There is something almost absurd about the numbers in this case.
Creditors claimed roughly ₹21,700–₹22,000 crore against Dr. Subhash Chandra.
The repayment plan offered approximately ₹6.5 crore.
That is a recovery of roughly 0.03% of the claims—a haircut of about 99.97%.
And yet, the plan received 80.814% approval from the creditors who voted.
On 25 August 2026, a Special Bench of the NCLT, New Delhi directed that the repayment plan be approved, subject to certain corrections.
So what exactly happened?
And more importantly:
How does insolvency law allow something like this to happen?
First, forget what you know about company insolvency
This case was not simply:
"Subhash Chandra's company owes money, so the company went into insolvency."
The proceedings were against Dr. Subhash Chandra personally, as a Personal Guarantor, under Part III of the Insolvency and Bankruptcy Code. (insolvency & bankruptcy code is the primary Law on insolvency in India passed in 2016)
This distinction is important.
Imagine a company borrows ₹1,000 crore from a bank.
The promoter gives a personal guarantee.
The company later defaults.
The bank may then have a route to proceed against the promoter personally, subject to the requirements of the IBC and the guarantee.
That is broadly what happened here.
Indiabulls Housing Finance initiated proceedings against Dr. Chandra under Section 95 of the IBC in 2022. After proceedings before the Supreme Court delayed the matter, the personal insolvency resolution process was eventually admitted in April 2024 and a Resolution Professional, Shiv Nandan Sharma, was appointed.
And this is where insolvency law becomes interesting.
So, what does a Resolution Professional actually do?
Think of the RP as the person who enters a messy financial situation and tries to bring some order to it.
He examines the debtor's financial position.
He receives and verifies claims.
He prepares the statutory reports.
He facilitates meetings of creditors.
And, in a personal insolvency resolution process, he helps put the proposed repayment plan before the creditors.
He is not the debtor's lawyer.
He is not supposed to simply accept whatever the debtor says.
But he is also not a bankruptcy investigator with unlimited powers.
That distinction became extremely important in this case.
Then came the ₹6.5 crore plan
Dr. Chandra proposed a repayment plan of approximately ₹6.5 crore.
Against claims of roughly ₹22,000 crore.
Why would anyone agree to that?
The answer given by the RP and supporters of the plan was fairly practical.
The disclosed estate of the Personal Guarantor was very small compared with the enormous claims against him.
If the creditors rejected the plan and pushed the matter towards bankruptcy, there might be little or nothing meaningful to distribute.
So the argument was essentially:
Would you rather receive ₹6.5 crore, or spend years fighting over assets that may not exist or may not be recoverable?
That is the cold logic of insolvency.
This is where "commercial wisdom" enters the story
Under the IBC, creditors are not simply spectators.
They vote.
And in this case, the plan received 80.814% approval.
The basic idea behind the IBC is that financial creditors who have their money at stake are generally better placed to decide whether a commercial proposal makes sense.
You will often hear lawyers say:
"Commercial wisdom of the Committee of Creditors."
It sounds complicated.
It isn't.
Imagine ten people are owed money by a business.
The business says:
"I cannot pay you the full amount. I can give you ₹10 lakh today, or you can take your chances with a long insolvency process."
The law gives the creditors a significant say in deciding whether that deal is worth accepting.
The NCLT does not normally sit in the creditor's chair and say:
"I think you should have negotiated for ₹12 lakh."
But there is an important limit.
Commercial wisdom is not a licence to violate the law.
That became the central battle in the Subhash Chandra case.
The NCLT is not supposed to be a rubber stamp
The creditors had approved the plan.
But several major creditors—including Canara Bank, HDFC Bank, RBL Bank, IndusInd Bank, IDBI Trusteeship and LIC Housing Finance—opposed it.
Their objection was not simply:
"We don't like ₹6.5 crore."
They raised a much more serious question:
Was the process by which the ₹6.5 crore plan was approved legally sound?
This matters because the NCLT's job under the relevant provisions of Part III is not to replace the creditors' commercial decision with its own.
But neither is it supposed to blindly approve whatever gets the required votes.
It has to examine whether the statutory requirements have been followed.
That is why Section 114 matters.
The Tribunal has to examine whether the repayment plan complies with the IBC, the regulations and applicable law.
So the real fight became:
How much should the NCLT interfere?
And then came the "associate creditors" problem
This was probably the most interesting part of the case.
Under Section 109(4)(b), certain creditors who fall within the statutory definition of an "associate" cannot vote.
Why?
Because imagine a promoter owes ₹100 crore to ten genuine banks.
He also controls another company that claims to be his creditor for ₹30 crore.
If that related company gets to vote, the debtor could potentially influence the very process that determines how much everyone gets paid.
That is why the IBC has rules restricting certain connected creditors from voting.
The problem was that five entities were alleged to be associates of Dr. Chandra:
Veena Investments, Direct Media Distribution Ventures, World Crest Advisors, Lemonade Capital Advisors and Corpcall Capital Advisors.
The Judicial Member and Technical Member disagreed sharply on this.
The Judicial Member said: read the words
The Judicial Member took a fairly literal approach to Section 79(2)(g).
His reasoning was essentially that the statutory test required the debtor himself, alone or together with his associates, to satisfy the ownership or control requirements.
Dr. Chandra personally did not hold shares in Veena Investments.
Therefore, according to this approach, you could not simply say:
"This company is connected to his family, therefore it is automatically his associate."
That would be expanding the words of the statute.
And courts are generally cautious about doing that.
The Technical Member looked at the bigger picture
The Technical Member took a more purposive approach.
Her concern was obvious.
Suppose the law says:
"You cannot vote if you are the debtor's associate."
But the debtor simply puts the shares in the name of a relative or another connected company.
If the law then says:
"Sorry, technically the debtor doesn't own the shares."
the entire protection could become meaningless.
The Technical Member therefore looked at the wider relationships and alleged family control and concluded that the statutory restriction should apply.
This is a classic legal battle:
Do you read the statute literally, or do you interpret it in a way that prevents people from defeating its purpose?
The Third Member ultimately preferred the narrower statutory approach, holding that the definition of "associate" could not simply be expanded beyond the ownership/control tests written into Section 79(2)(g).
Then came the question that bothered the banks
How did a man whose earlier net worth certificates reportedly showed figures of approximately ₹45,888 crore in 2017 and ₹40,562 crore in 2018 arrive at a present net worth of around ₹31.79 crore?
That is an enormous change.
The objecting creditors wanted deeper investigation.
They argued that an independent forensic auditor and asset-tracing agency should have been appointed to examine possible asset transfers, stripping, preferential transactions and the true financial position.
And this is where I think the case becomes genuinely uncomfortable.
Because if you are a creditor staring at a 99.97% haircut, you would naturally want to know:
"Before I accept that this man has only ₹31 crore, have we really looked everywhere?"
The ₹1,260 crore property made the question even bigger
Canara Bank also brought before the Tribunal media reports concerning the reported sale of a property at 4, Bhagwan Das Road, New Delhi, reportedly for approximately ₹1,260 crore.
The numbers looked strange.
The Statement of Affairs reportedly showed assets of roughly ₹31.77 crore, apart from the residential property valued at about ₹25 crore.
So the obvious question was:
Where did the ₹1,260 crore property fit into this picture?
Dr. Chandra denied owning or selling the property.
His position was that the property belonged to Greatway Estates Pvt. Ltd., had been mortgaged to JC Flowers ARC or its assignee, and that the property had already been disclosed in the repayment plan.
The Tribunal ultimately did not treat newspaper reports as sufficient evidence of ownership or receipt of sale proceeds.
This is where I have a problem with the commercial logic
The Tribunal's answer is legally understandable.
A newspaper report is not proof that a person owns an asset.
Suspicion is not evidence.
A historical net-worth certificate, by itself, does not prove that somebody secretly transferred assets.
I agree with that.
But there is another side to this.
A 99.97% haircut is not an ordinary commercial decision.
When creditors are being asked to accept ₹6.5 crore against claims of roughly ₹22,000 crore, the standard of curiosity should be extremely high.
If the question is:
"Can we prove fraud?"
the answer may be no.
But the preliminary question should perhaps be:
"Have we done enough investigation to confidently say there is no recoverable value left?"
That is a different question.
And this is where the absence of a forensic audit becomes, in my view, the most uncomfortable part of the order.
The Third Member held that the IBC does not make a forensic audit mandatory before approving a Personal Guarantor's repayment plan, and that suspicion alone could not establish concealment or diversion.
Legally, that is a defensible position.
Commercially, however, creditors may reasonably ask whether a deeper investigation should have preceded acceptance of such an extraordinary haircut.
But there was another problem: the process itself
The Technical Member identified several procedural irregularities.
The RP submitted his Section 106 report on 17 October 2024.
The creditors' meeting took place on 24 October.
The objection was that the IBC required a minimum period of 14 days.
Creditors also complained that they received only about six days' notice and that the voting period ended on 31 October, which was Diwali.
There were also complaints about the admission of certain claims and the eligibility of certain creditors to vote.
That sounds serious.
So why wasn't the entire plan thrown out?
Because insolvency law has another principle: prejudice
This is a very important concept for anyone dealing with the NCLT.
A procedural mistake does not automatically destroy an insolvency process.
The Tribunal asks:
Did the mistake actually prejudice the process?
Here, the Third Member concluded that although certain timelines were not strictly followed, the creditors had sufficient opportunity to participate and vote, and there was no demonstrated prejudice serious enough to invalidate the entire process.
The plan had received 80.814% approval, well above the applicable three-fourths threshold stated in the material before the Tribunal.
So the Tribunal essentially took the view:
Yes, there were defects. But they did not destroy the integrity of the vote.
That is a very important insolvency principle.
The IBC is designed to rescue value, not create a new litigation marathon over every procedural mistake.
And what happens to the creditors who voted NO?
This is another part business owners should understand.
Once a repayment plan is properly approved under Section 114, it does not become optional for creditors who disliked it.
The approved plan binds the creditors covered by it under Section 115.
So if Bank A says:
"I voted against the plan. I want my original ₹500 crore."
the answer may be:
"You are bound by the approved repayment plan."
This is one of the reasons voting eligibility matters so much.
If the wrong people are allowed to vote, the problem isn't merely procedural.
It can change the economic outcome for everyone.
The Tribunal ultimately held that the approved plan would bind both assenting and dissenting creditors whose claims were covered by it.
So was this a ₹22,000 crore settlement for ₹6.5 crore?
Technically, I would be careful with that sentence.
It is more accurate to say that the NCLT approved a repayment plan of approximately ₹6.5 crore against creditor claims of roughly ₹21,697–₹22,006 crore.
The difference is enormous.
And that difference is precisely why this case matters.
It shows how personal insolvency can convert an enormous pile of debt into a legally structured repayment plan when the debtor's available estate is tiny and the required creditor majority supports the proposal.
It also shows something more uncomfortable:
The amount of debt does not necessarily determine the amount that creditors ultimately recover.
Recoverability does.
My biggest takeaway from this order
I don't think the interesting question is:
"How did Subhash Chandra get away with paying ₹6.5 crore?"
That makes the story too simple.
The better question is:
"Did the insolvency process do enough to establish that ₹6.5 crore was genuinely the best realistic recovery available to creditors?"
The NCLT's answer was essentially yes, subject to correcting certain creditor claims and procedural issues.
But the dissenting view shows why reasonable people can disagree.
When you have:
₹22,000 crore of claims
versus
₹6.5 crore offered
plus
historic net-worth figures in the tens of thousands of crores
plus
allegations concerning connected creditors
plus
questions about a ₹1,260 crore property
you would expect an exceptionally deep investigation before concluding that the creditors should accept almost nothing.
The Tribunal's response was that suspicion is not proof, a forensic audit is not automatically mandated, and the NCLT cannot rewrite the IBC simply because the facts look uncomfortable.
That is legally coherent.
But it leaves an important policy question hanging.
Does our insolvency framework give creditors enough investigative protection when the gap between the claimed wealth and the disclosed wealth is this enormous?
That, to me, is the real Corporate Legal War here.
Not whether ₹6.5 crore sounds small.
But whether the system has done enough work before deciding that ₹6.5 crore is all that is left.
Insolvency is not simply about how much you owe.
It is about what can actually be recovered, who gets to vote, whether the voting process was lawful, what assets have been properly disclosed, and how much scrutiny the NCLT should exercise before allowing a plan to bind everyone.
And if you are a creditor, remember one thing:
A 99% haircut is not the end of the legal war. It may be the point at which you should start asking much harder questions about how the number was reached.
That is where insolvency law becomes interesting.