Subhash Chandra Opposes Formation of Five-Member NCLT Bench For Deciding His Personal Insolvency Case

New Delhi: Opposing the formation of a five-member bench by the National Company Law Tribunal (NCLT) for deciding his personal insolvency case, Essel Group chairman Subhash Chandra on Wednesday (September 2) contended that the NCLT doesn’t have the power to constitute the bench, reported Press Trust of India.

Representing Chandra before the National Company Law Appellate Tribunal (NCLAT), senior advocate Sasmit Patra said that the NCLT’s order "faulty and wrong". Patra argued that "they are not empowered" to form a five-member bench.

Patra contended that the five-member bench had on Tuesday (September 1) stayed the order of Nilesh Sharma, Member (Judicial), who joined as a third member following a split verdict by the division bench of the NCLT.

"Under which power" it was stayed, and "when did this five-member bench sit together? What proceedings were conducted that led to this five-member bench taking only one order?" said Patra.

Representing dissenting creditors including LIC Housing Finance, Canara Bank and Union Bank, solicitor general (SG) Tushar Mehta submitted that the petition filed against the third member's order "may be disposed of with liberty to revive" since some respondents could challenge the reference itself.

SG Mehta said the case involved "very peculiar circumstances" because it had thrown up "three views" that were "divergent to each other," making it fit for a larger bench to examine the issue.

Chandra’s counsel Patra opposed Mehta and submitted that the orders by Ashok Kumar Bhardwaj, Member (Judicial), and Nilesh Sharma were aligned on the repayment plan and eligibility issues.

Officiating chairperson Justice Yogesh Khanna, heading the three-member NCLAT bench which heard the matter on Wednesday observed that the constitution of the five-member bench was "not a question before challenge for us."

Earlier, the NCLT on Monday (August 31) held that “no majority verdict” had in fact emerged approving Chandra’s repayment plan to creditors since the third NLCT member’s opinion was radically different from both members of the original bench.

Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri of NCLT held diametrically different views on the controversial haircut so far assumed to have been given to Chandra, a former independent Rajya Sabha MP and tycoon.

There has been an uproar on Chandra being asked to pay just Rs 6.5 crore against admitted claims of Rs 22,006.57 crore. This works out to a 99.97% of a haircut, the creditors were expected to take. In sharp criticism, this was termed as a “mundan” (tonsure) by the opposition Congress party.

Leader of Opposition Rahul Gandhi in his press conference called it a case of “two systems” under the Modi government. The new Insolvency and Bankruptcy Code of the Modi government has come under heavy fire after this settlement was made public, with analysts and general commentators also comparing the treatment of big defaulters versus small borrowers.

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