₹22,006-crore Claims, ₹6.25-crore Plan & No Majority: NCLT Stalls Subhash Chandra Deal

Three members examined Subhash Chandra’s repayment plan. They produced three different answers. Now five members will try again.

The National Company Law Tribunal has stayed the operation of an August 25 order that appeared to approve the Zee Group founder’s proposal to pay ₹6.25 crore against admitted creditor claims of ₹22,006.57 crore. The five-member bench, headed by NCLT President Justice Anupinder Singh Grewal, also restrained Chandra from selling, transferring, encumbering or otherwise dealing with his properties while the proceedings continue.

Notices have been issued to the parties, and the tribunal has made clear that the August 25 decision cannot be implemented at this stage. The repayment plan is neither finally approved nor rejected. It is trapped inside an extraordinary judicial deadlock.

The Three-Paise Plan

The number that turned a personal insolvency dispute into a national controversy is brutally simple. ₹22,006.57 crore in admitted claims. ₹6.25 crore proposed for creditors. That works out to a recovery of approximately 0.028 per cent, or less than 3 paise for every ₹100 claimed. Creditors would effectively face a haircut of about 99.97 per cent.

An additional ₹25 lakh has been proposed towards the cost of the insolvency process. Chandra has disputed the public interpretation of these figures. He says the ₹22,006-crore amount does not represent money personally borrowed by him. “My borrowing is ₹0,” he wrote in a statement on X.

The claims arose primarily from personal guarantees he provided for loans taken by companies linked to the Essel Group. Chandra has argued that the underlying companies borrowed ₹4,808 crore, repaid approximately ₹3,803 crore and left around ₹998 crore unpaid. According to his account, lenders subsequently submitted substantially larger claims against him as guarantor, partly because interest and multiple guarantees were included.

The distinction is important. The case does not concern Chandra personally borrowing ₹22,006 crore and offering to return ₹6.25 crore. It concerns the extent to which creditors can recover from him after invoking personal guarantees connected to corporate borrowings. But that clarification does not erase the central question. What does a personal guarantee mean if admitted claims of ₹22,006 crore can produce a proposed payment of ₹6.25 crore?

How One Split Became Three Opinions

The judicial confusion began with a two-member NCLT bench. Judicial Member Ashok Kumar Bhardwaj favoured approving the repayment plan, but reportedly sought to restrict its protection to creditors who had supported it. Dissenting banks and financial institutions would remain free to pursue other remedies.

Technical Member Reena Sinha Puri rejected the plan. She raised concerns about alleged procedural irregularities, the conduct of the resolution professional and the participation of entities allegedly connected to Chandra in the creditor voting process. The split sent the matter to a third member, Nilesh Sharma.

On August 25, Sharma supported approval of the plan. However, he disagreed with Bhardwaj’s proposed protection for dissenting creditors. Sharma held that an approved repayment plan could not bind supporters while leaving opponents free to recover separately. The result was not a conventional two-to-one majority. One member approved the plan with protection for dissenters. One rejected it. The third approved it for all creditors.

“No majority view has emerged,” the original bench subsequently held, according to reports citing the tribunal proceedings. The matter was returned to the NCLT president, who constituted a five-member special bench. Legal reports described it as the first bench of its size formed in the tribunal’s history. The enlarged bench has now stopped the August 25 order from taking effect and will hear the dispute afresh.

Who Voted for Three Paise?

The repayment plan reportedly received 80.814 per cent support among the votes cast. That number initially made the approval appear straightforward. Personal insolvency plans under the Insolvency and Bankruptcy Code are driven significantly by creditor voting.

A closer examination reveals the controversy. Creditors representing 77.48 per cent of the total voting share supported the plan, 18.42 per cent opposed it and 4.10 per cent did not vote, India Today reported from the voting record reproduced in the tribunal order.

Dissenters included HDFC Bank and LIC Housing Finance. LIC Housing Finance reportedly had an admitted claim of ₹1,322.39 crore and stood to receive approximately ₹38.09 lakh, equivalent to around 0.028 per cent. Several lenders questioned whether the process had been influenced by the votes of entities allegedly associated with Chandra. They also challenged the viability of a plan producing an almost total write-off.

The supporters may have concluded that ₹6.25 crore represented more than they could realistically recover through bankruptcy or prolonged litigation. A creditor sometimes accepts a microscopic payment when the alternative appears to be zero. That commercial calculation now sits beside a larger legal question: whether the voting process and the proposed treatment of dissenting lenders complied with the Insolvency and Bankruptcy Code.

Two Tribunals, One Dispute

The matter is simultaneously before the National Company Law Appellate Tribunal. Dissenting creditors approached the NCLAT after the August 25 opinion favouring the plan. Solicitor General Tushar Mehta, appearing for them, argued that allowing the order to operate could defeat the purpose of the insolvency law.

The NCLAT agreed to hear the challenge urgently. After the five-member NCLT bench stayed the disputed order, Mehta informed the appellate tribunal of the development and sought time to decide whether the creditors still needed to press their appeal immediately. The stay at the NCLT may temporarily remove the danger that the repayment plan will be implemented. It does not settle the objections that produced the appeal.

The dispute has, therefore, created an unusual procedural loop. Creditors challenged an approval that the original NCLT bench later said did not command a genuine majority. A larger NCLT bench must now decide the underlying case while the appellate tribunal considers what remains of the challenge.

The Guarantee Behind the Headlines

The insolvency proceedings trace back to personal guarantees supplied by Chandra for borrowings by Essel Group-linked companies. Indiabulls Housing Finance, now known as Sammaan Capital, initiated proceedings in 2022 after a loan to Vivek Infracon turned bad. The personal insolvency petition was admitted in 2024, after which other creditors joined the process.

Personal guarantees became a powerful feature of India’s insolvency regime after the government brought guarantors to corporate debtors within the relevant framework in 2019. The principle was clear: promoters could not necessarily protect their personal wealth after guaranteeing company borrowings.

The Chandra case tests the practical strength of that promise. A guarantee may create an enormous legal claim. Recovery still depends upon identifiable assets, procedural integrity and what creditors are willing to accept.

That explains why the five-member bench’s prohibition on dealing with Chandra’s properties matters. It preserves the available asset position until the tribunal determines whether the repayment proposal survives.

The political outrage surrounding the case has been predictable. Opposition leaders have portrayed the plan as evidence that influential industrialists receive treatment unavailable to ordinary borrowers. Vijay Mallya joined the criticism, using the numbers to attack India’s approach to debt recovery.

Those comparisons require caution. The admitted claims arise from corporate guarantees, the lenders themselves voted on the plan and the tribunal has not made a final determination. Yet the optics cannot be solved by procedural explanation alone.

₹22,006.57 crore and ₹6.25 crore belong in the same insolvency proceeding. Creditors were being asked to accept almost complete erosion of their admitted claims. Tribunal members could not agree on whether the plan was legally valid or whom it should bind.

The larger bench has now prevented the repayment plan from becoming reality while those questions remain unresolved. Subhash Chandra has not been ordered to pay ₹22,006 crore. He has not been permitted to settle the dispute for ₹6.25 crore either. For the moment, the three-paise plan has encountered a five-member wall.

(With inputs from ANI)