NCLAT issues notice to creditors on Subhash Chandra's plea; sets next hearing for Oct 29–30

Subhash Chandra. File picture.

The National Company Law Appellate Tribunal (NCLAT) on Tuesday issued notices to creditors and sought their responses on a plea filed by Essel Group Chairman Subhash Chandra challenging an NCLT order, reported news agency PTI. The appellate tribunal has scheduled the matter for hearing on October 29 and 30.

A three-member bench of NCLAT has directed the creditors, who opposed the maintainability of Chandra's petition, among others, to file their reply within a week. It also granted Chandra a week's time to file a rejoinder to the creditors' reply.

"Let the notice be issued... will file the reply (over maintainability and stay) within a week," said the bench comprising Officiating Chairperson Justice (Retd.) Yogesh Khanna and Technical Members Barun Mitra and Ajai Das Mehrotra.

The appellate tribunal also clubbed a separate petition filed by creditors challenging the NCLT order that approved a settlement involving a payment of about Rs 6.5 crore against admitted claims of around Rs 22,006.57 crore with Chandra's appeal, at the request of Solicitor General Tushar Mehta, appearing for some creditors.

The NCLAT has fixed October 29 and 30 for hearing Chandra's interim relief applications. The tribunal indicated that one day would be allotted for arguments on behalf of Chandra and the other for submissions from creditors, as per PTI.

Chandra had previously challenged the NCLT stay order

Chandra, the founder of Zee TV, had earlier challenged before the appellate tribunal an order passed on September 1 by a five-member larger bench of the National Company Law Tribunal (NCLT), which had stayed the previous order in his personal insolvency case and had barred him from selling his assets.

Senior Advocate Sasmit Patra, appearing for Chandra before the NCLAT earlier this month had termed the NCLT order "faulty and wrong" and had said, "they are not empowered" to form a five-member 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?" Patra argued.

The five-member bench order

The NCLT had formed a five-member bench, that stayed the order of NCLT Member Nilesh Sharma.

"It is manifest that as per section 419(5) of the Companies Act, there is no clear majority view capable of being given effect to. Therefore, the order dated 25th August, 2026 of the third member, Shri Nilesh Sharma, Member (J) is stayed," the special bench headed by President Justice Anupinder Singh Grewal had said.

What was the earlier NCLT order?

On August 25, the NCLT Member (Judicial) Nilesh Sharma, ruling as a third member, had approved the plan under which Chandra will pay just Rs 6.5 crore to settle against creditor claims of around Rs 22,006 crore.

Prior to this, two members of the NCLT had given a split verdict, following which the President of the forum had appointed Sharma as a third Member in regard to the difference of opinion.

Sharma had rejected the claims of the dissenting creditors including LIC Housing Finance, which had argued that the payout was "unviable and unlawful".

The proposed repayment plan entailed Chandra to settle claims arising from personal guarantees on his group's borrowings for just Rs 6.5 crore, which meant the creditors would take a 99.97 per cent haircut on the quantum of Rs 22,006 crore which was owed.

Many creditors had opposed it on the grounds that the recovery would be a fraction of the amount.

(With inputs from PTI)