NCLAT Issues Notices to Creditors in Subhash Chandra Insolvency Case, Hearing Set for October 29-30

The National Company Law Appellate Tribunal (NCLAT) has issued notices to creditors in the personal insolvency case involving Essel Group Chairman Subhash Chandra, with the matter now scheduled to be heard on October 29 and 30. 

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The case has reached the appellate tribunal after Chandra challenged a September 1 order of a five-member National Company Law Tribunal (NCLT) bench. That order had put on hold an earlier decision in his personal insolvency proceedings and prevented him from selling or transferring his assets. 

Creditors who have questioned whether Chandra’s appeal can be maintained have been given one week to submit their replies. Chandra will then have another week to respond. The three-member NCLAT bench hearing the matter comprises Officiating Chairperson Justice (Retd.) Yogesh Khanna and Technical Members Barun Mitra and Ajai Das Mehrotra. 

The appellate tribunal has also brought together Chandra’s appeal and a separate petition filed by creditors against the repayment arrangement in the case. The disputed plan involves settling admitted claims of around ₹22,006.57 crore for about ₹6.5 crore. 

The interim applications will be taken up over two days. October 29 has been set aside for arguments from Chandra’s side, while creditors are expected to make their submissions the following day. 

The dispute stems from an earlier split decision at the NCLT. Judicial Member Ashok Kumar Bhardwaj supported Chandra’s repayment proposal and found him eligible for relief under the insolvency framework for personal guarantors. Technical Member Reeta Kohli disagreed and rejected the proposal. 

The difference of opinion led to the matter being referred to Judicial Member Nilesh Sharma as a third member. Sharma agreed with Bhardwaj on the key questions and upheld the repayment plan. That decision, however, was subsequently stayed by a five-member NCLT bench, which also restricted Chandra from dealing with his assets while proceedings continued. 

The case took another turn at the NCLT’s September 23 hearing, when the five-member bench issued notice to the Central Bureau of Investigation. The restriction on Chandra selling or transferring property was allowed to continue until a final decision. 

The CBI has registered an FIR against Chandra over allegations that his net worth was inflated while obtaining loans from LIC Housing Finance Limited. According to the complaint referred to in the report, net-worth certificates were used in securing two loans totalling ₹980 crore. The case alleges a loss of more than ₹1,322 crore to the lender. These remain allegations in the proceedings. 

Chandra, in his appeal, has challenged the NCLT’s September 1 order and questioned the constitution of the five-member bench. The next stage of the dispute will now play out before the NCLAT on October 29 and 30.