Personal Guarantor Restrained from Asset Alienation Amidst Divergent Views in Tribunal
The National Company Law Tribunal (NCLT) Special Principal Bench in New Delhi has issued a significant order in the ongoing case of Indiabulls Housing Finance Limited against Dr. Subhash Chandra. The tribunal was faced with a complex situation due to differing opinions on the approval of a repayment plan for the personal guarantor, Dr. Subhash Chandra, under the Insolvency and Bankruptcy Code (IBC), 2016.
The case, initially heard by a division bench of the NCLT, resulted in dissenting opinions from the judicial and technical members. The judicial member, Sh. Ashok Kumar Bhardwaj, approved the repayment plan, suggesting that dissenting creditors could pursue other legal remedies for debt recovery. Conversely, the technical member, Ms. Reena Sinha Puri, rejected the plan, citing irregularities in the process.
Due to the lack of consensus, the matter was escalated to a third member, Sh. Nilesh Sharma of the NCLT Mumbai Bench, who approved the repayment plan with modifications, excluding certain creditor claims and ordering redistribution among remaining creditors. However, his judgment did not achieve a clear majority view as required under Section 419(5) of the Companies Act, 2013.
Consequently, the NCLT President constituted a Special Bench to address the impasse. The Special Bench has stayed the third member's order and restrained Dr. Subhash Chandra from alienating any assets directly or indirectly, pending further proceedings. The tribunal has scheduled the next hearing for September 23, 2026, and has invited responses from the involved parties.
This decision underscores the procedural complexities in insolvency proceedings, particularly when dealing with personal guarantors and the intricacies of creditor claims.
Bottom Line:
Insolvency and Bankruptcy Code - Special Bench constituted due to lack of majority opinion on repayment plan for personal guarantor - Decision of third member stayed - Personal guarantor restrained from alienating assets directly or indirectly.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Section 115, Companies Act, 2013 Section 419(5)
