Payout farce exposes NCLT's flawed process

The decision of a special bench of the National Company Law Tribunal (NCLT), headed by its president Justice (Retd) Anupinder Singh Grewal, to stay an order approving a Rs 6.25 crore payout plan against claims of over Rs 22,006.57 crore against Essel group founder Subhash Chandra has only exposed the tribunal's poor functioning. Public outrage forced the special bench to put the plan in abeyance, and the bench itself was constituted only after the controversy erupted. But for this afterthought, a huge financial claim would have been settled with a repayment of just 0.03% — that's a haircut of 99.97%. It was rightly described as a mundan. The creditors included some big names from the banking and finance sector. Some of them have appealed the NCLT's decision. An FIR has also been filed against Subhash Chandra for fraud and breach of trust..Subhash Chandra has argued that he did not personally borrow money and was only a guarantor for the loans raised by three group companies. Isn't a guarantor liable for the actions of those companies? The case must be seen against the backdrop of bans harassing thousands of ordinary borrowers and guarantors, many of whom have faced property confiscation or even been driven to suicide under repayment pressure. The NCLT arrived at Rs 6.5 crore by deducting Rs 25 crore — the reported worth of Subhash Chandra's house — from his declared assets of Rs 31.79 crore. He had to have a roof over his head, no? Yet questions persist about his net worth, which has at different times been declared as Rs 45,888 crore, Rs 40,562 crore, Rs 39.8 crore, and Rs 31.79 crore..CBI FIR against Subhash Chandra for 'inflation' of net worth to secure nearly Rs 1,000 crore in loans.The repayment plan was approved by a voting support of 80.81%, but 61.78% of that share came from associates or parties related to Subhash Chandra. The NCLT has now said the procedure was wrong. India has seen predatory practices where billions have been siphoned off through haircuts, write-offs, and waivers favouring the wealthiest and most resourceful persons and corporates. Subhash Chandra's case may still become one such case, because the last word is yet to be said. Vijay Mallya had reason to congratulate Subhash Chandra. He said Rs 14,100 crore was recovered from him against a judgment debt of Rs 6,203 crore. He must be wondering why someone who paid Rs 6.5 crore against a debt of Rs 22,000 crore thrives in India while he is in exile in England.