In his August 25, 2026, ruling, Mr. Sharma backed the repayment plan approved by creditors holding 80.814% of the voting share.
This prompted a fresh reference to the NCLT President, who constituted the five-member Special Bench on August 31, 2026.
It assured them that they would be heard at length before a final decision was taken on the repayment plan.
Acceding to the request, the Special Bench restrained Mr. Chandra from alienating his assets.
Dissenting creditors had opposed the repayment plan over the steep haircut and questioned whether Mr. Chandra’s financial position and assets had been adequately examined.
In a setback to Essel Group founder Subhash Chandra, a five-member Bench of the National Company Law Tribunal (NCLT) on Tuesday (September 1, 2026) stayed an August 25, 2026 ruling by a single-member Bench of the tribunal that had cleared a repayment plan requiring him to pay ₹6.25 crore towards admitted claims of ₹22,006.57 crore in personal insolvency proceedings against him.
The Bench, comprising President Justice (retd) Anupinder Singh Grewal, Judicial Members Bachu Venkat Balaram Das and Mahendra Khandelwal, and Technical Members Atul Chaturvedi and Ravindra Chaturvedi, found that the earlier opinions had failed to yield a clear majority and consequently stayed the August 25 opinion delivered by the third member, Nilesh Sharma.
“It is manifest that as per Section 419(5) of the Companies Act, 2013, there is no clear majority view capable of being given effect to. Therefore, the order dated 25.08.2026 of the third member Sh. Nilesh Sharma, Member (Judicial), is stayed,” the order stated.
The larger Bench was constituted after a two-member Bench of the NCLT in New Delhi, comprising Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri, delivered a split verdict on the repayment plan in September 2025. Following the split ruling, Mr. Sharma was brought in as the third member to resolve the impasse.
In his August 25, 2026, ruling, Mr. Sharma backed the repayment plan approved by creditors holding 80.814% of the voting share. The plan required Mr. Chandra to pay ₹6.25 crore from his personal estate against admitted claims of ₹22,006.57 crore, effectively entailing a haircut of over 99% for dissenting creditors, including major banks and financial institutions.
However, when the matter returned to the original two-member Bench, it found that Mr. Sharma had “consciously passed an independent order” rather than concurring with either of the earlier opinions, leaving no majority view. This prompted a fresh reference to the NCLT President, who constituted the five-member Special Bench on August 31, 2026.
On Tuesday (September 1, 2026), the Special Bench also issued notices to the parties and sought their replies ahead of the next hearing on September 23, 2026. It assured them that they would be heard at length before a final decision was taken on the repayment plan.
Bar on alienating assets
Meanwhile, dissenting creditors, including LIC Housing Finance and Union Bank of India, have challenged the approval of the repayment plan before the National Company Law Appellate Tribunal (NCLAT). Appearing for the creditors before the Special Bench, Solicitor General Tushar Mehta sought to restrain Mr. Chandra from disposing of any property held by him, either directly or indirectly.
“The request is that the guarantor may not dispose of any property directly or indirectly. Otherwise, the substratum will go,” Mr. Mehta submitted.
Acceding to the request, the Special Bench restrained Mr. Chandra from alienating his assets. “We also direct that the personal guarantor shall not alienate any assets whatsoever either directly or indirectly,” the Bench recorded in its order.
The insolvency proceedings against Mr. Chandra date back to 2024, when Indiabulls Housing Finance approached the NCLT to enforce personal guarantees furnished by him for loans taken by Essel Group-linked entities. The proceedings concern his liability as a personal guarantor and are distinct from insolvency cases involving group companies and regulatory proceedings concerning Zee Entertainment Enterprises.
Dissenting creditors had opposed the repayment plan over the steep haircut and questioned whether Mr. Chandra’s financial position and assets had been adequately examined. They had also sought a forensic investigation into his financial affairs.
LIC Housing Finance had termed the payment terms under the plan “unviable and unlawful”, pointing out that only ₹6.25 crore was proposed to be paid to creditors against admitted claims of ₹22,006.57 crore, apart from ₹25 lakh towards insolvency process costs.
The lender, which has an admitted claim of ₹1,322.39 crore, stood to receive only ₹38.09 lakh under the plan. “In the case of LICHFL, whose admitted claim stood at ₹1322.39 crore, the proposed repayment was merely ₹38,09,294, amounting to approximately 0.028% of its admitted dues,” it had stated.
On August 30, 2026, Mr. Chandra said the borrowers whose loans were backed by his personal guarantees had assured him that they would reconcile their accounts with the lenders and clear the outstanding ₹4,262 crore.
The August 25, 2026 tribunal order, while approving the repayment plan, had concluded that it would provide a better outcome for creditors than initiating bankruptcy proceedings against Mr. Chandra. It had further observed that once creditors had approved a repayment plan in accordance with the Insolvency and Bankruptcy Code, the tribunal would ordinarily defer to their commercial judgment rather than undertake its own assessment.
However, the order has brought into focus the effectiveness of personal guarantees as a recovery mechanism, particularly when the guarantor’s assets are worth only a fraction of the claims made by lenders.
