Subhash Chandra Highlights Reputation Damage in NCLAT Proceedings
On Wednesday, Subhash Chandra, the founder of Zee Group, addressed the National Company Law Appellate Tribunal (NCLAT), expressing concerns that he has been unjustly criticized nationwide due to a proposed payment of ₹6.5 crore against acknowledged creditor claims totaling ₹22,006 crore. Notably, there is no finalized order validating this repayment plan as of now.
Representing Chandra, Advocate Sasmit Patra argued that the ongoing proceedings have led to a media trial, significantly harming Chandra’s reputation. Patra stated, “There is no standing order in this case today. However, for the past 15 days, Dr. Subhash Chandra, the personal guarantor, has faced nationwide vilification, alleged to have transformed ₹6.5 crore into ₹22,000 crore.”
Solicitor General’s Objection and NCLAT’s Guidance
Solicitor General Tushar Mehta, representing the appellant-lenders, objected to these submissions, emphasizing that the NCLAT hearings should not be exploited to make statements aimed at media dissemination.
The NCLAT panel, consisting of Officiating Chairperson Justice Yogesh Khanna and Technical Members Barun Mitra and Ajai Das Mehrotra, advised Chandra to present his concerns to the National Company Law Tribunal (NCLT), the body overseeing the insolvency proceedings. The tribunal also clarified that no orders were being passed on Patra’s submissions.
Debate Over NCLT’s Five-Member Bench
Patra contested the NCLT’s authority to establish a five-member bench for reviewing the repayment plan. He highlighted the limited scope of Section 419(5), which permits differing views to be considered by another member but does not authorize the establishment of a five-member bench under the Insolvency and Bankruptcy Code (IBC) or company law.
He questioned the legitimacy of the bench’s decision to stay only the August 25 opinion of NCLT Judicial Member Nilesh Sharma, inquiring, “Under which power? When did this five-member bench convene? What proceedings were conducted that led to this bench staying just one order?”
Patra also countered Mehta’s claim of divergent opinions among the three NCLT members deliberating the repayment plan. He argued that both Judicial Member Ashok Kumar Bhardwaj and Sharma supported the plan’s approval and concurred on the eligibility issue under Section 79 of the IBC, with differences primarily regarding the treatment of dissenting creditors.
Path Forward in the Legal Proceedings
The NCLAT clarified that the lenders’ appeals did not contest the five-member bench’s constitution. It advised Chandra that he could independently challenge the September 1 order if dissatisfied.
SG Mehta initially sought to withdraw the lenders’ appeals, reserving the right to revive them if deemed necessary, noting the five-member NCLT bench had stayed Sharma’s opinion and intended to reconsider the case. However, Patra opposed this withdrawal with the liberty to revive, arguing that the appeals were flawed since Sharma’s opinion was never formalized into an NCLT order.
Ultimately, Mehta chose not to pursue the withdrawal applications, requesting the appeals remain pending. The NCLAT consented and scheduled the next hearing for October 7.
