The National Company Law Tribunal (NCLT) has approved a repayment scheme for Subhash Chandra, the founder and chairman of Zee Group. Under this plan, creditors will receive only 6.5 crore rupees against recognized claims amounting to approximately 22,006.57 crore rupees. This means that creditors will incur losses of almost 99.97 percent, as reported by the news agency PTI.
Nilesh Sharma, an NCLT member (judge) serving as the third member of the tribunal, approved the plan on Tuesday in accordance with Section 114 of the Insolvency and Bankruptcy Code (IBC). He rejected the objections raised by creditors who considered the proposed compensation too insignificant for approval.
Tribunal Rejects Creditor Objections
Previously, the case led to a disagreement between two members of the NCLT. Subsequently, the tribunal president appointed Sharma as the third member to make the decision. Sharma dismissed the objections put forth by LIC Housing Finance, which characterized the proposed payment as 'unviable and illegal.'
This creditor pointed out that with recognized claims of approximately 22,006.57 crore rupees, the plan provided for a payout of 6.25 crore rupees and 25 lakh rupees to cover procedural expenses. The NCLT order noted that in the case of LICHFL, whose recognized claim was 1,322.39 crore rupees, the proposed repayment amounted to only 38,09,294 rupees, which is approximately 0.028 percent of the recognized debt. It was stated that such a negligible repayment could not receive approval from this tribunal.
Creditors also argued that the plan designated the sum of 6.5 crore rupees as an estimate, not a final figure, making the offer uncertain and unsuitable for approval. However, the tribunal observed that the objecting creditors collectively constituted less than 20 percent of the voting share. Meanwhile, the repayment plan received approval from creditors holding 80.81 percent of the voting share.
NCLT States Creditors May Receive More Later
In its 144-page order, the tribunal indicated that the valuation conducted by the resolution professional showed that Chandra's personal assets are significantly less than the amount proposed in the repayment plan. The tribunal also ruled that rejecting the plan is unlikely to improve the position of the dissenting creditors. If the plan fails, Chandra may face bankruptcy, which would reduce the likelihood of debt recovery from his financial assets.
The tribunal emphasized that it cannot substitute its own assessment of the settlement amount's sufficiency for the commercial judgment of the creditors. It also noted that 'the commercial decision of the creditors operates within, not outside, the legal framework.' The NCLT stated: 'AA (NCLT) does not replace the commercial wisdom of the creditors nor conduct a wide-ranging investigation into allegations that are not supported by reliable material. Its role is supervisory, corrective, and judicial, not investigative, unless the law requires it.'
Furthermore, the NCLT clarified that after the repayment plan is approved, it will apply to all creditors under Section 115 of the IBC, including those who opposed it. The matter will now return to the original bench, which will issue the official order according to the majority opinion under Section 419(5) of the Companies Act, 2013.
What is the Case About?
Bankruptcy proceedings began after Indiabulls Housing Finance filed a suit in 2022 against Chandra, which provided a personal guarantee for a loan of 170 crore rupees to the company Vivek Infracon, which subsequently became non-performing. In April 2024, the NCLT accepted the application for personal bankruptcy. Indiabulls Housing Finance Ltd was renamed Sammaan Capital Ltd in 2024.
Earlier, Chandra had argued that the NCLT did not have the authority to decide on personal bankruptcy. The tribunal rejected this argument in May 2022 and appointed a resolution professional. Chandra challenged this decision in the NCLAT, but the issue was closed after Indiabulls announced reaching an agreement. However, this agreement was never implemented. After the Supreme Court upheld relevant provisions of the IBC in November 2023, Indiabulls resumed the bankruptcy case in February 2024.