Media Baron Subhash Chandra Faces Insolvency Proceedings on Indiabulls Plea
Photo : PTI
The National Company Law Tribunal (NCLT) issued a directive on Monday for the commencement of insolvency proceedings against media mogul Subhash Chandra, following a petition submitted by Indiabulls Housing Finance. Acting on the plea, a two-member bench in Delhi mandated the initiation of personal insolvency proceedings against Zee Entertainment Enterprises Ltd (ZEEL) Chairman Emeritus Chandra, who had provided guarantee for a loan extended to Essel group subsidiary, Vivek Infracon Ltd. While the NCLT bench, comprising members Ashok K Bhardwaj and Subrata K Das, upheld the application from Indiabulls Housing Finance, it dismissed similar requests from two other creditors, namely IDBI Trusteeship and Axis Bank. The NCLT’s ruling was declared during an open court session, with a comprehensive judgment yet to be released.
Indiabulls Housing Finance Ltd (IHFL) resorted to NCLT after Vivek Infracon defaulted on a payment of approximately Rs 170 crore in 2022. Vivek Infracon, a constituent of the Essel Group overseen by Chandra, failed to fulfill the obligations despite some negotiations for settlement. The case presented to the NCLT on Monday pertained to personal insolvency proceedings against Chandra, invoking Section 95 of the Insolvency & Bankruptcy Code (IBC).
What it Means for Subhash Chandra?
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 However, the matter was withdrawn as parties decided to settle the matter amicably.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.
(PTI Inputs)
