The National Company Law Tribunal (NCLT) on Tuesday barred Essel Group chairman Subhash Chandra from alienating his properties as lenders challenged a proposed settlement that would allow creditors to recover around Rs 6.5 crore against claims of about Rs 22,006 crore.
A five-member special bench headed by NCLT President Justice Anupinder Singh Grewal said there was no majority view among its members and, therefore, the order allowing the settlement could not yet be given effect.
“Let notice be issued to all the parties,” the bench said, directing that Chandra, the guarantor, “shall not alienate the properties, either directly or indirectly”.
The tribunal said it wanted to examine the matter after hearing all parties, including lenders who have opposed the repayment plan.
The case is also before the National Company Law Appellate Tribunal (NCLAT), where dissenting lenders have challenged the settlement. On Tuesday, a three-member NCLAT bench, comprising Officiating Chairperson Justice Yogesh Khanna and two other members, agreed to list the matter on Wednesday following a request from Solicitor General Tushar Mehta, appearing for LIC Housing Finance, Canara Bank and Union Bank.
Mehta sought a day's time to decide whether the lenders would proceed with the appeal.
The dispute centres on a repayment plan under which Chandra was allowed to settle claims arising from personal guarantees given for borrowings by Essel Group companies for about Rs 6.5 crore. The amount represents a 99.9 per cent haircut on the Rs 22,006 crore in claims.
Ten banks and lenders supported the proposal, while dissenting creditors, including HDFC Bank, LIC Housing Finance and Canara Bank, opposed it, arguing that the recovery would be negligible. The dissenting lenders accounted for less than 20 per cent of the voting share.
Chandra has disputed the Rs 22,006-crore figure, saying it does not represent money personally borrowed by him but claims arising from guarantees he had given for loans raised by Essel Group companies. He has pegged the personal guarantee claims at around Rs 3,990 crore.
Last week, the NCLT had allowed the settlement, observing that bankruptcy proceedings could result in even lower recovery for creditors. It also noted that Chandra's estate comprised “very few assets with negligible value”.
The dissenting lenders, however, have sought further scrutiny of Chandra's declared net worth, which they said was a key factor when the guarantees were extended.
The proceedings began after a two-member NCLT bench delivered a split verdict on the repayment proposal. The matter was referred to a third member, whose decision allowing recovery of around Rs 6.5 crore was challenged before the NCLAT.
On Tuesday, the special bench stayed the third member's August 25 order, citing the absence of a clear majority view under Section 419(5) of the Companies Act.
Chandra's Essel Group came under severe financial stress following the 2018 liquidity crisis triggered by the collapse of infrastructure financier IL&FS. The group subsequently faced difficulties refinancing its debt, with several businesses being sold or entering insolvency proceedings.
(With inputs from PTI)