NCLT Third Member Backs Subhash Chandra Personal-Guarantor Repayment Plan; Says Approved Plan Binds Dissenting Creditors
The National Company Law Tribunal's New Delhi Special Bench has delivered a significant third-member opinion in the personal guarantor insolvency proceedings involving Indiabulls Housing Finance Limited and Dr. Subhash Chandra. The opinion, pronounced on August 25, 2026, concludes that the repayment plan should be approved under Section 114 of the Insolvency and Bankruptcy Code, 2016, subject to specific corrections to the creditor list and consequential redistribution under the plan.
The matter is important for insolvency professionals, lenders and advisers because it addresses several recurring questions in personal-guarantor insolvency: the extent of judicial scrutiny at the repayment-plan approval stage, the treatment of dissenting creditors, the effect of voting irregularity allegations, and whether an approved plan can bind only consenting creditors.
What the third-member opinion decided
The proceeding arose from a difference of opinion between members of the original Division Bench. The NCLT President referred the disputed issues to a third member under Section 419(5) of the Companies Act, 2013 read with the NCLT Rules. Judicial Member Nilesh Sharma issued the third-member opinion on August 25, 2026.
The opinion states that the repayment plan submitted by the personal guarantor is required to be approved under Section 114 of the IBC. However, it directs that claims submitted through Mr. Anil Kumar on behalf of 960 individuals and Mr. Sunil Jain on behalf of 300 individuals be excluded from the final list of creditors. The Resolution Professional is required to prepare a revised and final list and take consequential steps for redistribution of the approved repayment-plan value among the remaining eligible creditors.
The opinion further states that, once approved, the repayment plan is binding on all creditors covered by it, whether they voted for or against it, by operation of Section 115 of the IBC. The matter is to be placed before the original Division Bench for appropriate orders in accordance with the majority opinion.
Background of the personal-guarantor process
Indiabulls Housing Finance Limited had initiated proceedings in 2022 under Section 95 of the IBC against Dr. Subhash Chandra as personal guarantor. The NCLT record notes that a Resolution Professional was initially appointed in May 2022. The proceedings were subsequently affected by an interim order of the Supreme Court, and the NCLT kept the Resolution Professional's report under Section 99 in abeyance in August 2022.
After the Supreme Court's later order, the Section 95 petition was admitted on April 22, 2024. The Resolution Professional was replaced in May 2024, after which the newly appointed professional completed the statutory process and moved the Tribunal for approval of the repayment plan.
The NCLT record shows that creditor positions were divided. Some lenders opposed the repayment plan while other creditors supported it. The Tribunal directed that all creditors be given an opportunity to participate in the adjudication. The record also notes that the repayment plan had received support representing 80.814% of voting share, above the statutory threshold referred to in the proceedings.
Judicial scrutiny is not merely mechanical
A key part of the opinion is its treatment of the Adjudicating Authority's role under Section 114. The third member held that the Tribunal is not expected to approve a repayment plan mechanically merely because the required creditor majority has voted in favour of it.
The opinion explains that the Adjudicating Authority must examine whether the mandatory requirements of the IBC and the applicable Personal Guarantor insolvency regulations have been complied with, whether the statutory process for formulation and approval of the plan was followed, and whether circumstances exist that require modification or reconsideration of the plan.
At the same time, the opinion recognises that a creditor-approved plan is a commercial decision that deserves judicial deference where the statutory requirements have been satisfied. The judgment therefore draws a distinction between legitimate judicial scrutiny for statutory compliance and an impermissible substitution of the Tribunal's commercial judgment for that of creditors.
Dissenting creditors cannot pursue the full debt outside the plan
The most practically significant conclusion concerns dissenting creditors. The opinion rejects the proposition that a repayment plan can bind only creditors that voted in favour while allowing dissenters to independently pursue recovery of the full original debt.
It reasons that Section 115 does not contemplate selective application of an approved repayment plan. Once the plan is approved, its statutory consequences apply to all creditors whose dues are dealt with under the plan, regardless of whether a particular creditor assented or dissented.
For banks, financial institutions and insolvency advisers, this interpretation is important when modelling recovery strategy in personal-guarantor cases. A creditor's dissent at the voting stage may preserve its objections for adjudication, but the opinion indicates that dissent does not create a separate right to disregard the approved plan and recover the full debt independently once Section 115 applies.
What professionals should track next
The procedural status must be read carefully. This August 25 order is the third-member opinion resolving the points referred after the original bench split. The order itself directs that the matter be placed before the original Division Bench for appropriate orders in terms of the majority opinion. Professionals should therefore track the consequential order of the original bench and any appellate proceedings before treating every aspect as finally settled beyond challenge.
For insolvency professionals handling personal guarantor matters, the immediate practical lessons are clear: creditor-list integrity, proper voting procedure, statutory compliance, and a defensible record of the repayment-plan process remain central to approval. For lenders, the decision underscores the need to raise objections during the plan process itself because an approved plan may ultimately bind both assenting and dissenting creditors.
Official source: View the official source document
Key takeaway
Fresh official NCLT/IBBI-hosted order addresses practical Section 114 and Section 115 issues relevant to insolvency professionals, lenders, CAs and restructuring advisers.
