National Company Law Tribunal (NCLT)'s recent decision in the insolvency proceedings against Essel Group founder Subhash Chandra has been challenged before the National Company Law Appellate Tribunal (NCLAT)
The verdict, under which various creditors stand to recover only about 0.028% of their origin claims from Chandra, had come under severe criticism with various creditors planning to challenge the decision.
Solicitor General (SG) Tushar Mehta, representing LIC Housing Finance, today sought urgent listing of the petition challenging the NCLT order approving the repayment plan. Mehta said that if the order is allowed to continue, it will defeat the very purpose of Insolvency and Bankruptcy Code (IBC).
SG Mehta mentioned the matter before a Bench of Officiating Chairperson Justice Yogesh Khanna, Member (Technical) Banu Mitra and Member (Technical) Ajai Das Mehrotra and urged the tribunal to hear it today at 2 PM. However, the Bench said they are yet to read the files and agreed to list it for hearing tomorrow.
Since 2022, Chandra has been the subject of insolvency proceedings filed by Indiabulls Housing Finance Limited (Indiabulls/ IBHF), which is now known as Sammaan Capital.
Chandra had stood as a personal guarantor for a ₹170 crore loan given to Vivek Infracon. After the loan turned bad, Indiabulls moved the NCLT in 2022 under Section 95 of the IBC for proceedings against Chandra.
The plea was admitted in 2024. Several other creditors also had joined the proceedings against Chandra.
Earlier this year, the NCLT appointed a third member to decide the case after Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri delivered conflicting opinions on a repayment plan.
While Bhardwaj favoured approval of the repayment plan, Puri concluded that it suffered from serious legal and procedural defects.
On August 25, Judicial Member Nilesh Sharma favoured approval of the plan. The plan allocates ₹6.25 crore to creditors against admitted claims of approximately ₹22,006.57 crore. A further ₹25 lakh was earmarked towards insolvency resolution process costs.
“The Repayment Plan submitted by the Personal Guarantor, in my opinion, is required to be approved under Section 114 of the Insolvency and Bankruptcy Code, 2016," Sharma said.
He directed the Resolution Professional (RP) to exclude claims filed by creditor Anil Kumar on behalf of 960 individuals and creditor Sunil Jain on behalf of 300 individuals. The ₹6.25 crore will be redistributed among the remaining eligible creditors after a revised list is prepared.
Several banks and financial institutions had earlier opposed the plan. They questioned the negligible recovery, the verification of claims and the participation of entities allegedly associated with Chandra in the voting process.
LIC Housing Finance argued that it would receive only ₹38.09 lakh against its admitted claim of ₹1,322.39 crore. It also contended that even the proposed ₹6.5 crore was described in the plan as indicative and uncertain.
The objecting creditors further relied on net-worth certificates purportedly showing Chandra’s net worth at approximately ₹45,888 crore in 2017 and ₹40,562 crore in 2018. His present net worth was stated to be about ₹31.79 crore.