Subhash Chandra Challenges NCLT's Five-Member Bench Decision in Insolvency Case

Subhash Chandra, Chairman of Essel Group, is challenging the NCLT's decision to form a five-member bench for his personal insolvency case. His legal team argues that the tribunal lacks the authority to create such a bench, raising significant questions about the legitimacy of the proceedings. The case has drawn attention due to the substantial claims involved, with Chandra facing creditor claims totaling over Rs 22,000 crore. As the legal battle unfolds, the implications for Chandra and the Essel Group remain critical. Stay tuned for updates on this developing story.

By Narendra Chaudhary Sep 2, 2026, 14:21 IST

Essel Group Chairman's Legal Battle

New Delhi: On Wednesday, Subhash Chandra, the Chairman of Essel Group, voiced his opposition to the National Company Law Tribunal's (NCLT) decision to establish a five-member bench for his personal insolvency case, arguing that the tribunal lacks the authority to do so.

During the proceedings at the National Company Law Appellate Tribunal (NCLAT), Senior Advocate Sasmit Patra criticized the NCLT's ruling as 'incorrect and flawed,' asserting that they do not possess the power to create such a bench.

Patra pointed out that the five-member bench had previously suspended an order from Nilesh Sharma, a Member (Judicial), who was appointed as a third member following a split decision from a division bench of the NCLT.

The NCLT had prohibited Chandra from selling his assets and had suspended an order that would have allowed him to address claims related to personal guarantees on group loans amounting to approximately Rs 6.5 crore, against total claims of around Rs 22,006 crore.

Patra questioned the legitimacy of the stay, asking, 'What authority allowed this, and when did this five-member bench convene? What proceedings led to this single order from the bench?'

Solicitor General Tushar Mehta, representing dissenting creditors including LIC Housing Finance, Canara Bank, and Union Bank, suggested that the petition against the third member's order could be resolved with the option to revive it later, as some respondents might contest the reference itself.

He noted that the case presented 'very unique circumstances' with 'three divergent views,' indicating the need for a larger bench to review the matter.

However, Patra countered this, stating that the orders from Ashok Kumar Bhardwaj and Nilesh Sharma were consistent regarding the repayment plan and eligibility criteria.

He emphasized that both members were aligned on the repayment plan, asserting, 'To claim that these issues need to be re-litigated is entirely incorrect. The scope of Section 419 (5) of the Companies Act, 2013, is quite limited.'

Patra further explained that Section 419 (6) stipulates that differing views must be addressed by another member or members, questioning the NCLT's authority to form a five-member bench.

The NCLT had established this five-member bench on Monday, which subsequently stayed the order from Nilesh Sharma and scheduled the next hearing for September 23, 2026.

This dispute has now escalated to the NCLAT, where dissenting lenders are contesting the third member's ruling.

On Wednesday, Mehta urged the three-member NCLAT bench to dismiss the appeal since the five-member NCLT bench had already stayed the third member's order.

Patra argued that the five-member NCLT bench should have suspended all three orders, including the split verdict from the division bench.

He also opposed the Solicitor General's request to withdraw the appeal.

Justice Yogesh Khanna, the officiating Chairperson of the NCLAT, remarked that the formation of the five-member bench was 'not a matter for us to challenge.'

Mehta suggested that Chandra's team should be allowed to contest that order separately while his appeal remains active, expressing no objections to this approach. However, the NCLAT bench stated that this could not be accommodated.

Patra informed the NCLAT that Chandra has faced significant public scrutiny over a proposed payment of Rs 6.5 crore against acknowledged creditor claims of Rs 22,006 crore, despite the absence of a final order approving the repayment plan.

In response, Mehta stated, 'This forum cannot be utilized for external commentary... it is being used to make statements that will be reported in the media. This is not the appropriate venue.'

The NCLAT bench concurred, advising, 'If you have any concerns, the matter is still pending before the NCLT; address your grievances there.'

Mehta chose not to pursue the withdrawal applications and requested that the appeals remain active. The NCLAT agreed and scheduled the petitions for the next hearing on October 7.