NCLT orders insolvency
proceedings against Subhash Chandra on Indiabulls Housing Finance plea
The National Company Law
Tribunal (NCLT) on Monday ordered insolvency proceedings against media mogul
Subhash Chandra, following a plea filed by Indiabulls Housing Finance. The
decision, announced by a two-member bench in Delhi, comes in response to Chandra's
role as a guarantor for a loan extended to Essel group firm Vivek Infracon Ltd.
Vivek Infracon, a subsidiary
of the Essel Group, defaulted on a payment of approximately Rs 170 crore in
2022, prompting Indiabulls Housing Finance to seek legal recourse.
While Indiabulls Housing
Finance's plea was upheld by the NCLT, similar requests from two other
creditors, IDBI Trusteeship and Axis Bank, were rejected by the bench
comprising members Ashok K Bhardwaj and Subrata K Das.
The order was pronounced
during the open court session, yet a comprehensive judgment detailing the
rationale behind the decision is still awaited.
Indiabulls Housing Finance
Ltd (IHFL) had moved NCLT after Vivek Infracon had in 2022 defaulted a payment
of around Rs 170 crore. Vivek Infracon is a part of Essel Group promoted by
Chandra.
Though some settlement talks
had taken place, no payment was made to IHFL.
The matter which was admitted
in NCLT on Monday was the case of personal insolvency against Chandra under
Section 95 of the Insolvency & Bankruptcy Code (IBC).
After initiation of the
insolvency proceedings, Chandra would come under the moratorium provisions of
the IBC and would not be allowed to sell, dispose or alienate any property or
assets.
A Resolution Professional
would be appointed by the insolvency tribunal, who would collate all the loans
and help the financial creditors recover their money.
Earlier, Chandra had
contended that a personal guarantor cannot be liable for insolvency proceedings
and the NCLT has no powers to initiate the process against him
However, this was rejected
by the NCLT in May 2022 and the tribunal held that it has the jurisdiction and
authority to adjudicate personal insolvency proceedings.
Subsequently, this was
challenged by Chandra before the appellate tribunal NCLAT. However, the matter
was withdrawn as parties decided to settle the matter amicably.
However, the issue was revived
again by IHFL earlier this year as the settlement with Chandra did not
materialise.
In 2019, the government
amended the provisions of IBC, allowing the creditors to file insolvency
proceedings against personal guarantors.
This provision was
challenged in the Supreme Court and the apex court in November 2023 upheld the
validity of these provisions.
www.economictimes.indiatimes.com
dt. 23.04.2024