A recent National Company Law Tribunal (NCLT) order passed in insolvency proceedings against Zee Group founder Subhash Chandra triggered a debate regarding the fairness of the tribunal’s decision. The order passed on 25th August directed Subhash Chandra to pay an amount of ₹6.5 crore to creditors in the case concerning claims worth ₹22,006.57 crore.
Soon, several reports emerged suggesting that the tribunal passed an unfair order by allowing a reduction in Chandra’s liability, with a huge cut of 99.97% in the creditors’ claims.
Reports published headlines to insinuate that Chandra was being let off by making him pay a minuscule amount against the massive debt pile of over ₹22,000.
Grabbing the opportunity, the Congress ecosystem also jumped to attack the Modi government based on misleading headlines. Commenting on the NCLT order, Congress member Dr Shama Mohamed termed it a “massive loot” going on under the Modi government.
“A common man can’t get away without paying even a single paisa to banks. Their homes and cars are seized by banks, and farmers have their names displayed in local areas for defaulting. But here is Subhash Chandra, getting away with paying ₹6.5 crore against ₹22,006 crore in dues through the NCLT. Earlier, Anil Ambani’s ₹47,000 crore debt was settled for ₹455 crore. A massive loot is going on under @narendramodi! All his corrupt friends are getting away after defaulting on banks during his tenure,” Dr Mohamed posted on X.
Mainstream media reports and the Congress ecosystem together suggested that Subhash Chandra had taken a personal loan of ₹22,006.57 crore, which he failed to repay to the creditors, and that the matter eventually went to the NCLT, where Chandra was able to largely avoid his liability by securing an order which directed him to pay only ₹6.5 crore.
However, all the claims and allegations turned out to be misleading and false after Chandra’s office issued a clarification on the NCLT order and set the record straight.
The truth behind the ₹22,000 crore claim
According to the clarification issued by Chandra, he did not personally take the loan money from the creditors. This means that the Zee Chairman did not take the loan amount of ₹22,006.5 crore from the lenders. He only acted as a personal guarantor for the loan amount, which was taken by companies linked to Zee and the Essel Group.
The ₹22,006.5 crore amount represents the total value of guarantees and claims filed by the creditors in the proceedings before the NCLT. This does not mean that Chandra, in his personal capacity, owed the amount to the creditors or that it is personally payable by him. Moreover, the amount includes different categories of claims made by two groups of lenders, as clarified by Chandra’s office.
One group of lenders had rejected the repayment plan and filed claims worth ₹3,992 crore against Chandra as a personal guarantor. Out of the ₹3,992 crore claims, ₹620 crore have been settled so far and ₹3,372 crore remain to be repaid. Regarding the unpaid amount, the borrowing entities offered to pay ₹1,113 crore to the lenders, and discussions were underway.
The other group of lenders made claims to the tune of ₹16,386 crore, out of which ₹16,201 crore was admitted during the insolvency proceedings. However, the claim was disputed by the borrowing entities, and the process to settle the remaining amount with the lenders is ongoing.
Chandra also rejected claims that his personal net worth was ₹45,888 crore in 2017 and said that the market capitalisation of Essel Group companies was being misrepresented as his net worth. It said that Chandra’s assets were valued at ₹39.08 crore in his declaration to Parliament in 2016. It added that his total assets stood at ₹31.79 crore in 2024 as disclosed to the resolution professional.
Subhash Chandra’s personal liability
Chandra’s liability to pay ₹6.5 crore, along with ₹25 lakh in process costs, was fixed in personal insolvency proceedings, which commenced against him after he gave a personal guarantee for a loan worth ₹ 170 crore to Vivek Infracon from Indiabulls Housing Finance. The loan went bad, leading to the filing of insolvency proceedings by Indiabulls in 2022. The NCLT later admitted the personal insolvency proceedings against Chandra in April 2024.
The liability to pay ₹6.5 crore was not imposed by the NCLT on Chandra. In fact, it was approved by a majority vote of 80.814% of creditors. Many of the creditors did not cast their votes. Notably, in insolvency proceedings, the role of the NCLT is supervisory. It cannot substitute for that of the creditors. It can only examine whether the creditors’ judgment is legally viable.
Thus, it is clear from Chandra’s clarification and the facts of the insolvency proceedings that the mention of the ₹22,000 crore figure in the headline that Chandra’s personal liability of ₹6.5 crore is misleading. Chandra has not been granted a sharp reduction of 99.97% on the loan amount claimed by the creditors.
The massive loans were taken by different commercial entities, and Chandra only acted as a personal guarantor for them. A personal guarantor is not primarily responsible for the repayment of the loan amount. If borrowing entities fail to repay the loan amount, the lenders can recover it from the guarantor’s personal assets.
In this case, after the loan amount was defaulted on, lenders initiated personal insolvency proceedings against Chandra before the NCLT. After examining Chandra’s assets, the tribunal proposed a repayment plan, which was approved by the majority of the lenders. This only fixes Chandra’s personal liability to ₹6.5 crore, while the recovery proceedings against the principal debtors for the recovery of the arrears are continuing.
