Canara Bank, Union Bank of India (UK) Ltd and LIC Housing Finance Ltd are set to challenge the National Company Law Tribunal’s (NCLT) approval of a repayment plan proposed by Essel Group founder Subhash Chandra, opening a fresh legal front over claims linked to personal guarantees he provided for corporate borrowings.

The three lenders said on Saturday (29 August) that they had opposed the plan, which provides for ₹6.25 crore to be distributed among creditors and another ₹25 lakh towards insolvency process costs. The plan was approved by the NCLT on August 25 despite objections from several financial creditors.

The lenders now plan to approach the National Company Law Appellate Tribunal (NCLAT), arguing against the approval of the repayment proposal.

The bank also said it had sought a forensic audit in connection with the proceedings. According to Canara Bank, however, its request could not be taken forward because it held only a minority share of the voting rights.

LIC Housing Finance said it would file an appeal along with other public financial institutions.

The lenders said the repayment plan received approval because financial creditors holding 80.81% of the voting share supported it.

The dispute therefore centres not only on the amount proposed to be paid, but also on the creditor voting process through which the plan secured the required backing.

The proceedings concern personal guarantees provided by Chandra for borrowings raised by companies linked to the Essel Group. The ₹22,006.57 crore figure therefore relates to claims arising from those guarantees, rather than money that Chandra has said he personally borrowed from lenders.

Chandra addressed this distinction in a public statement issued on Thursday, rejecting the portrayal of the ₹22,000 crore figure as personal borrowing.

He has also disputed the size of the claims being attributed to him, saying lenders opposing the repayment plan have claims of around ₹3,992 crore rather than ₹22,000 crore.

Chandra has maintained that the group remains committed to settling its outstanding obligations.