The legal proceedings surrounding the personal insolvency case of Essel Group founder Subhash Chandra have entered another phase after the National Company Law Appellate Tribunal (NCLAT) deferred the hearing to October 7.
The matter has been delayed following a challenge to the constitution of a five-member special bench of the National Company Law Tribunal (NCLT), which is examining Chandra's proposed repayment plan.
At the centre of the dispute is a repayment proposal under which creditors are expected to recover around Rs 6.25 crore from Subhash Chandra's personal estate against admitted claims of approximately Rs 22,006 crore.
The case has generated significant legal debate after differing views emerged within the NCLT over the repayment plan.
An earlier two-member NCLT bench could not reach a common conclusion on the proposal. The matter was subsequently referred to a third member, who approved the repayment plan that would allow creditors to recover around Rs 6.25 crore.
Several major lenders, including Union Bank of India, Canara Bank and LIC Housing Finance, challenged the third member's decision before the NCLAT.
The appellate tribunal has now postponed further proceedings until October 7.
Meanwhile, the repayment plan has also faced a fresh challenge before the NCLT itself.
A five-member special bench issued notices to all parties and suspended the operation of the repayment plan. The bench also directed Subhash Chandra not to sell, transfer or otherwise alienate his properties, either directly or indirectly, while the matter remains under consideration.
The special bench observed that there was no clear majority view regarding the proposed repayment plan and said that the matter required further examination before any final decision could be implemented.
The tribunal also indicated that it would hear all concerned parties, including creditors who have opposed the repayment proposal.
The dispute reached the five-member special bench after the original two-member NCLT bench delivered conflicting opinions on the repayment plan.
Following the disagreement, the matter was referred to a third member, who later approved the proposal involving recovery of around Rs 6.25 crore against claims amounting to nearly Rs 22,006 crore.
The lenders opposing the decision subsequently approached the NCLAT, challenging the order. The constitution of the five-member NCLT bench has now also become a separate point of legal dispute.
Subhash Chandra has maintained that the approximately Rs 22,006 crore in claims should not be interpreted as money personally borrowed by him.
According to his position, the claims arise from personal guarantees provided for loans taken by companies associated with the Essel Group.
The insolvency proceedings therefore concern his role as a personal guarantor for corporate borrowings rather than loans that he personally obtained.
The next major hearing in the case is scheduled for October 7, when the NCLAT will take up the matter again.
Until then, the repayment plan will remain under challenge, while the NCLT's direction restricting the transfer or alienation of Subhash Chandra's properties continues to remain part of the ongoing proceedings.
The NCLT is also expected to continue examining the issues surrounding the repayment plan, the conflicting views of its earlier members and the objections raised by creditors.
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