Chandra questions NCLT power to form five-member bench

New Delhi: Essel Group Chairman Subhash Chandra on Wednesday opposed the formation of a five-member bench by the National Company Law Tribunal (NCLT) to decide his personal insolvency case, arguing that the tribunal lacked the power to constitute such a bench.

Appearing before the National Company Law Appellate Tribunal (NCLAT), Senior Advocate Sasmit Patra described the NCLT's move as "faulty and wrong". He questioned the authority under which the five-member bench stayed an order passed by NCLT member Nilesh Sharma. The five-member bench had stayed Sharma's order, which dealt with Chandra's repayment plan and eligibility issues. The matter followed a split verdict by a two-member NCLT bench, after Sharma was brought in as the third member. NCLT had also barred Chandra from alienating his assets and stayed an order allowing him to settle claims arising from personal guarantees on group borrowings for about`6.5 crore, against creditor claims of around`22,006 crore.

Patra argued that the earlier orders by Ashok Kumar Bhardwaj and Sharma were aligned on key issues and said the relevant provisions of the Companies Act did not empower the NCLT to constitute a five-member bench.

Solicitor General Tushar Mehta, representing dissenting creditors including LIC Housing Finance, Canara Bank and Union Bank, said the case involved "very peculiar circumstances" because three divergent views had emerged, warranting consideration by a larger bench.

Mehta initially sought disposal of the appeal with liberty to revive it, after the five-member NCLT bench stayed Sharma's order.

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The Hans India