On 25 August 2026, a Third Member of the National Company Law Tribunal answered a reference in the personal insolvency of Dr. Subhash Chandra. Six days later the original Bench recorded that no majority had emerged and sent the matter back to the President under Section 419(5) of the Companies Act, 2013. Three Members had given three answers on the same points.

The question thrown up is narrow and unresolved. When points of difference are referred to a Third Member, is that Member obliged to adopt one of the two views already on record, or is he free to hear the points referred and form his own? Our answer is the second. The language of Section 419(5) admits of no other reading, the cognate provisions have been construed the same way, and a Third Member who differs from both is acting within the mandate of the provision.

What follows deals only with the construction of Section 419(5). It says nothing about the merits of the insolvency, or of any other pending case.

What happened in C.P. (IB) No. 97/ND/2022

The occasion for the question arose from the personal insolvency proceedings against Dr. Subhash Chandra before the New Delhi Bench of the National Company Law Tribunal, in a petition filed by Indiabulls Housing Finance Limited under Section 95(1) of the Insolvency and Bankruptcy Code, 2016.[1] The repayment plan placed before the NCLT offered a little over Rs. 6 crore against admitted claims running into several thousand crores.

The Division Bench that heard the matter could not agree.[2] The Member (Judicial) approved the repayment plan but confined it to those creditors who had voted in its favour, and expressly left the banks, financial institutions and other dissenting creditors at liberty to pursue their own remedies for recovery outside the plan. The Member (Technical) took the opposite view and rejected the plan altogether.

The points of difference went to a Third Member, nominated on 5 February 2026, who delivered his opinion on 25 August 2026.[3] He approved the plan, but on neither of the terms before him. Section 115(1) of the Code provides that a repayment plan approved by the Adjudicating Authority takes effect as if proposed by the debtor and binds the creditors mentioned in it.[4] Reading that provision as admitting of no selective application, he held that the plan bound assenting and dissenting creditors alike, so that the claims of the banks stood extinguished on approval. He also excluded two blocks of claims filed on behalf of some 1,260 individual creditors.

The matter returned to the original Bench on 31 August 2026.[5] The tally by then was rejection from the Member (Technical), approval qua the assenting creditors alone from the Member (Judicial), and approval binding everybody from the Third Member. Three Members, three answers, and no two of them the same on the points referred. The Bench held that Section 419(5) left it with no majority view capable of being given effect to, stayed the order of 25 August 2026, restrained the personal guarantor from alienating his assets and made a fresh reference to the President.

The President constituted a fresh five-Member Bench, which took up the matter on 1 September 2026 and listed it for 23 September 2026.[6] Whether Section 419(5) permits that course is a separate question, now agitated before the NCLAT, and it is not the question taken up here.

So much for what happened. The rest of this article is our reading of the provision, and nothing in it turns on whether any of the three Members was right about the repayment plan.

Judge or tie-breaker?

When a split is referred to a Third Member, is that Member deciding a case, or casting a deciding vote?

The practical instinct pulls one way. A reference is made because a Bench is deadlocked, and the purpose of the exercise is to get the matter decided. If the Third Member is free to strike out on a path of his own, the very mechanism meant to resolve the deadlock can end up deepening it, as the sequence set out above illustrates. On that view, the Third Member ought to align with one or the other, and the reference is essentially a tie-breaker.

The judicial instinct pulls the other way. A Member of the Tribunal hearing a matter is not a voting machine. He hears the parties, applies his mind to the questions before him and records his conclusion. If he is told in advance that his conclusion must be one of two options already chosen by others, then the hearing before him is something of a formality, and the outcome is settled before he begins. What is he to do if he is persuaded that both the views before him are wrong? Is he expected to lend his signature to the view he considers less wrong, so that a majority appears on paper?

And there is a further difficulty. Even if one were attracted to the tie-breaker theory, the section itself does not say so anywhere. It is one thing to read a provision purposively; it is another to read into it an obligation on a judicial officer to adopt a conclusion he does not hold.

The question is not a new one. It has been fought under Section 392 of the Code of Criminal Procedure, 1973, under Section 255(4) of the Income-tax Act, 1961 and under Section 58(3) of the Consumer Protection Act, 2019, and the Supreme Court is presently seized of it in the criminal jurisdiction. Section 419(5) has escaped that attention only because NCLT Third Members have, until now, agreed with one or other of the Members who made the reference.

The scope of Section 419(5)

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

Read as it stands, the provision contemplates an independent adjudication by the Member to whom the reference is made, and not a choice between two ready-made opinions.[7]

The section provides that where the Members of the Tribunal differ on any point or points, the President shall refer the case for hearing on such point or points by one or more of the other Members of the Tribunal. The legislative intent underlying the provision is that the referred points are to receive an independent and fresh consideration at the hands of the Member to whom the reference is made. The word used is “hearing”, and a hearing carries with it everything that the expression ordinarily implies before a Tribunal.

Significantly, while the provision stipulates that the points of difference shall be decided according to the opinion of the majority of the Members who have heard the case, it nowhere contemplates that the Third Member, or the Member or Members hearing the reference, would be bound by the opinion or the reasoning of either of the Members constituting the original Bench. The Third Member is required to independently hear the parties, examine the issues referred, and arrive at his or her own conclusion.

The Third Member is therefore required to adjudicate upon the points of difference and to render an opinion of his own. That opinion may agree with the view of one of the Members who first heard the case, and it may equally differ from the views of both. Neither outcome is contrary to the section; both are open on its language.

What the courts have said

The point has been decided under Section 392 of the Code of Criminal Procedure, 1973, which sends a criminal appeal to a third Judge when the Judges composing the Court of Appeal are equally divided. In Sajjan Singh v. State of Madhya Pradesh, the Supreme Court held that the third Judge “is, therefore, required to examine whole of the case independently and it cannot be said that he is bound by that part of the two opinions” on which the first two Judges had agreed.[8] A third Judge who is not bound even by what the divided Bench agreed upon can hardly be bound by what it disagreed upon.

That decision has since been doubted. On 11 June 2026, in Dr. Rakesh Kumar Gupta v. State of Uttar Pradesh, the Supreme Court referred its correctness to a larger Bench, the first of the questions reserved being whether a third Judge must agree with one of the two opinions already recorded or may render an independent opinion differing from both.[9] The misgiving expressed was about a third Judge reopening findings on which the divided Bench had agreed, not about his freedom on the points on which it had not. Until the larger Bench answers the reference, Sajjan Singh holds the field.

The consumer jurisdiction points the same way. Section 58(3) of the Consumer Protection Act, 2019 is cast in terms close to Section 419(5). In December 2024 the Allahabad High Court read it narrowly, holding that the Member to whom points are referred “can only delve and decide on those questions alone, he cannot act as a 3rd member to decide the lis”.[10] The Supreme Court took a different view in Askari Hussain v. Dinesh Kumar.[11] While recording that a referee Bench should ordinarily return its answers to the Bench that made the reference, the Court held that where the questions referred went to the root of the complaint and were inseparable from the evidence on record, the third Member “necessarily, had to survey the entire gamut of material and the rival contentions raised before the referring Bench”, and that his having decided the appeal while answering the reference was no illegality.

The contrary line is narrower than it first appears. Under Section 255(4) of the Income-tax Act, 1961, the Allahabad High Court in Commissioner of Income Tax v. Sahara India Ltd. held that a Third Member is under a statutory duty to answer the points referred, and cannot leave some of them unanswered or treat the reference as a rehearing at large.[12] That confines the Third Member to the points referred. It does not tell him what to say about them.

The position that emerges is workable. The Third Member is bound by the reference, in the sense that he must answer the points referred and must not stray beyond them. He is not bound by the answers. Nothing in Section 419(5), or in any of the cognate provisions, requires a judicial officer to subscribe to a conclusion he does not hold so that a majority may appear on paper.

Where no majority emerges

That brings one to the harder case, which is the case the NCLT now has. Where the Third Member expresses an independent opinion and no majority results on the referred points, Section 419(5) does not prohibit a further reference to one or more Members for the limited purpose of securing a majority among the Members who have heard the case. The provision mandates that the points of difference shall be decided in accordance with the opinion of the majority of the Members who have heard the matter. It prescribes the result to be achieved. It does not confine the Tribunal to a single route to that result, nor does it suggest that the process is spent after one reference. A Tribunal is in any event to be taken to possess the powers incidental and necessary to the exercise of the jurisdiction conferred on it, as the Supreme Court held in Union of India v. Paras Laminates (P) Ltd.[13] Securing the very majority that Section 419(5) demands is as plain an instance of such a power as one could ask for.

Upon hearing a reference under Section 419(5), the Third Member may accordingly render an independent opinion concurring with the opinion expressed by either of the Members constituting the original Bench, or render an independent opinion differing from the opinions expressed by both of them. What the section requires of the Third Member is that the points referred must be answered, and answered in full; what it does not require is that they be answered in a particular way.

Conclusion

Section 419(5) has worked for a decade because Third Members have generally agreed with somebody. Dr. Subhash Chandra’s insolvency is the first occasion on which the mechanism has had to work when the Third Member did not, and it has not worked. Treat the Third Member as a tie-breaker and the hearing before him becomes a formality with a fixed menu, and his independence is compromised at the threshold. Treat him as a Member deciding the points referred to him and the possibility of a third view has to be accepted, along with the further reference needed to resolve it. The second reading is the one the language supports. The Supreme Court will have something to say about the cognate provision in the criminal jurisdiction when the reference in Dr. Rakesh Kumar Gupta is answered. Until then, Benches of the NCLT faced with a genuine three-way divergence will have to reason it out for themselves.

Notes

*Anuja Pethia, AOR, Swarnim Legal

**Rishabh Govila, Adv, Swarnim Legal

[1] Indiabulls Housing Finance Ltd. v. Dr. Subhash Chandra, C.P. (IB) No. 97/ND/2022, NCLT, New Delhi Bench, petition under Section 95(1) of the Insolvency and Bankruptcy Code, 2016.

[2] Order of the Division Bench dated 3 September 2025 (Ashok Kumar Bhardwaj, Member (Judicial), and Reena Sinha Puri, Member (Technical)).

[3] Order of the Third Member, Nilesh Sharma, Member (Judicial), dated 25 August 2026.

[4] Section 115(1), Insolvency and Bankruptcy Code, 2016.

[5] Order of the Bench dated 31 August 2026 referring the matter afresh to the President under Section 419(5) of the Companies Act, 2013.

[6] Order dated 1 September 2026 of the five-Member Bench constituted by the President; matter listed for 23 September 2026.

[7] Section 419(5), Companies Act, 2013.

[8] Sajjan Singh v. State of Madhya Pradesh, (1999) 1 SCC 315.

[9] Dr. Rakesh Kumar Gupta v. State of Uttar Pradesh, 2026 INSC 632, decided on 11 June 2026.

[10] Dr. Dinesh Kumar v. Askari Hussain, Matters Under Article 227 No. 901 of 2024, Allahabad High Court, order dated 27 December 2024.

[11] Askari Hussain v. Dinesh Kumar, 2026 INSC 929 : 2026 LiveLaw (SC) 871.

[12] Commissioner of Income Tax v. Sahara India Ltd., 2017 (1) TMI 1456 (Allahabad High Court).

[13] Union of India v. Paras Laminates (P) Ltd., (1990) 4 SCC 453.