Major Reduction in Subhash Chandra’s Liability Following NCLT Ruling
In a pivotal decision, the National Company Law Tribunal (NCLT) has substantially reduced the financial liability of Subhash Chandra, the founder of Essel Group, in relation to the Vivek Infracon loan case. Creditors will now recover merely 0.028% of their original claims, translating into a reduction of nearly ₹22,000 crore, with Chandra’s liability now set at ₹6.25 crore.
Background of the Insolvency Proceedings
Initiated in 2022 by Indiabulls Housing Finance Limited—now known as Sammaan Capital—under Section 95 of the Insolvency and Bankruptcy Code (IBC), the insolvency proceedings were predicated on Chandra’s role as a personal guarantor for a ₹170 crore loan extended to Vivek Infracon. The NCLT accepted the plea in 2024, leading to a complex judicial process involving a divided bench.
Conflicting Opinions and the Final Decision
The case initially witnessed conflicting opinions between Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri on the viability of a proposed repayment plan. Bhardwaj advocated for the plan’s approval, whereas Puri highlighted significant legal and procedural shortcomings. To resolve this deadlock, Judicial Member Nilesh Sharma was appointed and, on August 25, favored the plan’s approval, setting Chandra’s liability at ₹6.25 crore against claims amounting to approximately ₹22,006.57 crore. An additional ₹25 lakh was allocated for insolvency resolution process costs.
Resolution Professional’s Role and Creditor Objections
The Resolution Professional (RP) has been tasked with excluding certain unsupported claims, notably those filed by creditors Anil Kumar and Sunil Jain, from the creditors’ list. Despite widespread opposition from various banks and financial institutions—who questioned the negligible recovery rates and the plan’s legitimacy—Sharma found these objections insufficient to overturn the plan. LIC Housing Finance, for instance, contended that its recovery would shrink to ₹38.09 lakh from an admitted claim of ₹1,322.39 crore, deeming the proposed ₹6.5 crore as speculative.
Allegations of Financial Connections
Objecting creditors referenced net-worth certificates suggesting Chandra’s net worth at different times—₹45,888 crore in 2017 and ₹40,562 crore in 2018, with a current evaluation at approximately ₹31.79 crore. However, the NCLT ruled these discrepancies did not warrant dismissal of the repayment plan. Sharma rejected claims that certain companies, purportedly linked to Chandra, should have been excluded from the voting process, stating that mere familial or business associations do not meet the statutory definition of “associates” under Section 79(2)(g) of the IBC.
Binding Nature of the Plan and Legal Representation
The approved plan is deemed binding on all creditors, including those who abstained or voted against it, as per Section 115 of the IBC. The case will now return to the original NCLT bench for formalization of the ruling. Subhash Chandra’s legal representation comprised advocates GP Madaan, Aditya Madaan, and Rahul Narula, while the Resolution Professional was represented by advocate Sajeve Deora. Various companies associated with the case had their legal interests represented by advocates Bishwajit Dubey, Prateek Mishra, and Sumit Singh Bagri, among others.
