NCLAT Keeps Lenders' Appeals Pending in Subhash Chandra Personal Insolvency Case

NEW DELHI — The National Company Law Appellate Tribunal (NCLAT) on Wednesday decided to keep pending the appeals filed by a coalition of dissenting lenders against an NCLT order that significantly reduced Essel Group founder Subhash Chandra's financial liability. The matter has been posted for the first week of October.

The appeals were filed by creditors, including LIC Housing Finance, Canara Bank, and Union Bank of India, challenging the August 25 order passed by the National Company Law Tribunal’s (NCLT) third member in Chandra's personal insolvency proceedings. That order had granted a 99 per cent haircut, lowering the recovery amount for creditors from ₹22,006.57 crore to roughly ₹6.25 crore, alongside ₹25 lakh for resolution process costs.

During Wednesday's hearing, Solicitor General Tushar Mehta, appearing for the lenders, stated that creditors should have the liberty to revive the appeals depending on the outcome of ongoing proceedings before a five-member NCLT bench. Subhash Chandra was physically present at the NCLAT for the proceedings.

The NCLAT chairperson directed that the appeals remain pending until the first week of October and noted that any challenge to the September 1 order of the five-member NCLT bench would require a separate appeal.

Meanwhile, Chandra’s legal counsel contended that the appeals were defective and filed against a non-est order, arguing that the original NCLT bench had a split opinion without a majority order. Counsel further argued that the third member's order did not conform to the views of the original members and claimed that the five-member bench order staying the August 25 decision was faulty.

This legal development follows a decision by a five-member NCLT bench to stay its August 25 order, which had approved Chandra’s repayment plan. The five-member bench observed that there was no clear majority view and restrained Chandra from alienating any of his properties, directly or indirectly.

Personal insolvency proceedings against Chandra began in 2022 when Indiabulls Housing Finance—now known as Sammaan Capital—initiated action over a ₹170-crore loan extended to Vivek Infracon, for which Chandra acted as a personal guarantor. The insolvency plea was formally admitted in 2024, prompting several other financial institutions to join the proceedings.

Earlier this year, Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri expressed conflicting views on the repayment plan. While Bhardwaj favored approval, Puri cited serious legal and procedural defects. A third member, Nilesh Sharma, subsequently voted to approve the plan on August 25.

Objecting creditors had earlier raised concerns over the negligible recovery rate, which amounted to roughly 0.028% of admitted claims, as well as the verification of claims and the voting participation of entities allegedly linked to Chandra. For instance, LIC Housing Finance stated it stood to recover only ₹38.09 lakh against an admitted claim of ₹1,322.39 crore. Creditors also pointed to net-worth certificates suggesting Chandra's net worth was significantly higher in previous years compared to the current stated figure of ₹31.79 crore. Conversely, Chandra maintained that total claims by objecting lenders amount to approximately ₹3,992 crore out of the ₹22,006.57 crore total admitted claims.

"The ongoing legal battles surrounding personal guarantees and corporate debt resolution highlight the critical importance of robust governance and clear procedural frameworks in India's insolvency regime. When high-value personal guarantees are invoked, lenders and promoters inevitably face prolonged legal scrutiny over valuations, repayment plans, and majority bench decisions. For the broader business ecosystem, this case underscores the complexities of debt recovery and the necessity for transparency in personal insolvency proceedings." — Dr. Shishir Gupta, Founder & CEO, StartupLanes