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His name has been sent to the Indian embassy in Washington, DC for confirmation -- a compulsory requirement for all civilian honours -- the source told rediff.com
The Padma Bhushan -- the nation's third highest civilian honour after the Bharat Ratna and Padma Vibhushan -- is awarded to individuals with exceptional track records like historians Irfan Habib and Ramchandra Guha and management guru C K Prahalad.
This reporter could not confirm the information, but if true, the news may generate controversy.
Chatwal has been accused in the past of financial irregularities including not repaying Indian bank loans and unpaid taxes in the United States where he lives.
Close to former US president Bill Clinton and his wife, current Secretary of State Hillary Clinton, Chatwal reportedly raised 'hundreds of thousands of dollars' for Hillary's presidential campaign after 'being forced into bankruptcy' in the US in 1995, according to the Washington Post newspaper.
A retired diplomat who has served in India's embassy in the US, felt an award to Chatwal would be a "mockery of the spirit of the Indian Republic."
"The nation would be rewarding a man who has faced serious cases of financial irregularities," the former diplomat said. "It shows that not talent or service, but political connections gets you such awards."
Chatwal -- a guest at US President Barack Obama's state dinner for Prime Minister Manmohan Singh at the White House last November -- is said to be quite close to the current ruling establishment in New Delhi.