The Crossbill Team
Essel Group chairman Subhash Chandra has challenged the National Company Law Tribunal’s (NCLT) decision to refer his personal insolvency case to a five-member bench, arguing before the National Company Law Appellate Tribunal (NCLAT) that the tribunal lacked the authority to constitute such a bench, news agency PTI reported.
Appearing for Chandra on Wednesday (September 2), senior advocate Sasmit Patra described the NCLT’s move as “faulty and wrong”, arguing that “they are not empowered” to form a five-member bench.
Patra also questioned the decision of the larger bench to stay an order passed by Nilesh Sharma, Member (Judicial), who had joined the case as the third member following a split verdict by the original NCLT division bench.
“Under which power” it was stayed, and “when did this five-member bench sit together? What proceedings were conducted that led to this five-member bench taking only one order?” said Patra.
The challenge comes after the NCLT on Monday (August 31) concluded that “no majority verdict” had emerged on Chandra’s repayment plan. The tribunal said Sharma’s view was substantially different from those of the two members of the original bench, making it necessary for the matter to be considered afresh by a larger bench.
Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri had earlier reached diametrically different conclusions on the repayment plan, while Sharma subsequently joined the proceedings as the third member to resolve the split.
Solicitor general Tushar Mehta, appearing for dissenting creditors including LIC Housing Finance, Canara Bank and Union Bank, took a different position before the NCLAT. He submitted that the petition challenging Sharma’s order “may be disposed of with liberty to revive” as some respondents could potentially challenge the reference to the larger bench itself.
Mehta argued that the case involved “very peculiar circumstances” because it had produced “three views” that were “divergent to each other,” making it appropriate for consideration by a larger bench.
Patra opposed the argument, maintaining that the orders of Bhardwaj and Sharma were broadly consistent on the repayment plan and questions concerning eligibility.
Officiating chairperson Justice Yogesh Khanna, who headed the three-member NCLAT bench hearing the matter on Wednesday, however, observed that the constitution of the five-member bench was “not a question before challenge for us.”
The legal dispute comes against the backdrop of widespread criticism over the proposed settlement in Chandra’s personal insolvency proceedings. Under the plan, Chandra would pay Rs 6.5 crore against admitted claims of Rs 22,006.57 crore, amounting to a 99.97% haircut for creditors.
The settlement has drawn sharp political criticism, with the Congress describing it as a “mundan” rather than a haircut. Leader of Opposition Rahul Gandhi has also termed the case an example of “two systems” under the Modi government, while the settlement has renewed questions over how insolvency proceedings treat large corporate borrowers compared with smaller defaulters.
The NCLAT’s proceedings will now determine the next course of the dispute over the reference to the larger NCLT bench and the repayment plan that triggered the controversy.
Appearing for Chandra on Wednesday (September 2), senior advocate Sasmit Patra described the NCLT’s move as “faulty and wrong”, arguing that “they are not empowered” to form a five-member bench.
Patra also questioned the decision of the larger bench to stay an order passed by Nilesh Sharma, Member (Judicial), who had joined the case as the third member following a split verdict by the original NCLT division bench.
“Under which power” it was stayed, and “when did this five-member bench sit together? What proceedings were conducted that led to this five-member bench taking only one order?” said Patra.
The challenge comes after the NCLT on Monday (August 31) concluded that “no majority verdict” had emerged on Chandra’s repayment plan. The tribunal said Sharma’s view was substantially different from those of the two members of the original bench, making it necessary for the matter to be considered afresh by a larger bench.
Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri had earlier reached diametrically different conclusions on the repayment plan, while Sharma subsequently joined the proceedings as the third member to resolve the split.
Solicitor general Tushar Mehta, appearing for dissenting creditors including LIC Housing Finance, Canara Bank and Union Bank, took a different position before the NCLAT. He submitted that the petition challenging Sharma’s order “may be disposed of with liberty to revive” as some respondents could potentially challenge the reference to the larger bench itself.
Mehta argued that the case involved “very peculiar circumstances” because it had produced “three views” that were “divergent to each other,” making it appropriate for consideration by a larger bench.
Patra opposed the argument, maintaining that the orders of Bhardwaj and Sharma were broadly consistent on the repayment plan and questions concerning eligibility.
Officiating chairperson Justice Yogesh Khanna, who headed the three-member NCLAT bench hearing the matter on Wednesday, however, observed that the constitution of the five-member bench was “not a question before challenge for us.”
The legal dispute comes against the backdrop of widespread criticism over the proposed settlement in Chandra’s personal insolvency proceedings. Under the plan, Chandra would pay Rs 6.5 crore against admitted claims of Rs 22,006.57 crore, amounting to a 99.97% haircut for creditors.
The settlement has drawn sharp political criticism, with the Congress describing it as a “mundan” rather than a haircut. Leader of Opposition Rahul Gandhi has also termed the case an example of “two systems” under the Modi government, while the settlement has renewed questions over how insolvency proceedings treat large corporate borrowers compared with smaller defaulters.
The NCLAT’s proceedings will now determine the next course of the dispute over the reference to the larger NCLT bench and the repayment plan that triggered the controversy.
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