If you have signed a personal guarantee for your company's loan, this case is about you. A media promoter facing claims of Rs 22,006 crore has been allowed to settle them for Rs 6.5 crore. Who he is had very little to do with it. What decided the case is how the law treats a guarantor whose assets have run out.
On 25 August 2026 the third member of the National Company Law Tribunal held that Dr Subhash Chandra's repayment plan deserves approval under Section 114 of the Insolvency and Bankruptcy Code, 2016. The plan puts up Rs 6.5 crore in total. Rs 25 lakh of that goes to the cost of the process, leaving Rs 6.25 crore for creditors whose admitted claims come to about Rs 22,006.57 crore. That is the 99.97 per cent haircut in the headlines.
Bottom line: what gets settled here is Dr Chandra's own liability as a guarantor, so once a discharge order follows, the creditors named in the plan cannot come back at him personally for those debts. The loans themselves are untouched. The companies that borrowed the money still owe every rupee, because Section 119(4) says a discharge order does not release anybody else. And this is not the final order. It is a third member's opinion, and it goes back to the original two-member bench for the actual order to be passed.
Where the 99.97 per cent and the three paise come from
The headline number is one division. Rs 6.25 crore divided by Rs 22,006.57 crore is 0.028 per cent. Turn it around and creditors give up 99.97 per cent of what they have claimed.
In rupees it lands harder. For every Rs 100 claimed, a creditor gets back about 2.8 paise, which the headlines round to three.
One lender makes it real. LIC Housing Finance has an admitted claim of Rs 1,322.39 crore. Its share under the plan is Rs 38,09,294.
Within two days the figure was a political fight. Business Today carried the government's answer to it on 27 August: what is being settled is one man's liability as a guarantor, and no bank has written off Rs 22,000 crore of loans.
Section 119(4) of the Code says the same thing, and this article comes back to it below. The 99.97 per cent is real as well. It is that low for the reason the order spends 144 pages on, which is that there was almost nothing left to take.
First, the words you need
Three terms carry this whole case, and the news reports use them without explaining them.
A personal guarantor is a person who promises a lender that if the borrower does not pay, they will. The borrower here is a company. The guarantor is a human being, usually the promoter or a director. Read our guide on indemnity versus guarantee if you want the contract law behind it.
A repayment plan is a written offer from a debtor to his creditors. He says: this is everything I own, here is what I can pay, please accept it and close the matter. Section 105 of the Code allows it. The creditors vote on it.
A resolution professional, or RP, is a licensed insolvency professional appointed by the tribunal. He checks the claims, lists the creditors, runs the meeting and reports back. He is not the debtor's lawyer and he is not the bank's agent.
What actually happened, in order
Indiabulls Housing Finance Limited lent money to Vivek Infracon Private Limited under a loan agreement dated 13 December 2016. Dr Chandra signed a personal guarantee for it. The loan went bad.
In 2022 Indiabulls filed CP (IB)-97(ND)/2022 before the NCLT in New Delhi. It used Section 95 of the Code, which lets a creditor start an insolvency resolution process against an individual. The tribunal appointed Mr Raj Kamal Saraogi as RP on 30 May 2022.
Then the case froze. The Supreme Court passed an interim order on 5 August 2022 in Writ Petition (Civil) No. 567 of 2022. The NCLT kept the RP's report in abeyance on 18 August 2022. The Supreme Court vacated its order on 22 April 2024, and the tribunal admitted the petition the same day. Mr Shiv Nandan Sharma replaced Mr Saraogi as RP on 27 May 2024.
The creditors voted on the repayment plan and the voting window closed at 12:01 pm on 1 November 2024. The plan carried 80.814 per cent of the vote share. Six banks and a debenture trustee objected and filed separate applications.
The two-member bench then split. Judicial Member Ashok Kumar Bhardwaj was for approving the plan. Technical Member Reena Sinha Puri held that it was riddled with legal and procedural defects and should be rejected. On 9 February 2026 the NCLT President referred the difference to a third member under Section 419(5) of the Companies Act, 2013. That third member, Judicial Member Nilesh Sharma, pronounced his opinion on 25 August 2026.
How a promoter ends up in NCLT personally
Part III of the Insolvency and Bankruptcy Code deals with individuals. Most of it is still not in force. But on 15 November 2019 the Ministry of Corporate Affairs issued notification S.O. 4126(E). It brought Sections 94 to 187 into force from 1 December 2019, only in so far as they relate to personal guarantors to corporate debtors.
So an ordinary individual who cannot pay a personal loan still has nowhere to go under the Code. A promoter who guaranteed his company's loan does. And so does his bank.
Hundreds of guarantors challenged that notification. The Supreme Court upheld it in Lalit Kumar Jain v. Union of India, decided on 21 May 2021. The Court also settled the point promoters most often get wrong. Paragraph 111 of the judgment holds that approval of a resolution plan for the company does not automatically discharge the personal guarantor. The guarantee is a separate contract. Under Section 128 of the Indian Contract Act, 1872, the guarantor's liability runs alongside the borrower's.
Under Section 60(2) of the Code, the application against the guarantor goes to the same NCLT bench that is handling the company. Section 95(4)(b) requires the creditor to have served a demand notice and waited fourteen days first.
Two moratoriums follow. Section 96 starts an interim moratorium the moment the application is filed. Every pending proceeding about the guarantor's debts is stayed, and no creditor can start a new one. Section 101 replaces it with a full moratorium once the application is admitted. That one runs 180 days, or until the tribunal passes its order on the repayment plan, whichever comes first.
Where the Rs 6.5 crore came from
The number looks arbitrary until you see the asset statement.
The repayment plan valued Dr Chandra's assets as on 31 July 2024 at Rs 31,79,49,981. That figure already included his jewellery of Rs 9,81,329 and an investment of Rs 9,85,033 in Subhash Chandra & Sons. The Technical Member had thought both were left out. The third member checked pages 58 to 62 of the plan and found they were not.
From that Rs 31.79 crore, one asset was taken out: a flat at Jolly Maker I, Cuffe Parade, Mumbai, with two garages, valued at Rs 25 crore.
That flat is mortgaged. Dr Chandra deposited the title deeds with STCI Finance Limited to secure roughly Rs 250 crore of loans made in March 2018 to Essel Corporate Resources Private Limited and Jayneer Infrapower & Multiventures Private Limited. STCI's dues are far larger than the flat is worth.
STCI did not vote on the plan. Under Section 110 of the Code a secured creditor who stays out of the vote keeps its right to sell its security. So the flat sits outside the plan, and STCI can still enforce against it.
Rs 31.79 crore minus Rs 25 crore leaves about Rs 6.79 crore. The offer was Rs 6.5 crore, of which Rs 25 lakh covers the cost of the process. That is how you get Rs 6.25 crore for creditors, and how LIC Housing Finance ends up with Rs 38,09,294 against a claim of Rs 1,322.39 crore.
The vote that decided it
Section 111 of the Code sets the bar for approval: more than three-fourths in value of the creditors present and voting. Not three-fourths of all creditors. Three-fourths of the value of the votes actually cast.
The plan got 80.814 per cent. Four creditors carried it almost single-handed. World Crest Advisors held 28.49 per cent of the vote share, Lemonade Capital Advisors LLP 16.85 per cent, Catalyst Trusteeship for a foreign portfolio investor 11.85 per cent, and Corpcall Capital Advisors LLP 10.30 per cent. Together that is 67.49 per cent. All four voted in favour.
The banks voted against and lost. LIC Housing Finance had 6.09 per cent, IDBI Trusteeship for Franklin Templeton 3.36 per cent, HDFC Bank 3.17 per cent and Axis Bank 2.86 per cent. Canara Bank had 1.60 per cent, Union Bank of India (UK) 0.76 per cent and RBL Bank 0.55 per cent. Canara Bank's own application put the banks' combined share at 19.186 per cent. IndusInd Bank held 1.11 per cent and did not vote at all.
Nineteen per cent cannot block a plan that needs twenty-five per cent against it to fail. That is the whole story of the vote.
Why the banks' best argument failed
The banks attacked the vote itself. They said the winning votes should never have been counted.
Section 109(4)(b) bars an associate of the debtor from voting. The banks argued that Veena Investments, Direct Media Distribution Ventures, World Crest Advisors, Lemonade Capital Advisors and Corpcall Capital Advisors were all associates of Dr Chandra. Strip out their votes and the plan collapses.
The argument turned on the definition. Section 79(2)(g) says a company is an associate of the debtor where the debtor, alone or with his associates, owns more than fifty per cent of the share capital, or controls the appointment of the board of directors.
The third member held that this test has to be met on its own terms. Family connection does not meet it, and neither does a business relationship, commercial closeness, or an allegation of indirect influence. Where neither the shareholding threshold nor board control is shown, the entity is not an associate, and its vote counts. The banks had also relied on a SEBI interim order dated 12 June 2023. That did not change the answer.
The tribunal held the objecting creditors had failed to establish that these entities were associates. Their votes stood.
What the tribunal agreed had gone wrong
The order is not a clean chit to the resolution professional. Two failures were recorded.
The first is about claims. A Mr Anil Kumar filed claims for 960 individuals from Haryana, and a Mr Sunil Jain for 300 more. The RP admitted all of them without documents to support them. The third member held this was a lapse in his statutory duty. The remedy is direct: those claims come off the list of creditors, and the money set aside for them is redistributed among the remaining creditors. Approval of the plan is expressly made subject to that correction.
The second is about timing. Section 106(4)(a) says the creditors' meeting must be held between fourteen and twenty-eight days after the RP files his report. Section 107(1) says the notice must go out at least fourteen days before the meeting. Only six days' notice was given. The creditors had themselves resolved unanimously to cut that requirement to five days.
The tribunal held that the timelines were broken. It also held that no creditor had shown any actual harm from it. Everyone except about four per cent of the debt turned up and voted. A procedural slip with no proven prejudice does not undo a decision the creditors took.
The Rs 45,888 crore question
A net worth certificate given to RBL Bank in 2017 put Dr Chandra's net worth at USD 7.17 billion, roughly Rs 45,888 crore. Another given to Canara Bank in 2018 put it at Rs 40,562 crore. He now declares Rs 31.79 crore. The banks wanted a forensic auditor and an asset-tracing agency appointed before anything was approved.
The gap between those certificates and today's figure certainly justified asking questions, the third member accepted. But old certificates do not by themselves prove that assets were hidden or moved. And nothing in the Code makes a forensic audit a precondition to considering a repayment plan.
Suspicion, the order says, is not proof. Insolvency proceedings cannot become an open-ended investigation into a debtor's financial history because a minority of creditors is unhappy. Without material showing concealment, the RP's decision not to order an investigation was not a breach of duty.
The order does leave a door open. Approval gives Dr Chandra no immunity for fraud, concealment or misrepresentation. If a substantial asset surfaces later, the creditors can apply to recall both the approval order and the discharge order. An order obtained by fraud is a nullity in law, and a tribunal has inherent power to set aside its own tainted orders. What the tribunal will not do is hold up a decision on suspicion alone.
Why a 99.97 per cent haircut is not a Rs 22,006 crore loss for the banks
The 99.97 per cent figure in the headlines is arithmetically correct and financially misleading.
Every rupee of that Rs 22,006.57 crore is a claim against Dr Chandra as a guarantor. None of it is money he borrowed himself. The companies that borrowed it are separate debtors, and their debts are untouched by this order.
Section 119(4) of the Code puts it beyond argument. A discharge order "shall not discharge any other person from any liability in respect of his debt". The borrowing companies still owe the money. Any co-guarantor still owes it. Any security still stands, which is exactly why STCI can still sell the Cuffe Parade flat.
What the banks lose is one route of recovery: this man's personal estate. That estate is Rs 6.79 crore after the mortgaged flat comes out. They were never going to get Rs 22,006 crore from it under any process.
The third member made this point himself when he compared the two available outcomes. Approving the plan and pushing Dr Chandra into bankruptcy both end the same way, with the guarantor discharged from his past liabilities. Bankruptcy would cost more and take longer, and his assets would not stretch further.
The dissenting creditors are bound too
The Judicial Member had floated a middle path: bind only the creditors who voted yes, and let the banks that voted no chase Dr Chandra on their own.
The third member rejected it. Section 115(1) says an approved plan is binding on the creditors mentioned in it and on the debtor. There is no clause allowing a tribunal to apply that selectively. Once a plan is approved, its consequences follow for everyone in it, including those who fought it.
He added a practical observation. Even if dissenting banks were let loose, there would be nothing left to recover from. A repayment plan is normally built on the full value of the guarantor's assets, because creditors will not vote for anything less.
What has not happened yet
The last clauses of the order show that the file is still open.
The third member's job under Section 419(5) of the Companies Act, 2013 is limited. He is not sitting in appeal over the two members who disagreed. He answers the questions referred to him, and his opinion decides which way the majority falls. Clause (d) of the operative part directs that the matter be placed before the original division bench, which then passes the actual order in terms of the majority opinion.
So as things stand, the plan has an opinion in its favour, not a final approval order. After that order comes, Section 119 requires the RP to apply separately for a discharge order. And any aggrieved creditor can appeal to the National Company Law Appellate Tribunal.
What this means if you have signed a personal guarantee
Strip away the size of the numbers and what is left applies to any guarantee anyone signs.
Your guarantee outlives the company's insolvency. That is Lalit Kumar Jain, and it has been settled law since May 2021.
A guarantee you signed as extra comfort later on carries the same weight as one signed at the time of the loan. The claims here run to Rs 22,006 crore precisely because guarantees kept being added over the years across group companies. Nobody keeps a running total until a resolution professional does it for them.
Filing under Section 95 does not need your consent, and the interim moratorium under Section 96 begins on the day the creditor files. Your personal position changes before you have argued anything.
The creditors, not the tribunal, decide whether the offer is good enough. Section 111 gives them the vote, and Section 114 gives the tribunal a supervisory role over how that vote was run. The order is blunt about the limit: the tribunal does not sit in appeal over the commercial wisdom of creditors.
And the honest declaration of assets is the hinge of the whole process. If you disclose everything, a plan can close the matter for good. If you do not, the approval and the discharge can both be recalled years later. Directors who want the broader picture on where personal exposure comes from can start with our guide to the duties of a director and our overview of the Companies Act, 2013.
Common mistakes
- Assuming the company's settlement releases you. Dr Chandra argued that Indiabulls had settled with Vivek Infracon in 2023 and so had no case left against him. It did not end the proceedings against him.
- Signing an open-ended guarantee. A guarantee with no ceiling and no end date follows the loan wherever it goes. Ask for a cap and a date before you sign, and see our list of common contract mistakes for the clauses people skip.
- Taking an oral release seriously. If a lender tells you the guarantee is "only for comfort" and will never be invoked, get it in writing or assume it is worth nothing.
- Handing out a net worth certificate casually. Certificates given to RBL Bank in 2017 and Canara Bank in 2018 came back years later as the central argument against him.
- Ignoring the demand notice. Section 95(4)(b) requires fourteen days after a demand notice before a creditor can file. Those fourteen days are your last quiet window.
- Believing your vote protects you as a lender. A creditor holding under a quarter of the value can object, litigate for four years and still be bound by the plan under Section 115.
Frequently asked questions
Is it true that lenders get only 3 paise for every Rs 100? Yes, measured against the admitted claims. Rs 6.25 crore against Rs 22,006.57 crore is 0.028 per cent, which is about 2.8 paise in every hundred rupees and rounds to three. That is a haircut of 99.97 per cent on the claims made against Dr Chandra personally, not on the loans themselves.
Did the NCLT waive Rs 22,000 crore of bank loans? No. Every one of those claims is against Dr Chandra as a guarantor. The companies that actually borrowed the money still owe it, and Section 119(4) of the Code says a discharge order does not release any other person from liability for the same debt.
Is the repayment plan finally approved? Not yet. The order of 25 August 2026 is a third member's opinion on a reference under Section 419(5) of the Companies Act, 2013. It directs that the matter go back to the original division bench, which passes the actual order in line with the majority view.
Why was the plan approved when creditors get only 0.028 per cent? Because the tribunal's role under Section 114 is to check that the process was lawful, not to judge whether the price was good. More than three-fourths in value of the creditors voting approved it, which is what Section 111 requires, and the order says a tribunal cannot sit in appeal over the commercial wisdom of creditors.
Can a bank start insolvency proceedings against me personally for my company's loan? Yes, if you signed a personal guarantee. MCA notification S.O. 4126(E) dated 15 November 2019 brought Sections 94 to 187 into force from 1 December 2019 for personal guarantors to corporate debtors, and the Supreme Court upheld it in Lalit Kumar Jain v. Union of India.
What happens the moment such an application is filed? Section 96 starts an interim moratorium from the date of filing. Every pending proceeding about your debts is stayed and no creditor can begin a new one. Once the application is admitted, Section 101 gives a full moratorium of 180 days, or until the tribunal rules on the repayment plan, whichever is earlier.
Do banks that voted against the plan keep their right to sue him? No. Section 115(1) makes an approved plan binding on all creditors named in it and on the debtor. The third member specifically rejected the idea of applying it only to creditors who voted in favour.
What if assets are found later that he did not declare? The order says approval gives him no immunity for fraud or concealment. Creditors can apply to recall both the approval order and the discharge order, because an order obtained by fraud is treated as a nullity in law.
Why is his Mumbai flat not part of the plan? The Jolly Maker I flat at Cuffe Parade is mortgaged to STCI Finance Limited against roughly Rs 250 crore of loans. STCI did not vote on the plan, so under Section 110 of the Code it keeps its right to enforce the mortgage. The flat is outside the plan and STCI can still sell it.
Who were the four creditors that carried the vote? World Crest Advisors with 28.49 per cent, Lemonade Capital Advisors LLP with 16.85 per cent, Catalyst Trusteeship for a foreign portfolio investor with 11.85 per cent and Corpcall Capital Advisors LLP with 10.30 per cent. Between them that is 67.49 per cent of the vote share, and all four voted in favour.