The bench clarified that the order passed by the third member of the tribunal approving the repayment plan cannot be given effect to, as it did not constitute a majority view.
The NCLT said the matter had been referred to it because there was no majority among the members who had previously heard the case. The bench said it would issue notice in the matter.
Solicitor General Tushar Mehta told the NCLT that an appeal had already been filed against the order by the third member.
On insistence from the lenders, the NCLT also directed that Chandra shall not alienate his properties, either directly or indirectly.
The lenders subsequently informed the National Company Law Appellate Tribunal (NCLAT) about the NCLT’s stay. The NCLAT deferred the hearing of the lenders’ plea to Wednesday, September 2.
Why the NCLT order was stayed
The development follows an NCLT order on Monday which said that no final order had been issued in the matter as no majority view had emerged among the three members who had heard the case.The original two-member NCLT bench had differed on the repayment plan, following which the matter was referred to a third member. The third member had subsequently approved Chandra’s repayment plan, under which he would pay around ₹6.5 crore against admitted claims of more than ₹22,000 crore.
The NCLT on Monday said the third member’s view was also different from those of the original Judicial and Technical Members, meaning there was no majority opinion.
The five-member bench has now clarified that the third member’s order cannot be given effect to because it is not the majority view.
Lenders challenge repayment plan
Canara Bank and Union Bank of India had approached the NCLAT challenging the repayment plan and had sought an urgent hearing. The lenders had argued that the plan represented a virtually 99% haircut and could affect the intent and purpose of the Insolvency and Bankruptcy Code.
Canara Bank, Union Bank of India, LIC Housing Finance and HDFC Bank had earlier opposed the repayment plan. Other financial creditors holding 80.81% of the voting share had backed it.
The proceedings were initiated by Indiabulls Housing Finance against Chandra in relation to personal guarantees he had provided for loans taken by Essel Group companies. Chandra has maintained that he did not personally borrow from lenders and that the claims relate to guarantees provided for loans raised by group companies.
The NCLT’s latest directions leave the repayment plan without effect for now, pending further proceedings before the tribunal.
