The National Company Law Appellate Tribunal (NCLAT) is set to review an appeal challenging the National Company Law Tribunal’s (NCLT) recent ruling in the insolvency proceedings involving Subhash Chandra, the founder of the Essel Group. The NCLT’s order significantly reduced Chandra’s liabilities from ₹22,000 crore to ₹6.25 crore, a decision that has sparked dissatisfaction among creditors.
The controversial judgment allows creditors to recover a mere 0.028% of their original claims, prompting several creditors to seek a revision of the decision. Representing LIC Housing Finance, Solicitor General Tushar Mehta argued for the urgent listing of the appeal against the NCLT’s approval of the repayment plan. Mehta contended that allowing the order to stand would undermine the objectives of the Insolvency and Bankruptcy Code (IBC).
The matter was presented before a bench comprising Officiating Chairperson Justice Yogesh Khanna, along with Technical Members Banu Mitra and Ajai Das Mehrotra. Although Mehta requested an immediate hearing at 2 PM today, the bench deferred the hearing until tomorrow, expressing the need to review the case files first.
The insolvency proceedings against Chandra commenced in 2022, initiated by Indiabulls Housing Finance Limited, now operating as Sammaan Capital. Chandra had provided a personal guarantee for a ₹170 crore loan extended to Vivek Infracon. Following the loan’s default, Indiabulls invoked Section 95 of the IBC to initiate proceedings against Chandra. The NCLT admitted the plea in 2024, with various other creditors joining the action.
In a prior development this year, the NCLT appointed an additional member to resolve a deadlock between Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri, who held opposing views regarding the repayment plan. On August 25, Judicial Member Nilesh Sharma endorsed the plan, allocating ₹6.25 crore to creditors against claims totaling approximately ₹22,006.57 crore, with an additional ₹25 lakh earmarked for insolvency resolution costs.
More Read
“The Repayment Plan submitted by the Personal Guarantor, in my opinion, is required to be approved under Section 114 of the Insolvency and Bankruptcy Code, 2016,” Sharma stated. He directed the Resolution Professional to exclude claims by creditor Anil Kumar, representing 960 individuals, and creditor Sunil Jain, representing 300 individuals, from the distribution. The remaining amount will be redistributed among eligible creditors based on a revised list.
Opposition to the plan has been notable among several banks and financial institutions, who have criticized the minimal recovery rate and questioned the verification of claims, as well as the involvement of entities allegedly linked to Chandra in the voting process. LIC Housing Finance, in particular, highlighted that it stands to recover only ₹38.09 lakh against its admitted claim of ₹1,322.39 crore. Furthermore, they expressed concern over the proposed ₹6.5 crore being described as indicative and uncertain within the plan.
The objecting creditors also cited financial documents suggesting Chandra’s net worth was approximately ₹45,888 crore in 2017 and ₹40,562 crore in 2018, compared to a present net worth of about ₹31.79 crore.
