The National Company Law Appellate Tribunal (NCLAT) on Wednesday said appeals filed by a coalition of dissenting lenders, including LIC Housing Finance, Canara Bank and Union Bank of India, against NCLT’s August 25 order that reduced the liability on Subhash Chandra, should be kept pending and posted the matter for the first week of October. Solicitor General Tushar Mehta, appearing for the lenders, told the NCLAT the lenders should be at liberty to revive the appeals depending on the outcome of proceedings before the five-member NCLT bench.
Chandra was physically present at the NCLAT during Wednesday’s hearing.
The appeals were filed by creditors against the order passed by the NCLT’s third member in the personal insolvency proceedings of Essel Group founder Subhash Chandra that gave him a 99 per cent haircut.
The third-member order had resulted in a steep reduction in the amount that creditors stood to recover from ₹22,006.57 crore to only ₹6.5 crore.
Mehta submitted that since the matter was now before a five-member NCLT bench, the appeals could be disposed of with liberty to revive them if required. The NCLAT chairperson, however, said the appeals filed by the creditors should remain pending and posted the matter for the first week of October. The tribunal also said that if the lenders wanted to challenge the September 1 order of the five-member NCLT bench, they would have to file a separate appeal.
Chandra’s counsel, however, argued that the appeals themselves were defective and had been filed against a “non-est” order. His contention was that the original NCLT bench had a difference of opinion and, therefore, there was no majority order. He further argued that the third member’s order did not conform to the views of the original members and, therefore, could not be treated as a valid order capable of being challenged in appeal.
Chandra’s counsel also argued that the five-member bench order that stayed the August 25 order was faulty and wrong.
The development comes a day after a five-member NCLT bench stayed its August 25 order approving Chandra’s repayment plan. Under the August 25 order, Chandra was required to pay about ₹6.25 crore to creditors, against admitted claims of ₹22,006.57 crore. The bench held that there was no clear majority view and restrained Chandra from alienating any of his properties, directly or indirectly.
The case dates back to 2022, when insolvency proceedings were initiated against Chandra by Indiabulls Housing Finance, now known as Sammaan Capital, over a ₹170-crore loan to Vivek Infracon for which Chandra had stood as personal guarantor. The insolvency plea was admitted in 2024, after which several other creditors joined the proceedings.
Earlier this year, the NCLT appointed a third member after Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri delivered conflicting views on Chandra’s repayment plan. Bhardwaj had favoured approval of the plan, while Puri had held that it suffered from serious legal and procedural defects. Third member Nilesh Sharma subsequently favoured approval of the plan on August 25.
Under the plan, ₹6.25 crore was to be distributed among eligible creditors, with a further ₹25 lakh earmarked towards insolvency resolution process costs. The amount represented only around 0.028% of the admitted claims. Several lenders had opposed the plan, questioning the negligible recovery, verification of claims and participation of entities allegedly associated with Chandra in the voting process.
LIC Housing Finance, for instance, had said it would receive only Rs 38.09 lakh against its admitted claim of ₹1,322.39 crore. The objecting creditors had also relied on net-worth certificates that purportedly showed Chandra’s net worth at around ₹45,888 crore in 2017 and ₹40,562 crore in 2018, while his present net worth was stated to be about ₹31.79 crore.
Chandra, however, has contended that the total claims against him by the objectors to the repayment plan amount to about ₹3,992 crore, as against the total admitted claims of ₹22,006.57 crore in his capacity as a personal guarantor.