The legal dispute surrounding Zee founder Subhash Chandra’s personal insolvency proceedings has entered another phase, with the National Company Law Appellate Tribunal (NCLAT) postponing the matter to October 7, The Economic Times reported.
The development follows a challenge by Chandra’s counsel to the constitution of a five-member special bench of the National Company Law Tribunal (NCLT), which is currently examining his proposed repayment plan.
At the heart of the dispute is a plan under which creditors would recover approximately Rs 6.25 crore from Chandra’s personal assets, against admitted claims amounting to around Rs 22,006 crore.
WHY WAS THE NCLAT HEARING POSTPONED?
Chandra’s legal team has raised objections to the composition of the five-member NCLT bench.
The issue arose after an earlier two-member NCLT bench delivered conflicting opinions on the proposed repayment plan. The matter was subsequently referred to a third member, who approved the proposal providing for recovery of about Rs 6.25 crore from Chandra’s personal estate.
Several major lenders, including Union Bank of India, Canara Bank and LIC Housing Finance, challenged the third member’s decision before the NCLAT.
The appellate tribunal has now scheduled the matter for October 7.
The repayment proposal had already faced another setback before the NCLT.
On Tuesday, the five-member special bench issued notices to all parties and suspended the implementation of the repayment plan. It also ordered Chandra not to transfer or otherwise alienate his properties, either directly or through indirect means.
The special bench observed that there was no majority decision on the repayment proposal and, therefore, the earlier decision could not be given final effect at that stage.
The bench said it intended to examine the scope of the dispute in detail and hear all concerned parties, including creditors who had opposed the repayment plan.
HOW DID THE MATTER REACH THE FIVE-MEMBER BENCH?
The case reached the special bench following differences between the two members of the NCLT division bench over Chandra’s repayment proposal.
As the two members took opposing positions, the matter was sent to a third member for consideration.
The third member subsequently approved the plan, under which creditors were expected to recover around Rs 6.25 crore against admitted claims of nearly Rs 22,006 crore.
Creditors who disagreed with the decision, including public sector banks and other lenders, then approached the NCLAT.
The composition of the five-member NCLT special bench has now itself become a subject of challenge before the appellate tribunal.
WHAT IS CHANDRA'S STAND ON THE RS 22,006-CRORE CLAIM?
Chandra has argued that the Rs 22,006-crore amount should not be viewed as debt that he personally borrowed.
According to his position, the claims arose from personal guarantees he had provided for loans taken by companies linked to the Essel Group.
This distinction is significant because the insolvency proceedings involve Chandra as a personal guarantor for corporate loans, rather than borrowings that he has personally taken.
The NCLAT is now expected to hear the matter on October 7.
Until then, the repayment plan remains under legal challenge, while the five-member NCLT bench’s direction preventing Chandra from alienating his properties continues to remain in force as part of the proceedings.
The NCLT is also expected to hear the parties on the issues surrounding the repayment proposal and the conflicting opinions that resulted in the constitution of the special bench.
