NCLT To Re-Hear Repayment Plan In Subhash Chandra Case, Says 2:1 Majority Ruling Not Achieved

The insolvency case involving Zee founder Subhash Chandra has hit a fresh roadblock, with the National Company Law Tribunal saying it cannot pass a final order on his repayment plan because its members have failed to reach a majority view.

The tribunal on Monday said it has constituted a five-member bench to hear the insolvency case. The hearing will be held at 10:15 am on Tuesday, Sept 1.

The repayment plan, under the ruling issued last week, had proposed paying creditors Rs 6.25 crore, with another Rs 25 lakh towards insolvency process costs, against admitted claims of Rs 22,006.57 crore. That amounts to a recovery of roughly 0.03%, or a nearly 99.97% haircut.

The latest NCLT order, however, is not a fresh rejection of the plan. Instead, it says there is no majority on what the plan should actually mean for creditors who opposed it.

The original judicial member had supported the plan, but only for creditors who voted in its favour. He wanted banks and other dissenting creditors to retain the right to pursue recovery separately. The order says he “confined the approval of repayment plan only to those creditors who approved it” and gave dissenting creditors liberty to recover their dues.

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The technical member, meanwhile, rejected the repayment plan.

A third member later approved the plan, but took a fundamentally different view from the judicial member. He held that the plan could extinguish the claims of all creditors, including banks that had opposed it.

The latest order makes the distinction explicit: the judicial member's approach was to approve the plan for assenting creditors while allowing dissenters to recover their money. The third member's approach involved “extinguishing the claim of all the creditors including banks and financial institutions.”

The bench also noted that the two views applied Section 115(1) of the Insolvency and Bankruptcy Code differently, saying this would make a “vital difference in ramification of the plan.”

The conclusion is blunt: “no majority view has emerged in the matter.” As a result, “no order can be passed at this stage” and the matter has been referred afresh to the NCLT President.

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