NCLT Third Member Backs Dr Subhash Chandra’s ₹6.5 Crore Repayment Plan; Banks’ Objections to Go Before Original Bench
NEW DELHI (India CSR): The National Company Law Tribunal (NCLT), New Delhi, has supported the approval of a repayment plan proposed by Dr Subhash Chandra in his capacity as a personal guarantor, after a long-running insolvency process involving claims of more than Rs. 22,000 crore and objections from several banks and financial creditors.
In an order pronounced on August 25, 2026, Nilesh Sharma, Member (Judicial), acting as the Third Member of the NCLT Special Bench, held that the repayment plan met the requirements of Section 114 of the Insolvency and Bankruptcy Code, 2016 (IBC). The matter had been referred to the Third Member because the original Division Bench had earlier recorded differing opinions.
The order states that the plan, backed by 80.814 per cent of the voting share at the meeting of creditors, should be approved subject to certain changes. Most significantly, claims submitted through Anil Kumar on behalf of 960 individuals and Sunil Jain on behalf of 300 individuals are to be excluded from the final creditor list. The amount allocated to these excluded claims will be redistributed among the remaining eligible creditors under the approved plan.
However, the case is not entirely over. The Third Member directed that the matter be placed before the original Division Bench for passing the appropriate order in line with the majority opinion under the Companies Act, 2013.
In a case drawing attention across India’s financial and legal circles, the stark contrast between more than Rs. 22,000 crore in creditor claims and a proposed Rs. 6.5 crore repayment plan has turned the NCLT proceedings involving Dr Subhash Chandra into a closely watched test of personal-guarantor insolvency law.
A Personal Guarantor Case
The proceedings began in 2022 when Indiabulls Housing Finance Limited initiated insolvency proceedings under Section 95 of the IBC against Dr Subhash Chandra as a personal guarantor. A personal guarantor is a person who agrees to repay a lender if the principal borrower fails to meet its obligations.
The case is different from a corporate insolvency process involving a company. Under Part III of the IBC, the law provides a framework through which an individual debtor or personal guarantor can propose a repayment plan to creditors. If creditors approve the proposal with the required voting majority and the Tribunal finds the process legally compliant, the plan can become binding on both supporting and dissenting creditors.
The insolvency process faced delays after the Supreme Court passed an interim order in 2022. Later, after the Supreme Court vacated that order in April 2024, the NCLT admitted the petition. Shiv Nandan Sharma was subsequently appointed as the Resolution Professional, replacing the earlier professional.
The Resolution Professional placed Dr Chandra’s repayment plan before the creditors. The plan proposed that the personal guarantor would sell the limited assets and deposits available to him and contribute Rs. 6.5 crore towards the repayment process, including Rs. 25 lakh stated as process costs.
According to the repayment proposal, the personal guarantor’s estate had limited value and may not have been sufficient even to cover the costs of a bankruptcy process. The plan argued that creditors could receive a better practical outcome through a negotiated repayment arrangement than through bankruptcy, where recoveries could be uncertain.
₹6.5 Crore Plan Amid Much Larger Claims
The modest proposed repayment amount became the central point of disagreement between supporting and dissenting creditors.
LIC Housing Finance, one of the objecting creditors, submitted that admitted claims in the matter stood at approximately Rs. 22,006.57 crore, while the repayment plan proposed ₹6.25 crore for creditors and Rs. 25 lakh towards process expenses. LIC Housing Finance stated that its own admitted claim was approximately Rs. 1,322.39 crore and that the proposed recovery for it would be around Rs. 38.09 lakh, or about 0.028 per cent of its admitted dues.
Canara Bank and other objecting creditors also raised questions about the gap between past net-worth certificates and the present financial position presented in the proceedings. A 2018 certificate submitted to Canara Bank had assessed Dr Chandra’s net worth at Rs. 40,562 crore. Another certificate furnished to RBL Bank in 2017 reportedly reflected a net worth of USD 7.17 billion, approximately Rs. 45,888 crore.
The objectors argued that this sharp contrast with the current financial position warranted a forensic audit and asset-tracing exercise before the repayment plan could be approved. They also questioned whether the repayment plan was sufficiently certain, stating that some expected recoveries were dependent on future events and sale proceeds.
The Third Member acknowledged that the difference between earlier net-worth certificates and the current disclosed financial position gave creditors a legitimate reason to seek clarification. However, the order drew a distinction between a question requiring explanation and evidence proving concealment, diversion or fraudulent transfer of assets.
The Tribunal found that the objecting creditors had not produced independent and convincing material to establish that assets reflected in earlier certificates were still available, had been concealed, or had been diverted in violation of law.
Why NCLT Did Not Order a Forensic Audit
One of the most important legal findings in the order concerns the role and powers of the Resolution Professional in a personal guarantor insolvency process.
The objecting creditors alleged that the Resolution Professional should have conducted a forensic audit, appointed an asset-tracing agency and investigated possible diversion of assets. But the Third Member held that the IBC does not expressly require such an investigation as a mandatory condition before approval of a repayment plan for a personal guarantor.
The order noted that the IBC specifically grants broader investigative powers to a Bankruptcy Trustee after bankruptcy begins. It also grants investigation-related powers in corporate insolvency and liquidation matters. But the law does not create an equivalent, unrestricted power for the Resolution Professional during the repayment-plan stage of a personal guarantor insolvency process.
The Tribunal said it could not create such an obligation through interpretation where Parliament had not expressly provided one. At the same time, it clarified that if credible evidence of concealment, fraud or diversion of assets is discovered later, creditors may seek appropriate remedies, including recall of an approval order obtained through fraud.
This observation is important because it preserves a balance. The Tribunal did not accept allegations merely on suspicion, but it also did not close the door on creditors if material evidence emerges in the future.
Banks and Financial Institutions Involved
The order records the participation, objections or voting positions of several banks and financial institutions. Their involvement is significant because their combined objections represented 19.186 per cent of the voting share.
| Bank / Institution | Role or position recorded in the order |
|---|---|
| Indiabulls Housing Finance Limited | Original financial creditor; voted in favour with 1.98% voting share |
| Axis Bank Limited | Objected to the plan; voted against with 2.86% voting share |
| Canara Bank | Objected to the plan; voted against with 1.60% voting share |
| HDFC Bank Limited | Objected to the plan; voted against with 3.17% voting share |
| IndusInd Bank Limited | Filed objections; did not vote, with 1.11% voting share |
| RBL Bank Limited | Filed objections; voted against with 0.55% voting share |
| Union Bank of India (UK) Limited | Voted against with 0.76% voting share |
| LIC Housing Finance Limited | Objected to the plan; voted against with 6.09% voting share |
| IDBI Trusteeship Services Limited | Appeared as trustee for funds; one voting entry did not vote and another voted against |
| STCI Finance Limited | Asserted security rights over mortgaged property; its objection was rejected while its security enforcement rights were preserved |
| JC Flowers Asset Reconstruction Company Limited | Mentioned as mortgagee of a property discussed in Canara Bank’s later application |
It is important to note that Indiabulls Housing Finance and LIC Housing Finance are housing finance companies, while IDBI Trusteeship is a trustee company and STCI Finance is a financial institution. They are included because they were parties to, or materially referred to in, the NCLT proceedings.
Creditors’ Voting and Related-Party Questions
The repayment plan received 80.814 per cent approval by value at the meeting of creditors. Supporting creditors included World Crest Advisors LLP, Lemonade Capital Advisors LLP, Catalyst Trusteeship, Corpcall Capital Advisors LLP, Veena Investments Private Limited and Direct Media Distribution Ventures Private Limited, among others.
The objecting creditors argued that some supporting creditors should not have been allowed to vote because they were allegedly related or associate parties. They questioned the participation of Veena Investments and entities associated with it, including Direct Media Distribution Ventures and World Crest Advisors.
The Third Member did not accept this objection. The order held that the statutory test for treating an entity as an “associate” under the relevant IBC provision had not been satisfied. It noted that a company has a separate legal identity from its shareholders and that the required threshold of control had not been established in the manner necessary under the law.
The Tribunal also considered objections concerning the inclusion of Anil Kumar and Sunil Jain, who had submitted claims on behalf of 960 and 300 individuals, respectively. In this instance, the Tribunal found that the claims were not supported by sufficient documentation. The claims were therefore directed to be excluded, along with the individuals represented through them.
This is why the plan will require a revised creditor list and a fresh calculation of distribution among eligible creditors.
STCI Mortgage Rights Preserved
STCI Finance had objected to approval of the repayment plan on the ground that it held an equitable mortgage over certain immovable properties of the personal guarantor. It argued that its security interest should not be affected without adequate protection.
The Third Member held that the repayment plan did not extinguish or impair STCI Finance’s right to enforce its mortgage security in accordance with law. The Tribunal therefore ruled that STCI’s concurrence was not necessary for approval of the repayment plan.
While dismissing STCI Finance’s application, the order specifically preserved its liberty to enforce the security interest over the mortgaged property and recover dues under applicable law. This means the Tribunal’s view on the repayment plan does not take away the financial institution’s independent rights over the mortgaged asset.
Canara Bank’s Property-Sale Application Rejected
Canara Bank had also moved a later application concerning reports about the sale of a property at 4, Bhagwan Das Road, New Delhi, for an alleged consideration of around ₹1,260 crore.
Dr Chandra stated that the property did not belong to him. According to the order, the property was owned by Greatway Estates Private Limited and was mortgaged with JC Flowers Asset Reconstruction Company Limited. The personal guarantor also stated that he neither sold the property nor received sale consideration from it.
The Tribunal held that a newspaper or media report, without reliable independent evidence of ownership, sale, receipt of consideration or connection to the personal guarantor, could not by itself justify an adverse inference or a separate enquiry in the insolvency process. It therefore found no reason to continue with Canara Bank’s application.
What Happens Next
The Third Member’s opinion supports approval of the repayment plan under Section 114 of the IBC. The Resolution Professional must now prepare a revised final list of creditors after removing the claims filed through Anil Kumar and Sunil Jain, and redistribute the repayment amount among the remaining eligible creditors.
The plan, once given effect in accordance with the majority opinion and applicable directions, will be binding on all creditors, including those who voted against it. Yet the order also preserves legal remedies where they remain available, particularly if substantial assets are later found to have been fraudulently concealed.
For creditors, the ruling underlines the high legal threshold for stopping a creditor-approved repayment plan in a personal guarantor case. For personal guarantors, it clarifies that the repayment-plan framework is intended to provide an alternative to bankruptcy, but not a shield against future action if concealment or fraud is established with evidence.
| Particulars | Amount / Detail | Position in NCLT Order |
|---|---|---|
| Total admitted claims | ₹22,006.57 crore | Cited by LIC Housing Finance while opposing the repayment plan |
| Proposed payment to creditors | ₹6.25 crore | Amount proposed for distribution to creditors under the plan |
| Process costs | ₹25 lakh | Proposed insolvency-resolution process expenses |
| Total proposed plan value | ₹6.50 crore | Includes ₹6.25 crore for creditors and ₹25 lakh process costs |
| LIC Housing Finance admitted claim | ₹1,322.39 crore | Claim cited by LIC Housing Finance |
| Proposed recovery for LIC Housing Finance | ₹38.09 lakh | LIC Housing Finance’s stated allocation under the plan |
| LIC Housing Finance recovery rate | Approximately 0.028% | Proposed recovery as a share of its admitted claim |
| Net worth stated in Canara Bank certificate, 2018 | ₹40,562 crore | Raised by objecting creditors to question the present asset position |
| Net worth stated in RBL Bank certificate, 2017 | USD 7.17 billion / approximately ₹45,888 crore | Also cited by objecting creditors |
| Present net worth stated in proceedings | Approximately ₹31.79 crore | Financial position presented for the personal guarantor |
| Objectors’ key demand | Forensic audit and asset-tracing exercise | Sought before approval of the repayment plan |
| Tribunal’s finding | Earlier certificates require clarification, but do not alone prove wrongdoing | No independent and convincing evidence was placed to establish concealment, diversion or fraudulent transfer of assets |
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