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NCLT Approves Subhash Chandra Rs 6.5 Crore Creditors Face 99.97 Percent
The in New Delhi has approved a for founder Subhash Chandra under which creditors will receive only Rs 6.5 crore against admitted claims of Rs 22,006.57 crore - a staggering 99.97% . Judicial Member Nilesh Sharma, appointed as the third member after a split verdict between two original members, delivered the deciding opinion on .
A Decisive Majority Amidst Fierce Opposition
The plan, which allocates Rs 6.25 crore to creditors and Rs 25 lakh towards process costs, secured approval from creditors holding 80.814% of the . Despite this overwhelming majority, several major lenders including , , , and vigorously opposed the proposal. , which had an admitted claim of Rs 1,322.39 crore, stood to recover only about Rs 38 lakh.
The argued that the plan was unviable, unlawful, and based on uncertain assumptions. They pointed to from and that assessed Chandra's wealth at USD 7.17 billion and Rs 40,562 crore respectively, starkly contrasting with his disclosed net worth of just Rs 31.79 crore.
Jurisdictional Boundaries: NCLT's Supervisory Role
Member Sharma drew a careful line between the tribunal's
under
and the
of creditors. He clarified that
"the AA neither substitutes its own
for that of the creditors nor does it conduct a wide-ranging investigation into allegations that are unsupported by reliable material. Its role is supervisory, corrective and judicial, not investigative unless the statute so requires."
This principle proved decisive. The tribunal held that once the requisite majority had validly approved the plan, and no fundamental was established, it could not impose its own assessment of what constituted adequate recovery.
The "" Question: A Statutory Interpretation
A critical flashpoint was whether certain creditors supporting the plan - , , , , and - were "associates" of Chandra under and thus barred from voting under .
argued that these entities, collectively holding over 61% , were controlled by Chandra's relatives and should be excluded. However, Member Sharma applied a strict textual interpretation, holding that the statutory test requires the debtor to hold more than 50% share capital or control the board. He found no evidence that Chandra met this threshold.
"Excluding a creditor from voting deprives it of an important statutory right affecting its financial interests,"
the order stated.
"Such a disability cannot be imposed on the basis of suspicion or conjecture."
Procedural Lapses and the Unsupported Claims
The third member acknowledged significant lapses by Resolution Professional , particularly in admitting claims by Mr. Anil Kumar (representing 960 individuals) and Mr. Sunil Jain (representing 300 individuals) based solely on Chandra's verbal assurances without supporting documentation. However, he held that this irregularity did not vitiate the entire process, especially since the amounts allocated to these claimants constituted a minuscule fraction of the plan value.
The tribunal directed that these unsupported claims be excluded, with the amounts redistributed among remaining eligible creditors.
Binding Effect and Creditors' Remedies
Once approved, the plan becomes binding on all creditors under , including those who voted against it. The NCLT rejected the suggestion of allowing to pursue independent recovery, stating this would defeat the collective nature of the insolvency process.
However, the tribunal preserved the right of affected creditors to approach the for if it is subsequently discovered that material assets were fraudulently concealed by Chandra.
STCI Finance and the Question
had challenged its exclusion from the process, arguing that its over a mortgaged property required under . The tribunal held that since the plan did not extinguish or impair STCI's , no such was required.
Beyond the Courtroom: A Broader Debate
The decision has reignited debates about India's insolvency framework for personal guarantors. Businessman Vijay Mallya, himself facing extradition over ' debts, posted on X questioning why some borrowers receive such steep haircuts while others face relentless recovery actions.
The case also highlights the legal distinction between a and the underlying debt of principal borrowers. The Rs 22,006 crore figure represents guarantee claims, not Chandra's personal borrowings, and creditors retain the right to pursue principal debtors separately.
The matter now returns to the original division bench for formal implementation orders, with the resolution professional directed to prepare a revised creditor list and distribution statement.
Key Observations
"The AA neither substitutes its own
for that of the creditors nor does it conduct a wide-ranging investigation into allegations that are unsupported by reliable material."
"Excluding a creditor from voting deprives it of an important statutory right affecting its financial interests. Such a disability cannot be imposed on the basis of suspicion or conjecture."
"The commercial decision of the creditors operates within, and not outside, the
.
can be exercised only by persons who are legally entitled to participate in the process and through a procedure which complies with the mandatory requirements of the Code."
"The Code does not make a
or
a mandatory precondition for approval of a
."
"Where the Legislature has consciously conferred a particular power in one part of a statute while omitting it in another, such omission cannot be supplied by judicial interpretation."
