In personal insolvency case before NCLAT, Subhash Chandra opposes formation of 5-member NCLT bench

Essel Group Chairman Subhash Chandra on Wednesday (September 2, 2026) opposed the formation of a five-member bench by the National Company Law Tribunal (NCLT) to decide his personal insolvency case, contending that the tribunal does not have the power to constitute such a bench.Also read | NCLT five-member Bench stays approval of Subhash Chandra’s ₹6.25-crore payout against ₹22,006-crore claimsAppearing for Mr. Chandra before the National Company Law Appellate Tribunal (NCLAT), Senior Advocate Sasmit Patra termed the NCLT order "faulty and wrong" and said, "they are not empowered" to form a five-member bench.Mr. Patra submitted that the five-member bench had on Tuesday (September 1) stayed the order of Nilesh Sharma, Member (Judicial), who was brought in as the third member after a division bench of the NCLT delivered a split verdict.NCLT on Tuesday (September 1) barred Essel Group Chairman Mr. Chandra from alienating his assets and stayed an order allowing him to settle claims arising from personal guarantees on group borrowings for about ₹6.5 crore, against claims of roughly ₹22,006 crore."Under which power" it was stayed, and "when did this five-member bench sit together? What proceedings were conducted that led to this five-member bench taking only one order?" Mr. Patra argued.Solicitor General Tushar Mehta, representing dissenting creditors such as LIC Housing Finance, Canara Bank and Union Bank submitted that the petition filed against the third member's order "may be disposed of with liberty to revive" since some respondents could challenge the reference itself.He said the case involved "very peculiar circumstances" as it had thrown up "three views" that were "divergent to each other," making it fit for a larger bench to examine the issue.However, Mr. Patra opposed it and said the orders by Ashok Kumar Bhardwaj, Member (Judicial), and Nilesh Sharma were aligned on the repayment plan and eligibility issues.The first order by Ashok Kumar Bhardwaj, Member (Judicial), is clear, along with that of Nilesh Sharma, when it comes to the repayment plan."Both are equally on the same page as far as Section 79 is concerned on eligibility. Therefore, to say all these issues have to be re-litigated is completely wrong. The scope of 419 (5) (of the Companies Act, 2013) is very limited," Mr. Patra said, adding that 419 (6) says if there is a differing view, then that differing view has to be taken up by another member or other members."It does not give power to the NCLT under the IPC or company law to form a five-member bench. Under which authority, which power, then there is a five member bench," he questioned.The NCLT on Monday (August 31) formed a five-member bench that stayed the operation of Nilesh Sharma's order on Tuesday (September 1) after issuing notice to all parties and listing the matter for the next hearing on September 23, 2026.This dispute reached the appellate tribunal NCLAT, where dissenting lenders have challenged the order of the third member.On Wednesday (September 2), Mr. Mehta informed a three-member NCLAT bench to dispose of the appeal as the five-member NCLT bench had on Tuesday stayed the order of the third member — the tie-breaker judge Nilesh Sharma.However, Mr. Patra contended that the five-member NCLT bench should have stayed all three orders passed, including the split verdict of the division bench.He also opposed the Solicitor General's plea to withdraw the appeal.Officiating Chairperson Justice Yogesh Khanna, heading the NCLAT bench, then observed that the constitution of the five-member bench was "not a question before challenge for us." Mr. Mehta responded by suggesting that Mr. Chandra's side be allowed to challenge that order separately while his own appeal remained pending, saying he had "no difficulty" with that course. The NCLAT bench, however, said this could not be permitted.Mr. Patra told NCLAT that Mr. Chandra has been vilified across the country over a proposed payment of ₹6.5 crore against admitted creditor claims of ₹22,006 crore even though no final order approving the repayment plan currently exists.On this, Mr. Mehta said: "This forum cannot be used for saying something outside the court... this forum is being used to say something which will be printed tomorrow in the media. This is not the forum."Consenting with them, the NCLAT bench said: “If you have any grievances, the matter is pending before NCLT; you raise grievance right there."Mr. Mehta decided not to press the withdrawal applications and requested that the appeals remain pending. The NCLAT agreed and directed that the petitions be listed for next hearing on October 7.