HDFC Bank May Challenge NCLT Order on Subhash Chandra Repayment Plan

HDFC Bank is weighing an appeal against the National Company Law Tribunal order approving a ₹6.5 crore repayment plan proposed by Zee Group founder Subhash Chandra to settle his personal insolvency case.

The private sector lender had opposed the plan during the insolvency process and voted against it. The bank has now indicated that it may approach the National Company Law Appellate Tribunal to challenge the decision.

HDFC Bank said the approved plan would allow it to recover only about 3.2 percent of its total claim. The bank’s position is significant because it is among several lenders that did not support the repayment proposal.

The NCLT decision came after the tribunal’s original two member bench gave differing opinions on the proposal. Judicial member Nilesh Sharma later acted as the deciding member and approved the plan. However, the matter has not yet reached its final stage.

Sharma has sent the case back to the regular NCLT bench for further directions regarding implementation. The repayment plan will become binding on creditors only after the required final steps are completed under the Insolvency and Bankruptcy Code.

The case itself does not mean that Chandra personally borrowed thousands of crores of rupees from the lenders. The insolvency proceedings were initiated because he had provided personal guarantees for loans taken by companies linked to the Essel and Zee groups.

Government sources have pointed out that around ₹2,574 crore of the claims relate to loans for which Chandra had provided personal guarantees when the borrowing originally took place. Several other guarantees were given later as additional security.

The companies that took the loans remain responsible for repaying those debts. Creditors can continue to pursue recoveries from those companies and the securities backing their loans, according to government sources.

Under Chandra’s repayment proposal, around ₹1,494 crore is expected to be paid by the companies connected with the underlying debts. Separately, ₹6.25 crore would come from Chandra’s personal assets.

The total proposal is ₹6.5 crore. Of this, ₹6.25 crore would go towards payments to creditors, while ₹25 lakh has been set aside to meet the costs of the insolvency process.

Chandra has maintained that he did not personally borrow money from any of the creditors involved in the case. In a statement, he said his role was limited to providing personal guarantees for loans taken by the companies.

He also said the companies had borrowed close to ₹45,000 crore as of January 2019. According to Chandra, around ₹43,000 crore of that amount had subsequently been repaid.

Chandra further stated that his net worth stood at ₹31.79 crore in 2024. This included a residential property valued at about ₹25 crore. He has argued that the repayment proposal was based on the assets personally available to him.

The plan secured 80.81 percent support from creditors based on the value of their claims. However, several major financial institutions voted against it. HDFC Bank, LIC Housing Finance, Axis Bank, Canara Bank, RBL Bank and Union Bank were among the lenders opposing the proposal.

The tribunal considered the repayment proposal under Section 114 of the Insolvency and Bankruptcy Code. The order acknowledged certain procedural shortcomings in the process but concluded that they were not serious enough to warrant rejection of the plan.

The tribunal also noted that creditors had participated in the process and that there was not enough evidence to show that they had suffered sufficient prejudice because of the procedural issues.

Another important point in the order was the role of creditor decisions. Sharma held that the tribunal should not replace the commercial judgment of creditors with its own assessment when the required majority has approved a repayment proposal.

Still, the decision is not the end of the legal process. The regular NCLT bench must issue further directions, and HDFC Bank could challenge the decision before the NCLAT.

If the plan eventually receives final approval and is implemented, it would become binding on the creditors under the relevant provisions of the insolvency law. Chandra would be able to exit the insolvency proceedings after completing the repayment obligations.

The insolvency case traces back to a ₹170 crore loan taken by Vivek Infracon. Chandra had acted as a personal guarantor for the loan after the account turned problematic.

Indiabulls Housing Finance, which is now known as Sammaan Capital, approached the NCLT in 2022 seeking insolvency proceedings against Chandra.

The latest development has therefore brought the long running case to another important stage. While the tribunal has accepted the repayment proposal at this point, HDFC Bank’s possible appeal could determine whether the ₹6.5 crore settlement moves ahead as proposed or faces another round of legal scrutiny.