Several lenders, including public sector financial institutions, are moving the National Company Law Appellate Tribunal (NCLAT) against the National Company Law Tribunal’s (NCLT’s) approval of a repayment plan submitted by Essel Group founder Subhash Chandra, under which only ₹6.25 crore is proposed to be paid against admitted claims of about ₹22,000.57 crore.
Canara Bank, in a media statement, said that it was filing an appeal against the NCLT order. Union Bank of India (UK) said it was “immediately challenging” the NCLT decision before the NCLAT. LIC Housing Finance (LICHFL) also said it would immediately appeal the order along with other public financial institutions.
The development comes despite the repayment plan receiving 80.81 per cent of the votes of creditors. The plan proposes a payment of just ₹6.25 crore against admitted claims of around ₹22,000.57 crore, resulting in an extremely low recovery for creditors.
Canara Bank said it, along with Union Bank of India (UK) and LICHFL, had opposed the repayment plan. “Canara Bank (1.60 per cent voting share) along with other public sector entities Union Bank of India (0.76 per cent voting share) and LIC Housing Finance Ltd (6.09 per cent voting share) opposed and voted against the repayment plan submitted by Dr Subhash Chandra for ₹6.25 crore. However, the repayment plan was approved by other private creditors with majority vote (80.81% voting share),” said Canara Bank.
The bank also said it had sought a forensic audit, but the request could not be allowed because of its minority voting share. “In fact, Canara Bank demanded for forensic audit but the same could not be allowed in view of our minority voting share.” “Bank is filing appeal in NCLAT against the NCLT order,” it said.
Another public sector bank, Union Bank of India (UK), in a statement, said it had rejected the resolution plan along with other public sector undertakings such as Canara Bank and LICHFL and had sought its rejection before the NCLT. “However, due to majority vote of certain private creditors, the same plan has been approved by NCLT.” “Now, Union Bank of India (UK) Ltd is immediately challenging the decision of NCLT before NCLAT,” it said.
LICHFL also said it had voted against the repayment plan. “LIC Housing Finance Limited (LIC HFL) and other public financial institutions, including Canara Bank and Union Bank of India (UK) Ltd., voted against the Repayment Plan proposed by Dr. Subhash Chandra. The Plan was ultimately approved on account of the votes cast in favour of the Repayment Plan by the other Financial Creditors, aggregating to 80.81 percent.” “LIC HFL will immediately file an appeal before the Hon’ble NCLAT, along with the other public financial institutions,” it said.
The lenders’ opposition is also linked to the size of the recovery proposed under the plan. LICHFL, for instance, had an admitted claim of ₹1,322.39 crore, against which the plan provided for ₹38.09 lakh, according to the NCLT order.
LICHFL had argued before the tribunal that the repayment was too small and had described the payment terms as “unviable and unlawful”.
HDFC Bank, which had also voted against the plan, is weighing an appeal. “With regard to the referred NCLT matter, HDFC Bank’s admitted claim was only 3.2 per cent of the total stated amount,” the bank said. The facility was inherited from HDFC Ltd, which merged with HDFC Bank in 2023.
“HDFC Bank had opposed this settlement and had voted against this resolution, which was approved by the majority. The Bank is exploring filing an appeal at the NCLAT,” it said.
The case relates to insolvency proceedings against Chandra in his capacity as a personal guarantor for loans taken by companies associated with the Essel Group. Indiabulls Housing Finance had approached the NCLT after the dues were not repaid.
