Subhash Chandra's ₹6.5 cr payout to settle dues cleared by NCLT; Congress calls it ‘mundan’: Key things to know

The National Company Law Tribunal (NCLT) has sanctioned a resolution plan allowing media entrepreneur Subhash Chandra to settle admitted claims of around ₹22,006.57 crore by paying creditors only ₹6.5 crore. The proposed recovery amounts to a reduction of nearly 99.97% in the lenders’ claims.

The Congress slammed the NCLT order in Chandra's case, stating the massive reduction was not merely a “haircut” but a "mundan", adding that it makes a "complete mockery" of the Insolvency and Bankruptcy Code, 2016.

NCLT Member (Judicial) Nilesh Sharma, acting as the third member of the tribunal, approved the resolution plan on Tuesday under Section 114 of the Insolvency and Bankruptcy Code (IBC), according to PTI. The tribunal dismissed objections from lenders who argued that the proposed recovery was too low to justify approving the plan.

The matter came before a third member after the two-member NCLT bench delivered a split decision, prompting the tribunal’s president to appoint Nilesh Sharma to resolve the differences.

Settlement ‘unviable and unlawful’, say creditors

Sharma dismissed the objections raised by dissenting creditors, led by LIC Housing Finance, which had described the proposed settlement as “unviable and unlawful”.

The lenders argued that the plan offered only ₹6.25 crore against total admitted claims of around ₹22,006.57 crore, while allocating another ₹25 lakh to cover the costs of the insolvency process.

"In the case of LICHFL, whose admitted claim stood at ₹1,322.39 crore, the proposed repayment was merely ₹38,09,294, amounting to approximately 0.028 per cent of its admitted dues. It was contended that such a negligible repayment could not receive the approval of this tribunal," said the NCLT order.

The dissenting creditors also pointed out that even the ₹6.5 crore proposed under the repayment plan was described as an indicative figure rather than a guaranteed payment. They said that this made the plan uncertain, provisional and unsuitable for approval.

The repayment plan also described the proposed ₹6.5 crore payout as an indicative amount rather than a guaranteed sum, which the dissenting creditors argued made the proposal uncertain and unsuitable for approval.

The NCLT, however, noted that the creditors opposing the plan collectively accounted for less than 20 per cent of the voting share. The proposal had secured the required approval, with 80.81 per cent of the votes in its favour.

In his 144-page order, Sharma said the resolution professional’s valuation found that Chandra’s personal assets were worth considerably less than the amount offered under the plan. He added that the dissenting creditors were unlikely to obtain a better recovery by rejecting the proposal, as doing so would push Chandra into bankruptcy rather than allow him to repay creditors through a financially viable resolution.

"If the plan is approved and the debtor's insolvency is resolved, putting him back on his feet, the objectors would ultimately stand a better chance of recovering their debts directly from the Principal Debtors," the NCLT stated.

The tribunal said it could not override the creditors’ commercial judgment or independently determine whether the amount offered under the settlement was sufficient.

It further observed that "the commercial decision of the creditors operates within, and not outside, the statutory framework".

Chandra issues statement

Chandra, in a statement, clarified that he did not personally borrow from lenders but signed guarantees, stating, “There is no personal borrowing by Dr. Subhash Chandra from any of the creditors named in the order or from any other creditor/lender. He only signed personal guarantees.”

While businesses he guaranteed borrowed nearly ₹45,000 crore, Chandra noted that approximately ₹43,000 crore has been repaid and highlighted his current net worth of ₹31.79 crore, largely comprising a ₹25 crore residential property.

HDFC Bank may challenge NCLT nod

HDFC Bank is considering an appeal against the NCLT decision.

India’s largest private-sector lender told Mint on Thursday that the approved plan would allow it to recover only 3.2% of its total claim. HDFC Bank had opposed the proposal and voted against it during the insolvency process. The lender is now weighing an appeal before the National Company Law Appellate Tribunal (NCLAT).

Congress reacts

Congress general secretary Jairam Ramesh stated on X, “In finance terminology, when creditors are owed money and the debtor repays only part of it, the difference expressed as a percentage is called a haircut.”

"This is not just a haircut. It is actually a mundan and makes a completely mockery of the Insolvency and Bankruptcy Code, 2016," Ramesh added.

What did Vijay Mallya say?

Alleged fugitive businessman Vijay Mallya has once again alleged that banks have already recovered money from him, but he continues to be denied justice.

Reacting to the development, Mallya said, "If True many congratulations to my friend Subhash. Banks and Government have admitted having recovered ₹14,100 crores from me against a Judgement debt of ₹6203 crores. Many more borrowers have settled at a fraction. Indian Debt Resolution Justice I presume. No media questions."