BREAKING | New 5-Member Bench Of NCLT Delhi Stays Order Approving Subhash Chandra's ₹6.25 Cr Repayment Plan
Today, the freshly constituted Five Member Bench of the National Company Law Tribunal (NCLT) at New Delhi stayed the approval of Dr Subhash Chandra's repayment plan, which offered Rs. 6.25 crore to creditors against admitted claims of Rs. 22,006.57 crore.
The Bench comprising NCLT President Justice Anupinder Singh with Judicial Members Bachu Venkat Balara Das and Mahendra Khandelwal, and Technical Members Atul Chaturvedi and Ravindra Chaturvedi, restrained Chandra from alienating his properties on a request made by Solicitor General Tushar Mehta, appearing for the creditors. It observed:
"we also direct that the guarantor shall not alienate the properties either directly or indirectly"
The Bench also issued notices to all the parties.
Background
The matter was placed before the five Member Bench following divergent views on the approval and scope of a repayment plan under the Insolvency and Bankruptcy Code, 2016 (IBC), which left no majority decision at the original two Member Bench stage.
The reference was made under Section 419(5) of the Companies Act, 2013, which permits a matter to be referred to a larger Bench where the Members hearing it are divided in opinion. The original Bench comprising Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri had found that “no majority view emerges” even after the matter was referred to a third Member.
Chandra's repayment plan offered Rs. 6.25 crore to creditors and Rs. 25 lakh towards process costs against admitted claims of Rs. 22,006.57 crore. Despite the approximately 99.9% haircut, creditors holding 80.814% of the voting share approved the plan.
Read More: NCLT Delhi Approves Zee Founder Subhash Chandra's ₹6.5 Cr. Repayment Plan Against ₹22,006 Cr. Claims
The original NCLT Bench had delivered a split verdict on the plan. While the Judicial Member favoured its approval and held that it should be confined to creditors who had accepted and approved it, the Technical Member opposed the plan.
The matter was consequently referred to a third Member. Judicial Member Nilesh Sharma, in an order dated 25 August, supported approval of the repayment plan, noting that the requisite majority of creditors had voted in its favour. He held that opposition by some creditors or objections concerning Chandra's financial affairs, by themselves, did not make the plan incapable of approval.
Sharma also noted lapses in the admission of claims relating to 960 individuals through Anil Kumar and 300 individuals through Sunil Jain, which had been admitted solely on the basis of Chandra's verbal assurances. He held that these unsupported claims should not have been admitted, but found that the lapse did not vitiate the entire insolvency process.
He further held that the repayment plan was binding on all creditors, including those who had dissented from it.
Read More: NCLT Delhi Refers Subhash Chandra's ₹6.5 Cr Plan To 5-Member Bench After No Majority, Hearing Today
However, when the matter returned to the original two Member Bench, it noted that the third Member had passed an independent order instead of resolving the difference between the original Members. This resulted in the matter being placed before the freshly constituted five Member Bench.
Accordingly, the five Member Bench has stayed approval of the repayment plan, restrained Chandra from alienating his properties and issued notices to the parties.