A special five-member bench of the National Company Law Tribunal (NCLT) on Tuesday stayed the approval of a repayment plan proposed by Subhash Chandra, founder and chairman of the Essel Group. The tribunal also restrained Chandra from alienating any asset, either directly or indirectly, according to orders reported by The Economic Times and The Financial Express.
The newly constituted bench, presided over by NCLT President Justice Anupinder Singh Grewal, stayed the operation of a smaller bench's order passed last Tuesday that had approved the plan. The bench issued notices to all parties, including Chandra, and sought their responses, as reported by PTI. It clarified that the August 25 order approving the plan cannot be given effect for now, since no majority view had emerged among the members.
"Let notice be issued to all the parties," the bench said, as per PTI. It added, "We also direct that the guarantor shall not alienate the properties, either directly or indirectly." Justice Grewal said the bench wanted to first understand the scope of the matter before proceeding further. "You can address your concerns, whatever they are. Then we will, around the next date, take up whatever questions have come up," he told the parties present, PTI reported.
Background of the Case
The case had earlier gone before a two-member division bench of Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri, which delivered a split verdict on the repayment plan, as per an ANI report. It was then referred to a third member, Nilesh Sharma, who on August 25 gave an opinion favouring approval. However, the original two members subsequently found that all three members had taken materially different positions, meaning no clear majority had actually emerged, as per ANI. This led to the constitution of the larger five-member bench to resolve the deadlock.
NCLT president Justice Grewal on Monday issued a notification under Section 419(5) of the Companies Act, 2013, to constitute the five-member bench to hear the case afresh. The bench also comprised judicial members Bachu Venkat Balaram Das and Mahendra Khandelwal, and technical members Atul Chaturvedi and Ravindra Chaturvedi.
Repayment Plan and Lender Objections
Chandra's plan offers Rs 6.25 crore to creditors, along with Rs 25 lakh towards insolvency resolution process costs, as per ANI. Several lenders had objected to the proposal, questioning both the low recovery amount and the voting process, including the participation of entities they allege are linked to Chandra. The Financial Express reported that the figure drew sharp criticism from lenders given the scale of claims involved.
Creditors see Chandra as guarantor for Rs 22,006 crore borrowed by his various group companies, something the Essel chairman disputes. Ahead of the tribunal's direction, solicitor general Tushar Mehta, appearing for a few dissenting Essel Group creditors, sought protection against alienation of the guarantor's assets, according to The Economic Times.
The insolvency proceedings against Chandra stem from personal guarantees he furnished for loans taken by companies linked to the Essel Group. Indiabulls Housing Finance, now Sammaan Capital, moved against him in 2022 after a loan to Vivek Infracon turned bad, and the plea was admitted in 2024, as reported by The Financial Express.
Chandra's Response and Market Reaction
Chandra's office said in a statement that "we have complete faith and confidence in our judicial system," as reported by The Economic Times. The Financial Express noted that Chandra has said the Rs 22,006-crore figure has been widely misread.
Following the NCLT judgement, Zee Entertainment's stock was trading at its intraday low, as per The Financial Express. The share price was down 4.33% in the past month and 17.73% in the past year.