Subhash Chandra opposes NCLT five-member bench's stay order; creditors appeals pending at NCLAT

Contending that the National Company Law Tribunal NCLT does not have the power to constitute a fivemember bench Essel Group Chairman Subhash Chandra on Wednesday opposed the NCLTrsquos recent order in his personal insolvency case according to news agency PTIA fivemember special bench of insolvency tribunal NCLT on Tuesday had stayed the previous order of the proposed repayment of Rs 65 crore to creditors in Subhash Chandrarsquos personal insolvency case and had barred him from selling his assetsSenior Advocate Sasmit Patra appearing for Chandra before the National Company Law Appellate Tribunal NCLAT termed the NCLT order faulty and wrong and said they are not empowered to form a fivemember benchPatra submitted that the fivemember bench had on Tuesday stayed the order of Nilesh Sharma Member Judicial who was brought in as the third member after a division bench of the NCLT delivered a split verdictUnder which power it was stayed and when did this fivemember bench sit together What proceedings were conducted that led to this fivemember bench taking only one order Patra arguedSolicitor General Tushar Mehta representing creditors such as LIC Housing Finance Canara Bank and Union Bank of India submitted that the petition filed against the third members order may be disposed of with liberty to revive since some respondents could challenge the reference itselfHe said the case involved very peculiar circumstances as it had thrown up three views that were divergent to each other making it fit for a larger bench to examine the issue according to PTIHowever Patra opposed it and said the orders by Ashok Kumar Bhardwaj Member Judicial and Nilesh Sharma were aligned on the repayment plan and eligibility issuesBoth are equally on the same page as far as Section 79 is concerned on eligibility Therefore to say all these issues have to be relitigated is completely wrong The scope of 419 5 of the Companies Act 2013 is very limited Patra said adding 419 6 says if there is a differing view then that differing view has to be taken up by another member or other membersIt does not give power to the NCLT under the IPC or company law to form a fivemember bench Under which authority which power then there is a fivemember bench he arguedThe fivemember bench orderThe NCLT on Monday had formed a fivemember bench that stayed the order of Nilesh Sharma on Tuesday after issuing notice to all parties and listed the matter for next hearing on September 23 2026It is manifest that as per section 4195 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 on TuesdayThis matter is also at NCLAT where lenders have challenged the Sharmarsquos NCLT order on August 25Chandra claims he has been vilifiedOn Wednesday Mehta informed a threemember NCLAT bench to dispose of the appeal as the fivemember NCLT bench had on Tuesday stayed the order of the third member the tiebreaker judge Nilesh SharmaHowever Patra opposed the Solicitor Generals plea to withdraw the appeal and contended that the fivemember NCLT bench should have stayed all the three orders passed including the split verdict of the division benchOfficiating Chairperson Justice Yogesh Khanna heading the NCLAT bench then observed that the constitution of the fivemember bench was not a question before challenge for usMehta suggested that Chandras side be allowed to challenge that order separately while his own appeal remained pending saying he had no difficulty with that course However the NCLAT bench said this could not be permittedPatra told NCLAT that Chandra has been vilified across the country over a proposed payment of Rs 65 crore against admitted creditor claims of Rs 22006 crore even though no final order approving the repayment plan currently existsMehta responded by saying This forum cannot be used for saying something outside the court this forum is being used to say something which will be printed tomorrow in the media This is not the forumThe NCLAT bench said ldquoIf you have any grievances the matter is pending before NCLT you raise grievance right thereMehta decided not to press the withdrawal applications and requested that the appeals remain pending The NCLAT agreed and directed that the petitions be listed for next hearing on October 7What was the earlier orderOn August 25 the NCLT Member Judicial Nilesh Sharma ruling as a third member had approved the plan under which Chandra will pay just Rs 65 crore to settle against creditor claims of around Rs 22006 croreEarlier 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 opinionSharma had rejected the claims of the dissenting creditors including LIC Housing Finance which had argued that the payout was unviable and unlawfulThe proposed repayment plan entailed Chandra to settle claims arising from personal guarantees on his groups borrowings for just Rs 65 crore which meant the creditors would take a 9997 per cent haircut on the quantum of Rs 22006 crore which was owedWhile 10 banks and lenders had supported the proposal creditors including HDFC Bank LIC Housing Finance Union Bank of India and Canara Bank had opposed it on the grounds that the recovery would be a fraction of the amountWith inputs from PTI