NCLT Delhi Refers Subhash Chandra's ₹6.5 Cr Plan To 5-Member Bench After No Majority, Hearing Today

At 10:15 am today, a Special Five-Member Bench of the New Delhi National Company Law Tribunal (NCLT) is scheduled to hear the insolvency proceedings involving Essel Group Chairman Dr Subhash Chandra, following a reference after no majority view emerged on the approval and scope of his repayment plan.

The Special Bench has been constituted by NCLT President Justice Anupinder Singh and comprises himself, Judicial Members Bachu Venkat Balara Das and Mahendra Khandelwal, and Technical Members Atul Chathurvedi and Ravindra Chathurvedi.

The reference was made under Section 419(5) of the Companies Act, 2013, after a Bench comprising Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri found that “no majority view emerges” despite reference to a third member.

The 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.

Background

The earlier NCLT Bench had delivered a split verdict on approval of Chandra's repayment plan. While the Judicial Member favoured approval of the plan 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.

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 Chandra's verbal assurances. Sharma held that these unsupported claims should not have been admitted, but found that the lapse did not vitiate the entire insolvency process.

However, when the matter returned to the original two-member Bench, it noted that the third Member had passed an independent order rather than resolving the difference between the original Members. The Bench observed:

“All said and done, no majority view has emerged in the matter. In the wake, no order can be passed at this stage. Resultantly, we have no option but to make fresh reference to Hon'ble President in terms of the provisions of Section 419(5) of the Code.”

The Special Five-Member Bench will now consider the matter and resolve the absence of a majority view on Chandra's repayment plan.