The National Company Law Tribunal (NCLT) has stayed an earlier order approving Zee founder Subhash Chandra’s ₹6.5 crore repayment plan, reopening a challenge to a proposal opposed by several lenders.
A five-member special bench of the NCLT led by president Justice Anupinder Singh Grewal clarified that the order of member Nilesh Sharma, delivered on 25 August, could not be given effect because it did not constitute the majority view of the tribunal.
The bench, comprising Justice Grewal, judicial members Bachu Venkat Balaram Das and Mahendra Khandelwal Das and technical members Atul Chaturvedi and Ravindra Chaturvedi, on Tuesday restrained Chandra from selling or transferring property held by him, directly or indirectly, during the pendency of the matter. The direction came after solicitor general Tushar Mehta appeared for the creditors and sought protection of Chandra’s assets.
The NCLT issued notices to the parties and said it will hear them at length before taking a decision on the repayment plan. The next hearing is scheduled for 23 September. The outcome will determine the future of Chandra’s proposal, which seeks to settle claims linked to personal guarantees he provided for corporate borrowings. “We have complete faith and confidence in our judicial system,” Chandra’s office said in response to Mint’s query.
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{{/usCountry}}The issue is whether the repayment plan is binding on creditors who opposed it. Chandra’s plan proposed payment of ₹6.5 crore, of which ₹6.25 crore will go to creditors and ₹25 lakh towards insolvency process costs. It received 80.81% support from creditors by value. Sharma said the plan would be binding on dissenting creditors.
The creditors voting against the plan included LIC Housing Finance, IDBI Trusteeship Services, HDFC Bank, Axis Bank, Canara Bank, Union Bank of India (UK), and RBL Bank.
Queries sent by Mint to HDFC Bank, Axis Bank, LIC Housing Finance, IndusInd Bank and other creditors remained unanswered.
The NCLT had clarified on Monday evening that there was no majority view on the repayment plan.
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According to insolvency lawyers, the setting up of such a large special bench is unprecedented in the NCLT’s history. “This is the first time in NCLT’s history that a bench of this size has been constituted,” said Anshul Verma, a partner at SKV Law Offices. “NCLT ordinarily functions through single-member benches for routine matters or two-member division benches – one judicial, one technical – as the norm.”
Somdutta Bhattacharyya, a partner at Argus Partners, said the development was unusual, although there was no legal difficulty in the tribunal reconsidering the matter.
“There has been a lot of public discourse and hype around the matter, which may have prompted the NCLT to constitute a five-member bench,” Bhattacharyya said.
According to Akshaya Bhansali, managing partner at Rajani Associates, the case shows that the commercial value of a repayment plan cannot substitute for a legally sound process, which must ultimately produce a clear and reasoned majority view.
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The creditors simultaneously challenged the repayment plan before the National Company Law Appellate Tribunal (NCLAT). Minutes after the NCLT special bench proceedings ended, Mehta appeared before the NCLAT for creditors including LIC Housing Finance, HDFC Bank and Union Bank of India.
The NCLAT listed the matter for Wednesday.