Subhash Chandra insolvency: NCLT special bench issues notices, directs not to dispose of property

A five-member special bench of the National Company Law Tribunal (NCLT) on Tuesday issued notices to all parties in the personal insolvency case of Essel Group Chairman Subhash Chandra and directed him not to alienate his properties, either directly or indirectly.

The bench, headed by NCLT President Justice Anupinder Singh Grewal, said there was no final order in the matter as the members, including the third member who had considered the case earlier, had failed to arrive at a majority view.

"Let notice be issued to all the parties," the bench said.

It also directed that "the guarantor shall not alienate the properties, either directly or indirectly".

Justice Grewal said the bench wanted to understand the scope of the matter and would hear all parties, including the dissenting creditors.

"You can address your concerns, whatever they are. Then we will, around the next date, take up whatever questions have come up," he said.

The special five-member bench, constituted for the first time in the history of the NCLT, also comprises Bachu Venkat Balaram Das, Mahendra Khandelwal, Atul Chaturvedi and Ravindra Chaturvedi.

The development comes a day after a two-member NCLT division bench referred the matter back to the NCLT President after failing to arrive at a majority view on Chandra's repayment plan.

The four-year-old insolvency matter was earlier referred to a third member after NCLT members Ashok Kumar Bhardwaj and Reena Sinha Puri gave differing opinions on the resolution plan.

In a 144-page order dated August 25, the third member approved a repayment of around ₹6.5 crore by Chandra against creditor claims of about ₹22,006.57 crore, implying a haircut of nearly 99.97%.

The matter was subsequently sent back to the original division bench for a formal order in line with the majority opinion, as required under Section 419(5) of the Companies Act, 2013.

However, in an order passed on Monday, the division bench said no majority view had emerged despite reconsideration of the matter.

The bench noted that while the technical member had rejected the plan, the judicial member had confined it to creditors who accepted and approved it and allowed dissenting creditors to recover their dues.

The third member, however, had approved the plan while extinguishing the rights of all creditors by applying Section 115(1) of the Insolvency and Bankruptcy Code uniformly, it said.

"All said and done, no majority view has emerged in the matter. In the wake, no order can be passed at this stage," the bench said, referring the matter afresh to the NCLT President under Section 419(5).

Chandra has said the ₹22,006 crore figure has been widely misunderstood as it represents claims arising from personal guarantees he had provided for loans taken by companies associated with the Essel Group, and not money he had personally borrowed.

Meanwhile, dissenting lenders moved the National Company Law Appellate Tribunal (NCLAT) on Monday as a precautionary measure following the third member's order approving the ₹6.5-crore payment.

Solicitor General Tushar Mehta, appearing for LIC Housing Finance, Canara Bank and Union Bank, mentioned the matter before an NCLAT bench headed by Officiating Chairperson Justice Yogesh Khanna and sought an urgent hearing.

Mehta argued that allowing the order to continue would "defeat the very purpose of the Insolvency & Bankruptcy Code".

The NCLAT agreed to list the matter for hearing on Tuesday at 10.30 am.