New Delhi, Aug 27: The Congress on Thursday criticised the National Company Law Tribunal’s approval of a resolution plan allowing businessman Subhash Chandra to settle admitted creditor claims of around ₹22,006.57 crore by paying only ₹6.5 crore.
Congress leader Jairam Ramesh described the decision as more than a conventional financial “haircut”, calling it a “mundan” and alleging that it made a mockery of the Insolvency and Bankruptcy Code, 2016.
There was no immediate response from Chandra or his group to the Congress’ remarks.
Under the approved personal insolvency resolution plan, creditors are expected to receive ₹6.5 crore against admitted claims exceeding ₹22,000 crore. This represents a recovery of only a fraction of the total dues and a haircut of approximately 99.97 per cent for lenders.
Ramesh, referring to the financial term used when creditors recover less than the amount owed, said the tribunal’s decision had gone far beyond what could ordinarily be described as a haircut.
The NCLT approved the plan under Section 114 of the IBC after a third member was appointed to resolve a difference of opinion between two earlier members who had delivered a split verdict.
NCLT Member (Judicial) Nilesh Sharma, acting as the third member, rejected objections raised by dissenting lenders and cleared the resolution plan.
LIC Housing Finance, which led the objections, had argued that the proposal was both unviable and unlawful. It pointed out that its admitted claim stood at about ₹1,322.39 crore, while the proposed repayment to it was only ₹38.09 lakh, equivalent to roughly 0.028 per cent of its dues.
The lender also questioned the certainty of the proposed payment, arguing that the plan described the ₹6.5-crore amount as indicative rather than definitive.
The tribunal, however, noted that the creditors opposing the plan collectively accounted for less than 20 per cent of the voting share. The proposal had secured approval from creditors representing 80.81 per cent of the voting share.
In its 144-page order, the NCLT said the valuation conducted by the resolution professional indicated that Chandra’s personal estate was worth considerably less than the amount offered under the plan.
The tribunal further observed that rejecting the resolution plan could result in Chandra’s bankruptcy, potentially leaving dissenting creditors with poorer recovery prospects.
“If the plan is approved and the debtor’s insolvency is resolved,” the tribunal said, creditors could have a better opportunity to recover their dues from the principal debtors once Chandra’s financial position was restored.
The NCLT also emphasised that its role was not to replace the commercial judgment of the creditors or independently determine whether the settlement amount was adequate, provided the resolution process complied with the applicable provisions of the IBC.