Divergent Views Stall Decision on Creditor Claims; Matter Referred to NCLT President for Resolution
In a significant development, the National Company Law Tribunal (NCLT), New Delhi Bench, has reached an impasse over the approval of a repayment plan proposed by Indiabulls Housing Finance Limited concerning the financial obligations of Dr. Subhash Chandra. The tribunal's inability to arrive at a majority decision has necessitated a referral to the Hon'ble President of the NCLT for further deliberation.
The case, involving multiple interim applications and a company petition dating back to 2022, centers around the application of the Insolvency and Bankruptcy Code, 2016. The core issue is the approval of a repayment plan under Section 115(1) of the Code, which has led to a division in opinion among the tribunal members.
Mr. Ashok Kumar Bhardwaj, the Judicial Member, advocated for confining the approval of the repayment plan to creditors who supported it. He proposed that dissenting creditors, including banks and financial institutions, be allowed to pursue debt recovery outside the plan. This approach aims to preserve the rights of creditors while balancing the benefits of the repayment plan.
Conversely, the Technical Member, Ms. Reena Sina Puri, rejected the repayment plan entirely. The Third Member took a different stance, approving the plan but extinguishing the rights of all creditors uniformly, applying Section 115(1) to all creditors, which contrasts starkly with the views of the Judicial Member.
This lack of consensus has highlighted the complexities involved in insolvency proceedings, particularly when divergent interpretations of statutory provisions such as Section 79(2)(g) and Section 115(1) come into play. The absence of a majority opinion has left the tribunal unable to pass a definitive order, prompting the referral to the Hon'ble President under Section 419(5) of the Code.
The case underscores the challenges faced by the tribunal in balancing the interests of different stakeholders in insolvency proceedings. With significant financial implications for the parties involved, the resolution of this matter is being keenly watched by creditors and legal experts alike.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Approval of repayment plan under Section 115(1) of the IBC confined to assenting creditors, while dissenting creditors given liberty to resort to debt recovery process. Divergent views of Members (Judicial) and (Technical) led to no majority opinion, necessitating fresh reference to Hon'ble President under Section 419(5) of the Code.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 79(2)(g), 112, 113, 115(1), 419(5)
