New Delhi : The National Company Law Tribunal (NCLT) has approved a repayment plan under which Subhash Chandra will pay Rs 6.5 crore against admitted creditor claims of about Rs 22,006.57 crore. The plan was approved under Section 114 of the Insolvency and Bankruptcy Code (IBC) by NCLT Member (Judicial) Nilesh Sharma, who was appointed as the third member after the original two-member bench delivered a split verdict.
While the objecting creditors together held less than 20% of the voting share, the plan was approved by creditors representing 80.81% of the voting share. LIC Housing Finance, whose admitted claim stood at Rs 1,322.39 crore, was proposed to receive only Rs 38.09 lakh, or about 0.028% of its admitted dues. The lender argued that such a small repayment could not justify approval of the plan.
The NCLT, however, took into account the valuation of Chandra’s personal estate by the resolution professional. The tribunal said the valuation showed that his personal estate was worth significantly less than the amount being offered under the plan. If the insolvency process was resolved and Chandra was able to return to financial stability, the tribunal said, creditors could ultimately have a better chance of recovering their dues directly from the principal debtors.
The NCLT said its role was supervisory, corrective and judicial within the framework of the IBC. It noted that the commercial decision of creditors operates within the statutory framework of the law. The tribunal further held that once approved, the repayment plan would be binding on all creditors covered by it, irrespective of whether they voted for or against it.
It said dissenting creditors could not be allowed to separately pursue recovery of their full original debt outside the approved plan, as this would defeat the statutory scheme and result in unequal treatment of creditors. The matter will then go back to the original division bench for a formal order in accordance with the majority opinion, as required under Section 419(5) of the Companies Act, 2013.
Mallya said that if the report was true, there should be “congratulations” for Subhash Chandra. He also referred to the recovery of Rs 14,100 crore from him against a judgment debt of Rs 6,203 crore and said that many other borrowers had settled at a fraction of their dues. Mallya’s comments were made in the context of his own long-running dispute over recovery and were separate from the NCLT proceedings involving Chandra.
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