the IBC, seeking insolvency resolution against him as a personal guarantor. Interim orders of the Supreme Court delayed the proceedings until April 2024, when the petition was admitted.

Resolution Professional Shiv Nandan Sharma subsequently placed a repayment plan before creditors, offering Rs. 6.25 crores to them and Rs. 25 lakhs towards process costs, against admitted claims of Rs. 22,006.57 crores. Despite the approximate 99.9 per cent haircut, creditors holding 80.814 per cent of the voting share approved the plan.

RBL Bank, Canara Bank, HDFC Bank, IDBI Trusteeship and IndusInd Bank filed independent applications challenging the plan, while LIC Housing Finance, impleaded as Respondent No. 13, also raised objections. STCI Finance separately challenged the plan. The objections concerned alleged procedural irregularities, negligible recovery and the inclusion of entities alleged to be associates in the voting process.

The Judicial Member upheld the plan, while the Technical Member rejected it, resulting in a reference to Sharma as the Third Member.

IndusInd Bank contended that the Resolution Professional had committed material violations of the IBC, including Section 100(2), by failing to hold meaningful negotiations between Dr. Chandra and the creditors. The dissenting creditors also alleged that they were given only six days to consider the plan and that the extended voting period closed on 31 October 2024, a Diwali public holiday. Sharma rejected the objection, noting that the creditors had unanimously agreed to shorten the notice period and that creditors holding over 95 per cent of the voting share participated in the process.

LIC Housing Finance highlighted the proposed repayment of Rs. 38 lakhs against its admitted dues of Rs. 1,322 crores and argued that a personal guarantor could not dilute his liability by relying on payments made by principal borrowers. The creditors also relied on net worth certificates furnished to RBL Bank in 2017 and Canara Bank in 2018, which reflected Dr. Chandra's net worth at USD 7.17 billion and Rs. 40,562 crores respectively.

Dr. Chandra argued that the objections regarding associates were misconceived because he held no direct shareholding in Veena Investments or its subsidiaries. He also submitted that the net worth statements were based on the assets of promoter group companies rather than assets personally owned by him.

The Tribunal clarified that while Section 114 requires approval or rejection of a repayment plan based on the Resolution Professional's report under Section 112, the Adjudicating Authority retains supervisory jurisdiction to ensure compliance with statutory provisions. It observed:

“The AA neither substitutes its own commercial wisdom for that of the creditors nor does it conduct a wide-ranging investigation into allegations that are unsupported by reliable material. Its role is supervisory, corrective and judicial, not investigative unless the statute so requires.”

On the issue of associates, Sharma held that the concept under Section 79(2)(g), applicable to personal insolvency, was distinct from the “related party” concept in corporate insolvency. He held that only entities in which the debtor, alone or with associates, owns more than 50 per cent of the share capital or controls the board qualify as associates, and that mere family connection or indirect influence was insufficient. He noted:

“Excluding a creditor from voting deprives it of an important statutory right affecting its financial interests. Such a disability cannot be imposed on the basis of suspicion or conjecture. The burden lies upon the party asserting disqualification to establish, through cogent and reliable evidence, that the statutory requirements are satisfied.”

The NCLT consequently held that Veena Investments and its subsidiaries could not be treated as associates. It also rejected STCI Finance's contention that its consent as a secured creditor was mandatory, holding that the plan did not extinguish or impair its security interest and that it remained free to enforce its mortgage independently.

The Tribunal noted that the low recovery did not by itself justify rejection of the plan, as Dr. Chandra's available personal assets had been heavily depleted and creditors could receive nothing through bankruptcy. It also rejected Canara Bank's subsequent application concerning the alleged Rs. 1,260 crore sale of property at 4, Bhagwan Das Road, after accepting that the property belonged to Greatway Estates Private Limited and that newspaper reports did not establish Dr. Chandra's personal ownership.

The NCLT also noted lapses in admitting claims relating to 960 individuals through Anil Kumar and 300 individuals through Sunil Jain solely on the basis of Dr. Chandra's verbal assurances. Sharma held that these unsupported claims should not have been admitted but that the lapse did not vitiate the entire process.

Accordingly, the NCLT approved the repayment plan, excluded the unsupported claims of Anil Kumar and Sunil Jain, and directed redistribution of the amounts allocated to them among the remaining creditors before placing the matter before the Original Division Bench for appropriate orders.

For Applicants: Senior Advocate Mr. Ritin Rai, Anju Jain, Hitesh Sachar, Rifat Touhid, Mr. Bhawna Prajapati, Viney Pradhan for Canara Bank; Advocate Bheem Sain Jain for HDFC

For Respondents: Advocates GP Madaan, Aditya Madaan, Rahul Narula