NCLT five-member Bench stays approval of Subhash Chandra’s ₹6.25-crore repayment plan

A five-member Bench of the National Company Law Tribunal (NCLT) on Tuesday (September 1, 2026) stayed an August 25 order approving a ₹6.25-crore repayment plan proposed by Essel Group founder Subhash Chandra in personal insolvency proceedings against him, after finding that no clear majority view had emerged among the members who had earlier heard the matter.

The Special Bench, headed by NCLT President Justice Anupinder Singh Grewal, noted that there was no clear majority opinion capable of being given effect to under Section 419(5) of the Companies Act, 2013, which provides for a reference to additional members when members of an NCLT Bench differ in their opinion.

“It is manifest, as per Section 419(5) of the Companies Act, that there is no clear majority view capable of being given effect to. Therefore, the order dated August 25, 2026, of the third member, Shri Nilesh Sharma, is stayed,” the Special Bench, also comprising judicial members Bachu Venkat Balaram Das and Mahendra Khandelwal, and technical members Atul Chaturvedi and Ravindra Chaturvedi, said.

Mr. Sharma, a judicial member of the NCLT, had been brought in as the third member after the two members who originally heard the matter differed over the repayment plan. He subsequently delivered his opinion on August 25.

The five-member Special Bench was constituted on Monday (August 31) evening after the tribunal found that there was still no majority view on how the repayment plan should operate. The NCLT, in its clarification order on Monday (August 31), said the members had taken different views on whether the repayment plan should bind only creditors who supported it or all creditors, including those who opposed it. One member had favoured allowing dissenting banks and financial institutions to pursue separate recovery proceedings, while another held that the approved plan should apply to all creditors.

The Special Bench also issued notices to the parties and sought their replies, observing that it would hear them at length before taking a final decision on the repayment plan.

Bar on alienating properties

Meanwhile, creditors have challenged the approval of the repayment plan before the National Company Law Appellate Tribunal (NCLAT). Solicitor General Tushar Mehta, appearing for the creditors before the Special Bench on Tuesday (September 1), sought an order restraining Mr. Chandra, who is the personal guarantor in the proceedings, from alienating properties held by him directly or indirectly.

The Special Bench accordingly restrained Mr. Chandra from alienating his properties.

“We also direct that the gurantors shall not alinetae the properties whatsover either dirctly or indirectly”, the Bench said in an oral order.

The personal insolvency proceedings against Mr. Chandra were initiated in 2024 following a petition by Indiabulls Housing Finance. The proceedings relate to personal guarantees given by him for borrowings of Essel Group-linked companies and are separate from corporate insolvency proceedings involving group companies and regulatory proceedings concerning Zee Entertainment Enterprises.

The dispute relates to the repayment plan under which Mr. Chandra would contribute about ₹6.25 crore from his personal estate towards admitted creditor claims of around ₹22,000 crore in the personal insolvency proceedings. The substantial gap between the claims and the amount proposed to be paid from his personal estate has drawn scrutiny.

The repayment plan received 80.814% of the voting share, while creditors opposing it accounted for 19.186%. Banks and other creditors had raised objections over the low recovery and questioned whether Mr. Chandra’s financial position and assets had been sufficiently examined. They had also questioned whether a forensic investigation was warranted.

On August 30, 2026, Mr. Chandra said borrowers associated with his personal guarantees had assured him that they would reconcile their accounts with lenders and settle the balance of ₹4,262 crore.

The tribunal, while approving the repayment plan on August 25, had concluded that it could provide a better outcome for creditors than pushing Mr. Chandra into bankruptcy. It also held that where creditors had approved a plan in accordance with the Insolvency and Bankruptcy Code, the tribunal would not ordinarily substitute its own commercial assessment for that of the creditors.

The August 25, 2026, order has nevertheless triggered questions over the effectiveness of personal guarantees and the ability of lenders to recover money when a guarantor’s available assets are substantially lower than the liabilities.