HDFC Bank said on Thursday, 27 August that it is exploring an appeal before the National Company Law Appellate Tribunal (NCLAT) after the National Company Law Tribunal (NCLT) approved a personal insolvency repayment plan for Essel Group founder Subhash Chandra that offers lenders a staggering 99.97 per cent haircut on admitted creditor dues of ₹22,006.57 crore. Under the approved plan, Chandra would pay just ₹6.5 crore to settle the entire admitted claim — one of the most extreme debt waivers sanctioned under India's insolvency framework.

What the NCLT Order Approved

The tribunal's resolution plan, passed under Section 114 of the Insolvency and Bankruptcy Code (IBC), was cleared by NCLT Member (Judicial) Nilesh Sharma, who was appointed as a third member after the original two-member bench delivered a split verdict. Sharma rejected objections raised by dissenting creditors who argued the recovery was too meagre to merit approval.

The plan proposes a payment of only ₹6.25 crore to creditors and ₹25 lakh towards process costs — against admitted claims of approximately ₹22,006.57 crore. The NCLT order itself recorded the submission of creditors that 'such a negligible repayment could not receive the approval of this tribunal,' yet the plan was cleared regardless.

HDFC Bank's Position

An HDFC Bank spokesperson clarified that the bank's admitted claim in the matter accounted for only 3.2 per cent of the total stated amount. 'HDFC Bank's admitted claim was only 3.2 per cent of the total stated amount. The Bank inherited this facility, which was previously provided by HDFC Limited,' the spokesperson said.

The bank added that the loan facility had already been provided for in its books and was inherited as part of the merger between HDFC Bank and HDFC Limited. 'The Bank is exploring filing an appeal at the NCLAT,' the spokesperson confirmed.

LIC Housing Finance Led the Dissent

LIC Housing Finance (LICHFL) was among the most vocal objectors. Its admitted claim stood at ₹1,322.39 crore, against which the proposed repayment was a mere ₹38,09,294 — approximately 0.028 per cent of its admitted dues. LICHFL had argued before the tribunal that the payout was 'unviable and unlawful,' but the third member overruled this position.

This is notable given that LICHFL led the dissenting creditor bloc, and its objections were formally recorded in the NCLT order before being rejected.

Broader Implications for IBC Creditors

The case raises pointed questions about the efficacy of personal insolvency proceedings under the IBC for large-scale debtors. Critics argue that a 99.97 per cent haircut effectively renders the resolution process meaningless for institutional lenders, who are left with negligible recoveries after years of litigation. This comes amid broader concerns in banking and legal circles about the asymmetry between corporate and personal insolvency outcomes in India.

If HDFC Bank proceeds with its NCLAT appeal, the case could set a significant precedent for how personal insolvency plans involving large admitted claims are scrutinised at the appellate level. A ruling from the NCLAT would be closely watched by banks and financial institutions across the country.