Subhash Chandra challenges NCLT's five-member bench authority in insolvency case
Quick Look
Zee Group founder Subhash Chandra appealed to NCLAT against an NCLT order that barred him from alienating property and allowed settlement of insolvency proceedings for Rs 6.3 crore against admitted claims of Rs 22,006.5 crore, alleging the tribunal lacked power to constitute a five-member special bench under Section 419(5) of the IBC.
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Why It Matters
Subhash Chandra's insolvency proceedings under the IBC involved admitted claims of Rs 22,006.5 crore, with a proposed settlement of Rs 6.3 crore. The NCLT had constituted a five-member special bench to approve this repayment plan on August 25.
Chandra alleged the tribunal did not have the power to constitute a five-member special bench
NEW DELHI: A day after NCLT barred him from alienating any of his property and stayed its order allowing him to settle his personal insolvency proceedings by paying around Rs 6.3 crore as against admitted claims of Rs 22,006.5 crore, Zee Group founder Subhash Chandra questioned the validity of the order before NCLAT. He alleged the tribunal did not have the power to constitute a five-member special bench, as was done to decide his case. Senior advocate Sasmit Patra, appearing for Chandra, submitted before an NCLAT bench of officiating chairperson Justice Yogesh Khanna and technical members Barun Mitra and Ajai Das Mehrotra that the order was "faulty and wrong". "The scope of Section 419(5) is very limited. If there is a differing view, then that differing view has to be taken up by another member... It does not empower NCLT under IBC or company law to form a five-member bench... Under which power? When did this five-member bench sit together?" he submitted. The appellate tribunal was hearing appeals filed by Union Bank of India (UK), Canara Bank and LIC Housing Finance against the Aug 25 opinion approving Chandra's repayment plan.
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Solicitor general Tushar Mehta, appearing for the creditors, submitted that the petition filed against the third member's order "may be disposed of with liberty to revive it" since some respondents could challenge the reference itself. Patra raised a grievance that Chandra had been vilified across the country over a proposed payment of Rs 6.5 crore. The solicitor general took exception to this. The NCLAT bench agreed, saying, "If you have any grievances, the matter is pending before NCLT; you raise grievances right there." tnn
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What to Watch
AI outlook — possibilities, not facts
NCLAT will reserve judgment and issue a detailed order within 2-4 weeks
Likely · Within weeks
If NCLAT finds merit in Chandra's argument, it may remit the case to NCLT for reconsideration by a properly constituted bench
Possible · Within weeks
Open Questions
- What specific legal basis does Chandra argue is missing for the five-member bench under Section 419(5)?
- Will NCLAT suspend the NCLT order during appeal proceedings?
- How might this ruling affect future insolvency cases involving large debt settlements?
- What are the implications for creditor recovery if the settlement is rejected?
