NCLT Delhi 5-Member Bench Stays Approval Of Subhash Chandra ₹6.25 Crore Repayment Plan

The Bench, headed by NCLT President Justice Anupinder Singh and comprising Judicial Members Bachu Venkat Balara Das and Mahendra Khandelwal and Technical Members Atul Chaturvedi and Ravindra Chaturvedi, also restrained Chandra from dealing with or transferring his properties.

The direction came after Solicitor General Tushar Mehta, appearing for the creditors, sought protection against alienation of the guarantor's assets.

“We also direct that the guarantor shall not alienate the properties either directly or indirectly,” the Bench ordered.

Notices have also been issued to the parties.

The case came before the five-member Bench after the original two-member NCLT Bench failed to arrive at a majority view on the validity and scope of the repayment plan under the Insolvency and Bankruptcy Code, 2016 (IBC).

The reference to the larger Bench was made under Section 419(5) of the Companies Act, 2013, which provides for such a reference when Members hearing a matter differ in their opinions.

The original Bench, comprising Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri, had recorded that no majority opinion had emerged even after the matter was placed before a third Member.

Chandra's proposed repayment plan contemplated payment of ₹6.25 crore to creditors and ₹25 lakh towards the insolvency process costs, against admitted claims of ₹22,006.57 crore. This represented a haircut of nearly 99.9%. Despite this, creditors representing 80.814% of the voting share had voted in favour of the plan.

The original two-member Bench had delivered differing opinions. While Judicial Member Bhardwaj supported approval of the plan and opined that its operation should be restricted to creditors who had approved it, Technical Member Reena Sinha Puri rejected the proposal.

The matter was thereafter referred to Judicial Member Nilesh Sharma as the third Member. In an order dated August 25, Sharma favoured approval of the repayment plan, observing that the statutory voting threshold had been met.

He held that mere opposition from certain creditors, or objections concerning Chandra's financial dealings, could not by themselves constitute grounds to reject the plan.

Sharma also examined certain claims involving 960 individuals represented through Anil Kumar and another 300 individuals represented through Sunil Jain. He found that these claims had been admitted solely on the basis of verbal assurances allegedly given by Chandra and should not have been admitted in the absence of supporting material.

However, he concluded that these irregularities did not invalidate the insolvency proceedings as a whole. He further held that the repayment plan, once approved, would bind all creditors, including those who had voted against it.

When the matter subsequently came back before the original two-member Bench, it noted that the third Member had passed an independent order rather than resolving the specific points of disagreement between the two original Members.

In view of the resulting deadlock, the matter was placed before the newly constituted five-member Bench.

Case Title: Indiabulls Housing Finance Limited vs Dr Subhash Chandra