NCLAT Issues Notices to Creditors on Subhash Chandra’s Insolvency Plea

The National Company Law Appellate Tribunal (NCLAT) has issued notices to creditors in a plea filed by Essel Group chairman Subhash Chandra challenging an order passed by the National Company Law Tribunal (NCLT) in his personal insolvency proceedings.

The appellate tribunal has scheduled the matter for October 29 and 30, when it is expected to hear Chandra’s applications seeking interim relief.

A three-member NCLAT bench directed the creditors opposing the maintainability of Chandra’s appeal, among others, to submit their responses within a week. Chandra has also been given a week to file his rejoinder after receiving the creditors’ replies.

The bench comprised Officiating Chairperson Justice (Retd.) Yogesh Khanna and Technical Members Barun Mitra and Ajai Das Mehrotra.

NCLAT combines related creditor challenge

During the hearing, Solicitor General Tushar Mehta, appearing for certain creditors, requested that another petition challenging an NCLT order approving a settlement involving Chandra be heard alongside his appeal.

The NCLAT agreed to club the matters.

The settlement approved by the NCLT involved a proposed payment of approximately Rs 6.5 crore against admitted claims reported at around Rs 22,006.57 crore.

The appellate tribunal has allocated October 29 and 30 for arguments concerning Chandra’s interim relief applications. The proceedings are expected to include submissions from both Chandra and the creditors.

Dispute over NCLT’s five-member bench

Chandra’s appeal challenges a September 1, 2026 order passed by a five-member larger bench of the NCLT.

The larger bench had stayed the operation of an earlier order passed by a third member in Chandra’s personal insolvency proceedings. It also restrained Chandra from alienating his assets while the matter remains under consideration.

In his NCLAT petition, Chandra has argued that the September 1 order went beyond the NCLT’s statutory authority. He has also questioned the constitution of the five-member bench.

These arguments remain part of the ongoing litigation and are subject to the tribunal’s consideration.

How the insolvency dispute reached NCLAT

The proceedings originated with a split decision from a two-member NCLT bench examining Chandra’s personal insolvency resolution process.

Member (Judicial) Ashok Kumar Bhardwaj approved the repayment proposal submitted by Chandra and held that he could seek relief under the insolvency framework applicable to personal guarantors.

Member (Technical) Reeta Kohli took a different view and rejected the proposal.

Because the two members reached different conclusions, the points of disagreement were referred to another member under the applicable tribunal procedure.

Nilesh Sharma, Member (Judicial), was subsequently assigned to decide the issues on which the original bench had differed.

Sharma agreed with Bhardwaj on the key questions and upheld the repayment proposal.

Under that proposal, claims of approximately Rs 22,006 crore arising from personal guarantees were proposed to be settled for around Rs 6.5 crore.

The subsequent NCLT order stayed the operation of Sharma’s decision and imposed restrictions on Chandra’s ability to deal with his assets.

NCLT proceedings continue separately

The dispute is also continuing before the larger NCLT bench.

At its September 23 hearing, the five-member bench issued notice to the Central Bureau of Investigation (CBI) in connection with the personal insolvency proceedings.

The bench also indicated that the interim restriction preventing Chandra from alienating property would remain in place pending its decision.

The next NCLT hearing before the five-member bench is scheduled for November 19, although the NCLAT proceedings concerning Chandra’s appeal are set to take place earlier.

During the NCLAT hearing, Solicitor General Mehta suggested that the appellate tribunal wait for the outcome of the November proceedings. Chandra’s counsel, advocate Dhruv Mehta, opposed that request.

CBI case and LICHFL allegations

The insolvency proceedings are also taking place against the backdrop of a criminal investigation involving allegations concerning loans obtained from LIC Housing Finance Ltd (LICHFL).

The CBI has registered an FIR alleging that Chandra inflated his net worth to obtain loans from LICHFL and subsequently defaulted, allegedly causing losses of more than Rs 1,322 crore to the lender.

These are allegations contained in the criminal investigation and should not be treated as established findings unless determined through the appropriate legal process.

According to the complaint incorporated into the FIR, LICHFL alleged that net-worth certificates submitted by Chandra were used in connection with the approval and disbursement of two loans totalling approximately Rs 980 crore.

The criminal proceedings and the insolvency proceedings are separate legal processes, although developments in one matter may form part of the broader context surrounding the dispute.

What happens next

The immediate issue before the NCLAT is whether Chandra is entitled to the interim relief sought in his appeal against the September 1 NCLT order.

Creditors have been given a week to respond to the appeal, including objections concerning its maintainability. Chandra will then have a further week to file his rejoinder.

The appellate tribunal is scheduled to hear the interim applications on October 29 and 30.

Meanwhile, the five-member NCLT bench is continuing its own proceedings, with the next hearing scheduled for November 19.

The outcome of the NCLAT proceedings could determine how the restrictions imposed on Chandra’s assets are treated while the wider insolvency dispute continues before the tribunals.

Key facts at a glance

Issue	Current position
NCLAT matter	Chandra’s challenge to the September 1 NCLT order
NCLAT hearing	October 29-30, 2026
Creditor replies	To be filed within one week
Chandra’s rejoinder	One week after creditor replies
Settlement proposal	About Rs 6.5 crore
Claims cited	About Rs 22,006.57 crore
NCLT larger-bench hearing	November 19, 2026
Asset restriction	Continues pending further NCLT proceedings
CBI matter	FIR concerning alleged inflated net worth and LICHFL loans

The proceedings before the NCLAT and NCLT remain ongoing. The tribunals’ future orders will determine the next stage of Chandra’s personal insolvency case and the creditors’ challenges to the settlement.