Larger NCLT Bench Stays Approval of Essel Group Founder Subhash Chandra’s ₹6.25-Crore Repayment Plan

A five-member Bench of the National Company Law Tribunal (NCLT) has stayed an August 25 order that had approved a ₹6.25-crore repayment plan proposed by Essel Group founder Subhash Chandra. The tribunal observed that there was no clear majority view among the members who had earlier heard the matter.

Along with staying the approval, the Bench restrained Chandra, who is described in the order as the guarantor, from alienating any of his properties, either directly or indirectly. The tribunal also issued notices to all parties involved in the proceedings.

The company petition, bearing reference IB 97/ND/2022, was originally heard by a Division Bench comprising Member (Judicial) Ashok Kumar Bhardwaj and Member (Technical) Reena Sinha Puri. Differences between the two members resulted in the matter being referred by the then NCLT President to a third member for an opinion. The third member heard the case on February 20, 2026, and pronounced the judgment on August 25. The order was subsequently placed before a consequential Bench on August 31 for further directions.

Upon examining the orders passed by the three individual members, the five-member Bench noted that differences existed in their views. The tribunal stated that no majority view had emerged and that no order could be passed at this stage. Consequently, a fresh reference has been made to the NCLT President in terms of the provisions of Section 419.

The legal dispute stems from insolvency proceedings initiated against Chandra in his capacity as a personal guarantor for debts linked to Essel and Zee companies. Claims totaling approximately ₹22,006 crore have been admitted against him. However, this total does not represent money personally borrowed by Chandra or loans originally extended on the strength of his personal guarantee. Background details indicate that roughly ₹2,574 crore of the claims relate to loans for which Chandra provided a personal guarantee at the time of the original borrowing, while several other guarantees were furnished subsequently as additional security.

The proceedings began following a default on a loan extended by Indiabulls to Vivek Infracon, for which Chandra had stood as guarantor. The proposed settlement of his personal-guarantor liability involves a payment of about ₹6.25 crore from his personal estate. The overall plan also envisages around ₹1,494 crore in payments by the principal borrowers, while creditors retain recovery avenues against securities and other available assets of the companies.

Creditors had previously raised concerns regarding the extent of Chandra’s presently realisable assets. Historical net-worth certificates showed a net worth of ₹45,888 crore in 2017 and ₹40,562 crore in 2018, compared to a presently disclosed net worth of about ₹31.79 crore. While the repayment plan received 80.81% voting support from creditors, several lenders including LIC Housing Finance, HDFC Bank, Axis Bank, Canara Bank, RBL Bank, and Union Bank opposed it.

The latest NCLT order does not decide the merits of the repayment plan itself. Instead, it places the August 25 approval in abeyance while the five-member Bench considers the conflicting views that emerged during the earlier proceedings.

"This development highlights the procedural complexities involved in personal guarantor insolvency cases under the Insolvency and Bankruptcy Code. When judicial panels face divided opinions on substantial financial resolutions and asset valuations, higher benches must step in to ensure clarity and adherence to due process. For creditors and guarantors alike, it underscores the reality that debt resolution timelines can be significantly extended when there are conflicting views among members and disputes over realisable net worth." — Dr. Shishir Gupta, Founder & CEO, StartupLanes