HDFC Bank May Challenge NCLT Nod to Subhash Chandra’s ₹6.25 Crore Repayment Plan

TEN NEWS NETWORK

National News (28/08/2026): HDFC Bank is considering approaching the National Company Law Appellate Tribunal (NCLAT) against an order of the National Company Law Tribunal (NCLT) that approved a repayment proposal submitted by Essel Group founder Subhash Chandra in insolvency proceedings related to his personal guarantees.

Under the approved plan, Chandra is required to contribute ₹6.25 crore towards admitted claims of around ₹22,000.57 crore. HDFC Bank, which opposed the proposal during the insolvency process, had voted against the resolution and is now examining the possibility of challenging the tribunal’s decision.

HDFC Bank examining legal options

HDFC Bank said its admitted claim represented only around 3.2 per cent of the total claims considered in the proceedings. The bank inherited the relevant exposure from HDFC Ltd, which merged with HDFC Bank in 2023.

The lender has maintained that it was not in favour of the settlement and had voted against the repayment proposal. The possibility of an NCLAT appeal could now bring the recovery mechanism, voting process and treatment of creditors’ claims under further scrutiny.

The opposition is not limited to HDFC Bank. Several other financial institutions also voted against the repayment proposal, raising concerns over the extremely low recovery available to creditors.

Subhash Chandra disputes ₹22,000 crore claim figure

Chandra has challenged the interpretation of the ₹22,000-crore figure, arguing that it should not be treated as debt personally borrowed by him.

According to Chandra, the underlying claims relevant to the insolvency proceedings were approximately ₹3,992 crore, rather than more than ₹22,000 crore. He has maintained that he did not personally take loans from the lenders involved.

His role in the proceedings, he said, arose because he had provided personal guarantees for loans obtained by companies associated with the Essel Group.

Chandra has also stated that the total value of guarantees signed by him was around ₹22,000 crore. The repayment proposal received approval from 80.814 per cent of creditors who voted, while the remaining creditors either opposed the proposal or did not participate in the voting process.

Lenders raise concerns over steep haircut

The proposed settlement has triggered strong reservations among a section of lenders because the amount available for distribution is extremely small compared with the claims admitted in the proceedings.

A senior banking official indicated that some creditors were also considering legal action against the NCLT decision, describing the recovery under the plan as inadequate and the haircut as exceptionally high.

Among the lenders that voted against the proposal were LIC Housing Finance, HDFC Bank, Axis Bank, Canara Bank, IDBI Trusteeship Services, RBL Bank and Union Bank of India (UK).

IndusInd Bank did not participate in the voting, while Indiabulls Housing Finance voted in favour of the resolution.

LIC Housing Finance highlights recovery concerns

LIC Housing Finance, which has a significant exposure in the case, separately reiterated that it continues to retain its security interests in the assets charged or mortgaged in its favour.

According to the NCLT order, LICHFL’s admitted claim stood at approximately ₹1,322.39 crore, while the repayment plan allocated only about ₹38.09 lakh to it. This represents a recovery of roughly 0.028 per cent of its admitted claim.

LICHFL had strongly objected to the proposal before the tribunal, arguing that such a nominal payment did not provide a sufficient basis for approving the settlement. It had also questioned whether the proposed payment should be treated as a firm recovery commitment.

The housing finance company has now made it clear that its rights over the secured assets remain intact, including its ability to pursue remedies available under applicable law.

Corporate borrowers still liable for their dues

Government sources have also sought to clarify that the NCLT order should not be interpreted as wiping out the entire underlying corporate debt.

The approximately ₹22,000.57 crore figure represents claims admitted against Chandra in his capacity as a personal guarantor for borrowings undertaken by various Essel- and Zee-linked entities. It does not mean that Chandra personally borrowed the entire amount.

The companies that originally borrowed the money continue to remain responsible for their respective liabilities. The repayment arrangement reportedly envisages approximately ₹1,494 crore in payments from the principal corporate borrowers, in addition to Chandra’s personal contribution under the approved plan.

Why the NCLT order matters

The insolvency proceedings originated from defaults involving companies linked to Chandra. Indiabulls Housing Finance approached the NCLT after repayment obligations were not met, following which insolvency proceedings were initiated against Chandra in his capacity as a personal guarantor.

During the proceedings, Chandra proposed a settlement mechanism for creditors. The NCLT subsequently approved the repayment plan, subject to modifications concerning the list of eligible creditors and the manner in which the ₹6.25-crore corpus is distributed.

Importantly, the approved plan is binding on creditors covered by the proceedings, including lenders that voted against it.

The tribunal’s order further provides that once a discharge order is issued under Section 138 of the Insolvency and Bankruptcy Code (IBC), creditors cannot continue pursuing the personal guarantor for liabilities covered by that discharge.

NCLAT challenge could become crucial

For dissenting lenders, the proposed appeal could therefore become an important avenue to contest the tribunal’s decision.

At the appellate stage, creditors could potentially challenge aspects of the resolution, including the approval of the repayment plan, voting procedure, eligibility of claims and distribution of the available corpus.

Legal expert Raheel Patel, partner at Gandhi Law Associates, said the ₹6.25-crore corpus represents an exceptionally low recovery against admitted claims of roughly ₹22,006 crore, resulting in a haircut of more than 99.9 per cent.

Patel also noted that the distribution is broadly linked to the eligible claims admitted by the tribunal. The NCLT’s directions do not enhance the total corpus; instead, they remove certain claims that were not adequately supported and require the corresponding amounts to be redistributed among eligible creditors.

As a result, some lenders could see a marginal improvement in their individual recoveries, although the overall recovery pool remains unchanged. The central issue now is whether dissenting lenders will succeed in persuading the NCLAT to reconsider the exceptionally low recovery and the manner in which the repayment plan was approved.