Big Indian lenders like Union Bank of India (UK) Ltd, Canara Bank, and LIC Housing Finance are preparing for a legal battle. They have decided to challenge a recent decision by the National Company Law Tribunal (NCLT) regarding Zee Group Founder Subhash Chandra. The NCLT allowed a repayment plan where Chandra would pay only ₹6.5 crore, even though the total admitted claims against him are a massive ₹22,006.57 crore.

This decision means the banks would recover only 0.03 per cent of what they are owed. Because the recovery is so low, these public sector undertakings (PSUs) feel cheated. They are now moving to the National Company Law Appellate Tribunal (NCLAT), which is the higher court for company law cases, to ask for a fairer deal.

The trouble started with a personal insolvency (a legal process when an individual cannot pay their debts) case filed by Indiabulls Housing Finance. Union Bank stated that its UK subsidiary, along with Canara Bank and LIC Housing Finance, had already rejected this plan during the voting process. However, they were outvoted by a group of private creditors who held the majority of the voting power.

Canara Bank, which holds a 1.60 per cent voting share, voiced strong concerns about the process. The bank even demanded a forensic audit (a deep investigation of financial records to find fraud) of the accounts. This request was turned down because the PSU banks did not have enough voting power to force it. Now, the bank is firm on filing an appeal in the NCLAT to protect its interests.

Other major players are also involved in this dispute. LIC Housing Finance, which holds a 6.09 per cent voting share, confirmed it voted against the plan. Despite their opposition, the plan passed because other private creditors, who hold 80.81 per cent of the voting weight, gave it the green light. LIC HFL has stated it will join the other public institutions in filing the appeal immediately.

HDFC Bank is another lender looking at its options. The bank inherited a claim from the old HDFC Ltd, which makes up about 3.2 per cent of the total debt. HDFC Bank also voted against the settlement plan and is exploring legal ways to challenge the NCLT order. They are unhappy that a huge debt is being settled for such a small amount.

For Indian bank officers, this case is a significant example of the challenges in the Insolvency and Bankruptcy Code (IBC) process. It shows how minority creditors (lenders with smaller voting shares) can sometimes be forced to accept huge 'haircuts' (losses on the loan amount) if the majority agrees. The outcome at NCLAT will be closely watched by the banking community to see if the court protects the rights of public sector lenders.

The next step involves the NCLAT hearing the arguments from these banks. If the appellate tribunal agrees with the banks, the repayment plan could be scrapped or changed. Bankers and aspirants should watch for updates on whether the court orders a fresh audit or a better repayment terms for the lenders involved.