NCLT Delhi Issues Notice To CBI In Subhash Chandra's Personal Guarantor Insolvency Case

The Delhi Bench of the National Company Law Tribunal (NCLT) on Wednesday issued notice to the Central Bureau of Investigation (CBI) in proceedings concerning a repayment plan proposed for Essel Group Chairman Emeritus Dr Subhash Chandra in his capacity as a personal guarantor of his group companies.

The notice was issued after Solicitor General Tushar Mehta informed the five-member bench that the CBI was investigating a matter that has a bearing on the proceedings.

“We have been informed that CBI is investigating a matter which has a bearing on the instant case. We deem it appropriate to issue notice, and it may file its response in four weeks,” the bench said.

The bench is headed by NCLT President Justice Anupinder Singh and comprises Judicial Members Bachu Venkat Balaram Das and Mahendra Khandelwal, and Technical Members Atul Chaturvedi and

The CBI probe relates to allegations concerning loans sanctioned by LIC Housing Finance Limited (LICHFL) to four Essel Group-linked companies.

LICHFL had sanctioned a ₹500 crore facility to Vasant Sagar Properties and Pan India Infra Projects, while another ₹480 crore facility was sanctioned to Digital Subscriber Management and Consultancy Services and Spirit Infrapower and Multiventures. Chandra had furnished personal guarantees for the two facilities.

The CBI registered an FIR on August 31 following a complaint by LICHFL. The lender has alleged wrongful loss of over ₹1,322 crore in connection with the two loan facilities. These allegations are subject to investigation.

Chandra is not the principal borrower in these facilities. His liability in relation to them arises from the personal guarantees furnished for borrowings by the companies.

The NCLT proceedings, meanwhile, concern Chandra as a personal guarantor. The insolvency process was initiated against him under Section 95 of the Insolvency and Bankruptcy Code after Indiabulls Housing Finance Limited moved the application. The repayment plan was subsequently proposed in relation to his liabilities as a personal guarantor.

The plan proposed payment of ₹6.25 crore to creditors against admitted claims of about ₹22,006 crore. A further ₹25 lakh was proposed towards insolvency process costs, taking the total plan amount to ₹6.5 crore.

The repayment plan had received the requisite voting support from creditors. However, several lenders, including LICHFL, opposed the proposal.

The matter reached a five-member NCLT bench after members of the original bench differed on the plan. On August 25, a third member, Judicial Member Nilesh Sharma, approved the repayment plan. However, when the matter came up subsequently, the NCLT held that there was no clear majority view capable of being given effect to and stayed the August 25 order.

The five-member bench also directed that Chandra, as the personal guarantor, should not alienate any assets directly or indirectly during the pendency of the proceedings.

On Wednesday, Mehta told the bench that the CBI investigation was underway. Counsel appearing for Chandra opposed the CBI being treated as a necessary party to the NCLT proceedings.

The bench did not decide that issue at this stage and instead issued notice to the CBI, asking it to file its response within four weeks.

The bench also directed the parties, except Union Bank of India, to file their convenience compilations within four weeks.

The September 1 order staying the August 25 approval of Chandra's repayment plan will continue to operate until the matter is finally decided.