In the Indiabulls Housing Finance Limited vs Dr. Subhash Chandra personal insolvency reference, the New Delhi Special Bench of the National Company Law Tribunal (NCLT) has upheld the repayment plan approved by 80.814% voting share, while directing exclusion of claims by Mr. Anil Kumar and Mr. Sunil Jain representing 1,260 individuals, and held that the approved plan binds all creditors under Section 115 of the IBC.
The Special Bench held that where a Repayment Plan under Part III of the IBC has been approved by the requisite majority of creditors and the statutory procedure under Sections 105, 106, 112 and 114 of the IBC has been substantially complied with, the Adjudicating Authority must accord due deference to the commercial wisdom of the creditors while exercising supervisory judicial scrutiny.
The definition of “associate” under Section 79(2)(g) cannot be expanded beyond its statutory text, and procedural irregularities such as shorter notice periods or absence of forensic audit do not warrant rejection where no actual prejudice is demonstrated. The approved Plan binds all creditors under Section 115, subject to the Tribunal’s inherent power to recall its order upon subsequent discovery of fraudulent concealment of material assets, added the NCLT.
A Single Judicial Member Mr. Nilesh Sharma observed that the Adjudicating Authority under Section 114 of the IBC is not a mere rubber stamp to the creditors’ decision but must independently examine whether the statutory framework has been complied with, while respecting the commercial wisdom of the creditors. On the interpretation of Section 79(2)(g), the Third Member held that the statutory test for determining an “associate” is based on ownership exceeding 50% of share capital or legal control over the Board of Directors, and not on commercial influence, business proximity, or family relationships.
The Special Bench observed that the Legislature deliberately used narrower language in Part III compared to the broader “related party” concept in Part II, and purposive interpretation cannot be used to rewrite clear statutory language. On the RP’s conduct, the Third Member recorded lapses in admitting the unsupported claims of Mr. Anil Kumar (representing 960 individuals) and Mr. Sunil Jain (representing 300 individuals) without adequate documentary verification, and in not strictly complying with the 14-day notice requirement under Sections 106(4)(a) and 107(1).
However, the Bench found that these lapses did not vitiate the entire PIRP, particularly since the creditors had unanimously consented to a shorter notice period and no actual prejudice was demonstrated. The Member further observed that the Code does not make a forensic audit or asset-tracing exercise a mandatory precondition for approval of a repayment plan under Chapter III of Part III, as such investigative powers are specifically conferred only on the Bankruptcy Trustee under Section 149.
On the Lutyens’ Delhi property issue raised by Canara Bank in IA-2806/2026, the Member observed that the property belonged to Greatway Estates Private Limited and not to the Personal Guarantor, and that newspaper reports alone cannot constitute sufficient basis for initiating an enquiry.
Briefly, Indiabulls Housing Finance Limited filed an insolvency petition under Section 95 of the Insolvency and Bankruptcy Code, 2016 against Dr. Subhash Chandra, the Personal Guarantor, in 2022, seeking initiation of the Personal Insolvency Resolution Process (PIRP). After the Supreme Court vacated its interim order in April 2024, the petition was admitted and Mr. Raj Kamal Saraogi was appointed as the Resolution Professional (RP), who was later replaced by Mr. Shiv Nandan Sharma in May 2024. The newly appointed RP filed application seeking approval of a Repayment Plan offering approximately Rs. 6.5 crores against admitted claims aggregating around Rs. 21,697 crores.
The Repayment Plan was approved by 80.814% of the voting share in the Meeting of Creditors held on 24.10.2024. Several financial creditors, including IndusInd Bank, HDFC Bank, Canara Bank, RBL Bank, IDBI Trusteeship, and LIC Housing Finance, opposed the plan, primarily alleging that the voting majority comprised associate/related parties of the Personal Guarantor, that the RP conducted the process in a hurried and opaque manner, and that the plan was grossly inadequate. A difference of opinion arose between the Member (Judicial) and the Member (Technical) on multiple legal issues, prompting the President, NCLT to refer the matter to a Third Member under Section 419(5) of the Companies Act, 2013.
