HDFC Bank opposes Subhash Chandra's repayment plan, may appeal NCLT order

HDFC Bank has opposed the repayment plan of Essel Group chairman Subhash Chandra in his personal insolvency proceedings and is considering challenging the National Company Law Tribunal’s order approving the proposal. The development comes amid growing scrutiny of the insolvency proceedings involving Chandra, with the size of the proposed repayment compared with claims filed by creditors triggering political and financial debate.

HDFC Bank was among the creditors that opposed the repayment proposal before the NCLT. The lender may now explore legal remedies against the tribunal’s decision, including an appeal before the National Company Law Appellate Tribunal (NCLAT). The dispute centres on personal guarantees given by Chandra for borrowings by companies associated with the Essel Group. Creditors had submitted claims running into thousands of crores of rupees during the insolvency process.

Bank weighs legal options

HDFC Bank’s opposition assumes significance as the lender was among the dissenting creditors in the resolution process. Under the Insolvency and Bankruptcy Code, creditors vote on repayment proposals during personal insolvency proceedings. Once the prescribed majority backs a proposal and statutory requirements are satisfied, the adjudicating authority considers it for approval.

The NCLT approved Chandra’s repayment proposal after examining objections from dissenting creditors. The matter had earlier seen a difference of opinion between members of the tribunal and was subsequently referred to another member. The tribunal concluded that the plan met the statutory requirements for approval and took into account the commercial decision of the majority of creditors. HDFC Bank, however, has maintained its opposition to the proposal and could seek appellate scrutiny of the order.

Claims spark political row

The case has also acquired a political dimension after Congress leaders Rahul Gandhi and Jairam Ramesh questioned the outcome of the proceedings. Gandhi accused the Narendra Modi government of creating “two systems” in the country — one for wealthy businessmen and another for ordinary borrowers — while attacking the handling of Chandra’s insolvency case.

Chandra has disputed the portrayal of the proceedings and maintained that the total claims filed by lenders should not be treated as money personally borrowed by him. He has said the proceedings concern personal guarantees provided for loans taken by Essel Group companies and argued that figures being cited publicly do not accurately represent his personal liabilities. The Essel Group chairman has also said that settlements and recoveries already made by lenders need to be considered while assessing the outstanding amounts.

Appeal could extend dispute

Any challenge by HDFC Bank before the appellate tribunal could prolong the insolvency proceedings and bring the terms of the repayment plan under fresh judicial examination. The case is being closely watched because of the questions it raises over creditor recoveries in personal insolvency cases involving corporate guarantees and the extent to which dissenting lenders can challenge plans approved by the required majority. For HDFC Bank, an appeal would provide an avenue to contest the NCLT’s conclusions and seek reconsideration of its objections to the repayment arrangement.