The 1^st day of September, 2026 saw a dramatic unfold of events in the National Company Law Tribunal as a Special Bench comprising of all-new five-members took up the personal insolvency matter of Subhash Chandra[1], founder of Zee Group and stayed the order dated 25^th August 2026 passed by the erstwhile three-members. The Special Bench recorded that no majority view had emerged from the proceedings so far, and therefore issued notice to all parties to hear the matter afresh. Dr. Chandra has also been restrained from alienating property, directly or indirectly, pending further orders[2] while the case remains pending.[3]

On 31^st August, 2026, the NCLT had passed an order referring the matter to a Special Bench comprising of five-members invoking Section 419(5) of the Companies Act, 2013. This fresh reference comes in the backdrop of completely dissenting views taken by previous two-member Bench on the same repayment plan and a completely distinct view taken by the third member who the matter was subsequently referred to.

What is peculiar is the constitution of a completely fresh Bench comprising of NCLT President Justice (Retd.) Anupinder Singh Grewal, Judicial Members Bachu Venkat Balaram Das and Mahendra Khandelwal, and Technical Members Atul Chaturvedi and Ravindra Chaturvedi, who have not heard this matter before and would lead to re-hearing of the entire matter by invoking powers under Section 419(5) of the Companies Act, 2013, which governs how the Tribunal resolves a difference of opinion between Members, states that the eventual decision must rest on the view of “the majority of Members who have heard the case, including those who first heard it.” Whether a Bench constituted entirely of new Members can pass muster under Section 419(5) of the Companies Act is a genuinely open question, rather than a foregone conclusion.

How the Deadlock Arose

The matter commenced before a two-Member Bench comprising of Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri, hearing Dr. Chandra’s proposed repayment plan against admitted claims of roughly INR 22,006.57 crore. The plan offered creditors only INR 6.25 crore, with a further INR 25 lakh earmarked for insolvency-process costs, thus entailing a haircut of close to 99.97 per cent.

The two Members disagreed on the operative outcome. Judicial Member Mr. Bhardwaj approved the plan, but confined that approval to the roughly 80.8 % of creditors who had actually voted in its favour, preserving the position of dissenting creditors. Technical Member Mrs. Puri took the view that the plan should be rejected. With no majority, the point of difference was referred under Section 419(5) to a third Member, Judicial Member Mr. Nilesh Sharma.

Judicial Member Mr. Nilesh Sharma’s opinion, delivered on 25^th August, 2026, added a third outcome rather than breaking the tie. He approved the plan, but went a step ahead by excluding certain claims altogether, those routed through Anil Kumar (representing roughly 960 individual creditors) and Sunil Jain (representing roughly 300), and directed the resolution professional to redistribute the sums attributable to those claims among the remaining eligible creditors.

When the case returned to HMJ Bhardwaj and HMT Puri, they held, on 31st August, 2026 that HMJ Sharma had not aligned himself with either of their two positions but had instead passed what they described as an independent order. On that basis, they concluded that no final, majority-backed order could be said to exist, and referred the matter afresh to the President under Section 419(5).

This second-order deadlock, a disagreement not just about the plan, but about whether a majority exists at all, may not have been contemplated under the statute while enacting Section 419 of the Companies Act.

Section 419(5) of the Companies Act, 2013 reads:

Plain reading of the statute makes it clear that the President is authorised to refer the identified points of difference to “one or more of the other Members“, language that contemplates ‘in addition to’, rather than necessarily replacement of the original Members already seized of the matter. The language used by the statute further clarifies that ultimate decision must rest on the majority “of Members who have heard the case, including those who first heard it“, a phrase that, on one reading, assumes the original Members remain part of the adjudicating body whose votes are counted.

Addition or Substitution?

The interpretive question this raises is not whether Parliament wanted disagreements resolved by matters being re-heard by completely new Benches, or by addressing the points of conflict by the new Members in addition to the original Members.

A Relevant Data Point: The Supreme Court’s Ruling in Askari Hussain

Section 58(3) of the Consumer Protection Act, 2019 uses language close to Section 419(5): where Members of an NCDRC Bench differ, the President

In Askari Hussain & Ors. v. Dinesh Kumar & Ors.[5], decided on 31 August 2026, the Supreme Court considered whether a third Member had exceeded the scope of a Section 58(3) reference by deciding the appeal himself rather than simply answering the referred questions and returning the matter to the original Bench. The Court reaffirmed that the ordinary course under such reference provisions is for the referee Member to answer only the points referred and hand the matter back, but held that where the referring Bench itself frames broad questions “inseparable from the evidence on record,” rather than narrow points of difference, a third Member’s decision to go further may not automatically be treated as an illegality warranting interference. The Court drew on an existing line of authority on third-Member references, including its earlier decisions in Kesho Nath Khurana v. Union of India, 1981 (Supp) SCC 38 and State of Punjab v. Salil Sabhlok (2013) 5 SCC 1, to describe the referee’s approach in that case as a permissible “common sense” response to an unusually framed reference.

Askari Hussain does not decide the Subhash Chandra case’s composition question, and the facts differ in an important respect: the objection there concerned what a validly constituted referee Member could decide, not whether the referee Bench itself had been properly constituted. But the judgment is a reminder, on cognate statutory language, that Indian courts have tended to read these reference provisions purposively, with an eye to the practical difficulty a Tribunal faces once the standard mechanism breaks down, rather than mechanically. That interpretive tendency cuts both ways: it could support treating the phrase “including those who first heard it” as a directory safeguard rather than a rigid jurisdictional requirement, or it could equally support scrutinising a departure from it once the departure is total rather than partial, as it arguably is here.

The dispute has not stayed confined to the NCLT. Lenders opposed to the plan, including LIC Housing Finance, Canara Bank and Union Bank, had already moved the National Company Law Appellate Tribunal against Sharma’s 25 August order.[6] Commentators have suggested that the fresh proceedings before the five-member Bench may render that appeal infructuous, however that remains to be seen.[7].

*Nattasha Garg, is a an independent law practitioner specialising in commercial disputes, insolvency and money laundering matters.

[1]Indiabulls Housing Finance Ltd. v. Dr. Subhash Chandra, C.P.(IB) No. 97(ND)/2022

[2] Bar and Bench, “Subhash Chandra insolvency: NCLT forms 5-member bench after lack of consensus in verdicts” (31 Aug–1 Sep 2026) and Business Standard, “NCLT stays order approving Subhash Chandra’s ₹6.25 crore repayment plan” (1 Sep 2026): https://www.barandbench.com/news/litigation/subhash-chandra-insolvency-nclt-forms-5-member-bench-after-lack-of-consensus-in-verdicts ; https://www.business-standard.com/companies/news/nclt-stays-order-approving-subhash-chandra-s-6-5-crore-repayment-plan-126090100265_1.html

[3] Newsdrum, “No final order on Subhash Chandra’s Rs 6.25-crore plan; NCLT forms five-member bench”: https://www.newsdrum.in/business/no-final-order-on-subhash-chandras-rs-625-crore-plan-nclt-forms-five-member-bench-12460623

[4] Companies Act, 2013, s. 419(5), as substituted by the Eleventh Schedule to the Insolvency and Bankruptcy Code, 2016, w.e.f. 15.11.2016.

[5]Askari Hussain & Ors. v. Dinesh Kumar & Ors., 2026 LiveLaw (SC) 871, decided 31 August 2026 (Dipankar Datta and Sheel Nagu, JJ.).

[6] Business Today, “NCLT sends Subhash Chandra insolvency plan back to chairperson as benches fail to reach majority”: https://www.businesstoday.in/latest/corporate/story/nclt-sends-subhash-chandra-insolvency-plan-back-to-chairperson-as-benches-fail-to-reach-majority-552420-2026-09-01

[7] India Legal, “Subhash Chandra insolvency: NCLT Forms 5-member bench after no consensus on repayment plan”: https://indialegallive.com/constitutional-law-news/courts-news/subhash-chandra-insolvency-nclt-forms-5-member-bench-after-no-consensus-on-repayment-plan/