The National Company Law Appellate Tribunal (NCLAT) has issued notice on an appeal filed by Zee Group founder Subhash Chandra challenging a National Company Law Tribunal (NCLT) order restraining him from alienating his assets in connection with ongoing personal insolvency proceedings.
A three-member NCLAT Bench comprising Officiating Chairperson Justice (Retd.) Yogesh Khanna and Technical Members Barun Mitra and Ajai Das Mehrotra took up Chandra’s appeal and directed that copies of the petition be served upon the concerned creditors. The matter has been listed for further hearing.
Chandra has challenged the September 1 order of a five-member special bench of the NCLT, which had stayed an earlier order approving his proposed repayment plan and restrained him, in his capacity as personal guarantor, from selling, transferring or otherwise disposing of any of his assets, either directly or indirectly.
The insolvency proceedings stem from a petition filed by Indiabulls Housing Finance under the Insolvency and Bankruptcy Code (IBC) against Chandra in relation to personal guarantees furnished for borrowings of companies associated with the Essel Group.
The dispute centres on a repayment proposal under which Chandra had offered approximately ₹6.25 crore to settle admitted claims amounting to about ₹22,006.57 crore. The proposal had earlier received approval after a split verdict of the original NCLT Bench was referred to a third member under Section 419(5) of the Companies Act, 2013.
The third member, Nilesh Sharma, Member (Judicial), had on August 25 concurred with the view favouring the repayment plan on the principal issues and held that the approved arrangement would bind the creditors in accordance with the applicable provisions of the IBC.
However, the matter subsequently returned before the original Bench, which found that the differing orders did not yield a clear majority position. The issue was consequently placed before a larger Bench constituted by the NCLT President.
The five-member special Bench thereafter stayed the operation of the August 25 order and imposed the restraint on Chandra’s assets. The Bench observed that there was no clear majority view capable of being implemented under Section 419(5) of the Companies Act.
Chandra’s appeal before the NCLAT challenges, among other aspects, the scope of the larger Bench’s intervention. His case is that the reference arising from the split verdict was confined to the specific points of disagreement and that the subsequent proceedings could not be transformed into a fresh adjudication of the entire insolvency matter.
The appeal also questions the direction restraining him from alienating his assets, contending that the NCLT’s order travelled beyond the limited statutory framework governing a reference arising from a difference of opinion between members of the Tribunal.
The creditors opposing the repayment proposal have raised concerns over the substantial disparity between the admitted claims and the amount proposed under the plan. They have also questioned the manner in which the proposal was considered and the adequacy of the examination of Chandra’s financial position and assets.
The NCLAT’s proceedings will therefore require consideration of both the procedural controversy surrounding the constitution and jurisdiction of the larger NCLT Bench and the challenge to the restraint imposed on Chandra’s assets.
The appellate tribunal’s consideration of the matter comes against the backdrop of a wider dispute over the proposed resolution of Chandra’s personal insolvency liabilities, with creditors contesting the proposed recovery and Chandra seeking enforcement of the repayment arrangement approved by the third member.
The NCLAT has not, at this stage, adjudicated the merits of Chandra’s challenge. The proceedings will now proceed after the concerned creditors are brought on record and given an opportunity to respond to the appeal.
The post NCLAT seeks responses on Subhash Chandra’s challenge to NCLT asset transfer restraint in insolvency case appeared first on India Legal.