Tribunal twist: NCLT to hear Chandra plan again, this time with a bigger bench
NCLT Deadlock on Chandra Repayment Plan Triggers Emergency Five-Member Bench
Theindiapostdaily.com – The insolvency saga surrounding media veteran Subhash Chandra took a sharp procedural turn this week when the National Company Law Tribunal admitted that its earlier three-member panel had failed to reach a collective decision on the founder's proposed repayment arrangement. Within hours of that admission, the tribunal's appellate wing, the National Company Law Appellate Tribunal, moved to constitute an entirely new five-member special bench tasked with re-examining the plan from scratch. The hearing is scheduled for Tuesday, and aggrieved lenders have simultaneously lodged an urgent petition before the NCLAT, effectively placing the matter under two parallel judicial tracks.
The Split Inside the Original Bench
The impasse at the heart of the situation is not a question of whether Chandra owes money — that point is settled — but rather how a repayment scheme approved by a required creditor majority should bind institutions that voted against it. According to the tribunal's own explanation, one member of the earlier panel believed the plan ought to apply exclusively to creditors who had supported it, leaving dissenting banks and financial institutions free to continue independent recovery proceedings. A second member took the opposite position, arguing that once the requisite majority threshold was crossed, every creditor in the insolvency process was bound by the arrangement regardless of individual objections.
The tribunal acknowledged that these two readings carried materially different consequences for the rights of creditors who had opposed the proposal. In its clarification order, the bench stated:
"All said and done, no majority view has emerged in the matter. In the wake, no order can be passed at this stage. Resultantly, we have no option but to make fresh reference to Hon'ble President in terms of the provisions of Section 419(5) of the Code."
That language effectively nullifies the Friday order that had appeared to sanction the repayment plan, leaving creditors without a final, enforceable tribunal determination.
Composition of the New Bench and the Appellate Challenge
The replacement panel is headed by NCLT President Justice Anupinder Singh Grewal and includes judicial members Bachu Venkat Balaram Das and Mahendra Khandelwal Das alongside technical members Atul Chaturvedi and Ravindra Chaturvedi. The expanded composition — five judges rather than three — is designed to produce a clear majority and avoid the kind of internal deadlock that just paralysed the earlier sitting.
On Monday, before the tribunal's clarification was issued, creditors LIC Housing Finance, HDFC Bank, and Union Bank of India had already filed an urgent petition before the NCLAT contesting the Friday order. That petition now sits alongside the fresh reference to the five-member bench, meaning the question of whether opposing creditors can be compelled to accept a partial repayment may be addressed at two levels of the insolvency judiciary in quick succession.
What the Plan Actually Involves
The repayment arrangement under scrutiny would see Chandra pay a total of ₹6.5 crore. Of that sum, ₹6.25 crore is earmarked for distribution to creditors, while ₹25 lakh is allocated to cover the costs of the insolvency process itself. The plan was initially approved on 25 August by a three-member bench that included Nilesh Sharma, whom the NCLT president had appointed as the third member in February 2026.
Sharma's reasoning, as recorded at the time of approval, rested on two pillars. First, he found that creditors had meaningfully participated in the voting process and that no creditor had demonstrated a sufficient degree of prejudice from being bound by the majority decision. Second, he held that the tribunal should not substitute its own commercial judgment for the collective choice made by the requisite majority of creditors. Those holdings are now in limbo pending the five-member bench's determination.
Scale of the Underlying Exposure
The broader context of the case is important for readers who may have encountered headlines suggesting that Chandra personally borrowed thousands of crores. Government officials, speaking on condition of anonymity, clarified that the insolvency proceedings were initiated against him not because he was the primary borrower but because he had provided personal guarantees for loans taken by several Essel and Zee-linked companies. Approximately ₹2,574 crore of the total claims relate to guarantees he gave at the time those loans were originally disbursed. The majority of his remaining guarantees were furnished later, as additional security for existing obligations.
That distinction matters because it frames the legal question before the courts: the dispute is not about whether a single individual consumed a multi-thousand-crore credit facility, but about how a guarantor's limited repayment capacity interacts with the rights of creditors who hold different views on the best path to recovery.
Creditor Voting and the Majority Threshold
When the plan was put to a vote, HDFC Bank, Axis Bank, Canara Bank, RBL Bank, and Union Bank of India cast their votes against it. Nevertheless, the arrangement cleared the statutory threshold, receiving 80.81% support by value from the creditor body. The question now before both the five-member bench and the NCLAT is whether that supermajority is sufficient to bind the dissenting institutions or whether those institutions retain the right to pursue separate, parallel recovery actions outside the insolvency framework.
The answer will carry implications well beyond the Chandra matter. Indian insolvency law permits a creditor majority to approve a resolution plan, but the precise contours of that majority's binding force — particularly where a guarantor's repayment capacity is a fraction of total exposure — remain underdeveloped in case law. A definitive ruling from either the expanded NCLT bench or the appellate tribunal could set a precedent that shapes how future insolvency proceedings handle partial-repayment proposals opposed by a minority of creditors.
What Happens Next
The five-member bench is expected to hear arguments on Tuesday. Simultaneously, the NCLAT petition filed by LIC Housing Finance, HDFC Bank, and Union Bank of India remains pending. Depending on the sequencing of hearings, creditors may receive appellate guidance before the tribunal bench delivers its own view, or vice versa. Either way, the original Friday order is effectively suspended, and Chandra's repayment plan — along with the rights of every creditor in the process — hangs in procedural uncertainty until a final, majority-backed determination is issued.
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