LIC Housing Finance has challenged the NCLT order of a special single judge bench that approved the Rs. 6.5 crore repayment plan for Subhash Chandra's personal insolvency case against admitted claims of over Rs. 22,000 crore.
Solicitor General Tushar Mehta appeared on behalf of LIC Housing Finance, seeking an urgent hearing on the matter. The NCLAT has listed the matter for an urgent hearing tomorrow, September 1.
LIC Housing, which will recover just Rs 38 lakh against an admitted claim of Rs 1,322 crore, will argue that the plan was accepted by a committee or creditors where 61.78% of the vote was controlled by entities directly or indirectly under the commercial influence of Dr. Subhash Chandra, and ought not to have been allowed to vote.
Dissenting banks, including LIC Housing Finance, HDFC Bank, Axis Bank, Canara Bank and RBL Bank, together holding close to 20% of the CoC's voting rights, contested the five companies' participation.
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"There is no doubt about the fact that the said entities are controlled directly or indirectly by the individuals related to the PG," the NCLT order read, using the shorthand for personal guarantor and naming the five entities: Veena Investments Private Limited, Direct Media Distribution Ventures Private Limited, World Crest Advisors LLP, Lemonade Capital Advisors LLP and Corpcall Capital Advisors LLP.
Veena Investments is controlled by Sushila Devi Goel, wife of Jawahar Goel, Chandra's younger brother. Direct Media and World Crest are direct subsidiaries of Veena Investments; together the three companies held 35% of the voting rights.
Lemonade Capital Advisors, holding a 16.85% voting right, is linked to Essel Group entities through overlapping directorships: partners Ravindra Pashte and Naresh Manohar Ingale both sit on the board of Living Entertainment Enterprises Pvt Ltd, and Ingale is also a director of Ekmart Trading Pvt Ltd.
Corpcall Capital Advisors LLP, holding 10.30%, is linked through partner Vijay Bhujbal, a director of Essel Highways Ltd and Essel Infraprojects Ltd. Living Entertainment Enterprises and Essel Infraprojects were disclosed as "other related parties" in Veena Investments' FY21 consolidated financial statements, and Essel Highways is a subsidiary of Essel Infraprojects.
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The judge held that while these entities may clear the related party test, the personal insolvency regime provides an 'associate' test, within which these entities do not fall. Based on this strict interpretation of the term "associate," all five entities were allowed to vote on the scheme.
Other arguments will likely centre around a lack of forensic audit on Dr. Chandra's net worth, despite requests from creditors, and the alleged procedural lapses in the process by the resolution professional.
The matter will be taken up tomorrow before the NCLAT.
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