Subhash Chandra insolvency case: 'I've been vilified across country over ₹6.5 crore repayment plan,' says media baron

Subhash Chandra personal insolvency case: Media baron and Essel Group chairman Subhash Chandra on Wednesday told the National Company Law Appellate Tribunal (NCLAT) that he has been vilified across the country over a proposed ₹6.5 crore repayment plan against admitted creditor claims of over ₹22,006 crore despite no final order approving the plan.

Appearing for Chandra, advocate Sasmit Patra said that the proceedings led to a media trial that tarnished the media baron's reputation. “The fact is that there is no order today standing in this matter. But for the last 15 days, the personal guarantor, Dr Subhash Chandra, has been vilified across this country, saying that he has done ₹6.5 crore into ₹22,000 crore,” Patra was quoted as saying by Bar and Bench.

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Solicitor General Tushar Mehta, appearing on behalf of the lenders, said the NCLAT proceedings can't be used to make statements for publication in the media.

The tribunal said that Subhash Chandra could raise his grouse before the National Company Law Tribunal (NCLT) where the insolvency proceedings are pending. It further clarified that it is not passing any order on the submission by the media baron's advocate.

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Going ahead, Sasmit Patra questioned the NCLT's power to constitute a 5-member bench to reconsider the repayment plan. Citing Section 419(5) of the Companies Act 2013, Patra said, “The scope of Section 419(5) is very limited. If there is a differing view, then that differing view has to be taken up by another member or other members. It does not empower the NCLT under the IBC or company law to form a five-member Bench."

He also questioned the authority under which the bench stayed only the August 25 opinion of NCLT Judicial Member Nilesh Sharma.

“Under which power? When did this five-member bench sit together? What were the proceedings conducted that led to this five-member bench staying only one order?” he asked.

S-G Mehta argued that the 3 NCLT members who considered the repayment plan delivered differing opinions. Disputing this, Patra argued that Judicial Members Ashok Kumar Bhardwaj and Nilesh Sharma favoured approval of the repayment plan and agreed on the eligibility issue under Section 79 of the Insolvency and Bankruptcy Code (IBC).

He added that they differed primarily over how the dissenting creditors were to be treated. Bhardwaj proposed the plan should operate against creditors who supported it and should allow dissenting lenders to pursue other remedies for recovery.

Sharma, however, held the plan would bind all creditors, regardless of whether they agree or disagree, under Section 115 of the IBC.

“Both are equally on the same page as far as Section 79 is concerned on eligibility. Therefore, to say all these issues have to be re-litigated is completely wrong,” Patra submitted.

Upon hearing the arguments of both sides, the appellate tribunal stated the validity of the 5-member bench's constitution was not challenged in the lender's appeals. It said Chandra could independently challenge the September 1 order if he was aggrieved.

SG Mehta initially sought to withdraw the lenders’ appeals with liberty to revive them if required. He argued that the appeals might not need immediate consideration after the 5-member NCLT bench stayed Sharma’s opinion and decided to hear the matter afresh.

Patra opposed the withdrawal with liberty to revive, arguing that the appeals were defective as Sharma’s opinion had never crystallised into a final NCLT order.

Mehta subsequently decided not to press the withdrawal applications and instead sought to keep the appeals pending. The NCLAT agreed and listed the matter for October 7.