Canara Bank, Union Bank of India, and LIC Housing Finance have decided to fight a new legal order. The National Company Law Tribunal (NCLT) recently approved a repayment plan for Subhash Chandra, the founder of Essel Group. These banks are now moving to the National Company Law Appellate Tribunal (NCLAT) to challenge this decision. They believe the current settlement does not protect the interests of the lenders.

The case is about personal guarantees given by Subhash Chandra for loans taken by companies linked to the Essel Group. A personal guarantee is a promise where an individual agrees to pay back a loan if the company fails. The NCLT order allows Chandra to pay just Rs 6.25 crore to settle the matter. Additionally, Rs 25 lakh will be paid towards the costs of the insolvency process. This is a very small amount compared to the total claims.

According to reports, the admitted claims against Chandra stand at a massive Rs 22,006.57 crore. This means the proposed repayment is only a tiny fraction of what is actually owed to the banks. Canara Bank, which holds a 1.60% voting share in the creditors' group, was the first to announce its opposition. The bank even asked for a forensic audit (a deep check of financial records to find fraud), but the request was turned down because Canara Bank is a minority voter.

The plan was originally passed because 80.81% of the creditors voted in favor of it. In the insolvency process, decisions are made based on the majority of voting power. However, the banks that voted 'No' feel the deal is unfair to public taxpayers. Union Bank of India (UK) and LIC Housing Finance have joined Canara Bank in this legal battle. They want the NCLAT to set aside the lower court’s approval.

Subhash Chandra has defended his position through a public statement. He argued that the Rs 22,000-crore figure is being shown in a wrong way. He said he did not borrow this money personally for his own use. Instead, these are claims arising from corporate guarantees. He also claimed that the lenders who are actually opposing him represent a debt of around Rs 3,992 crore, not the full Rs 22,000 crore amount.

For bank officers, this case is very important for the future of recovery. It shows how personal guarantees are handled when big corporate groups fail to pay. If such small settlements become common, it might be harder for banks to recover public money from rich promoters. Bankers should watch if the NCLAT stays (stops) the current order or asks for a higher repayment amount.

The next steps will depend on the NCLAT hearing. The banks are expected to argue that the recovery amount is too low and that the audit request should have been granted. This case will set a big example for how the Insolvency and Bankruptcy Code (IBC) handles high-profile individual cases in India. Aspirants should note how voting shares work in these legal meetings.