Subhash Chandra moves NCLAT against NCLT stay on alienation of assets in ₹6.5 crore repayment plan case

Zee Group founder Subhash Chandra has moved the National Company Law Appellate Tribunal (NCLAT) against a September 1 order of a five-member special bench of the National Company Law Tribunal (NCLT) restraining him from alienating his assets..A Bench of Officiating Chairperson Justice (retd) Yogesh Khanna and Technical Members Barun Mitra and Ajai Das Mehrotra took up the appeal and directed Chandra to serve copies of the plea on the creditors. It then posted the matter for hearing on September 29..Senior Advocate Dhurv Mehta, appearing for Chandra, told the NCLAT that the appeal challenges the order passed by a special bench of NCLT on September 1.Several creditors, however, told the NCLAT that copies of the appeal have either not been served on them or that they had not been made parties despite having participated in the proceedings before the NCLT.The NCLAT then asked Chandra to supply copies of the appeal to the appearing parties during the course of the day and take steps to implead the necessary parties..Chandra has challenged the September 1 order principally on the ground that the Special Principal Bench went beyond the limited scope of a reference arising from a difference of opinion between members of the NCLT. He has also specifically challenged the direction restraining him from alienating “any assets whatsoever either directly or indirectly”. Apart from this restraint, Chandra has objected to the Bench staying the August 25 reasoned opinion of the Third Member and directing fresh replies in pending applications. According to him, these directions effectively reopen the entire proceedings instead of confining the exercise to the specific points on which the original members had differed. .Section 419(5) of the Companies Act, 2013 deals with situations where members of an NCLT Bench differ on one or more points. In such a case, the differing members are required to state the point or points of disagreement and refer them to the NCLT President, who may place them before one or more other members. The matter is then decided according to the opinion of the majority of the members who have heard it, including those who originally heard the case. Chandra's case is that this mechanism is meant only to resolve the identified points of difference and cannot be used either to conduct a de novo rehearing of the entire dispute or to impose a sweeping restraint on alienation of his assets..The dispute concerns a repayment plan proposed by Chandra in personal insolvency proceedings initiated by Indiabulls Housing Finance Limited under Section 95 of the Insolvency and Bankruptcy Code (IBC).Under the plan, Chandra proposed to pay ₹6.25 crore to creditors against admitted claims of ₹22,006.57 crore. Another ₹25 lakh was earmarked for insolvency process costs.The plan was initially considered by an NCLT bench comprising Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri. The two members delivered differing opinions.Bhardwaj favoured approving the plan only in relation to creditors who had supported it. He proposed allowing dissenting creditors, including banks and financial institutions, to pursue independent remedies for recovering their debts.Puri rejected the plan after finding serious defects in the process followed by the resolution professional.The matter was then referred to a third member, Judicial Member Nilesh Sharma, under Section 419(5) of the Companies Act, 2013..On August 25, Sharma held that the plan should be approved. However, he directed the exclusion of claims submitted through Anil Kumar on behalf of 960 individuals and Sunil Jain on behalf of 300 individuals. He also directed that the amount allocated to these claims be redistributed among the remaining eligible creditors.Sharma further held that the approved plan would bind all creditors, including those who had opposed it, under Section 115 of the IBC.When the matter returned to the original two-member bench, it held on August 31 that no majority view had emerged from the third member. The bench noted that the Technical Member had rejected the plan, the Judicial Member had sought to confine it to supporting creditors and the third member had approved it while making it binding on all creditors.Since all three judgments were different, the matter was referred afresh to the NCLT President who constituted a five-member bench to hear the matter.The larger bench restrained Chandra from alienating any assets while also staying the order that upheld his proposal to pay ₹6.25 crore to creditors against admitted claims of ₹22,006.57 crore.This prompted Chandra to approach NCLAT..Solicitor General Tushar Mehta appeared for Public Sector entities. .Advocate Diwakar Maheshwari from Khaitan & Co appeared for IndusInd Bank..Advocate Manmeet Singh from Cyril Amarchand Mangaldas represented Axis Bank and HDFC Bank