SC upholds Piramal Capital’s DHFL resolution plan

The Supreme Court on Tuesday upheld Piramal Capital and Housing Finance Limited’s resolution plan for Dewan Housing Finance Corporation Limited (DHFL) and set aside a decision of the National Company Law Appellate Tribunal (NCLAT) of January 2022.

“The judgment dated January 27, 2022 passed by the NCLAT is set aside. The judgment dated June 7, 2021 passed by the Adjudicating Authority/ NCLT [National Company Law Tribunal] granting its approval to the Plan Approval Application, and thereby approving the resolution plan, is upheld,” the court held.

A Bench of Justices Bela M. Trivedi and S.C. Sharma further ordered that monies related to the fraudulent or wrongful trading, recovered under Section 66 of the Insolvency and Bankruptcy Code (IBC), must be paid to Piramal Capital, the successful resolution applicant.

The court directed the NCLT to decide the avoidance applications filed by the Administrator under Sections 43 (preferential transactions of which the corporate debtor or DHFL is a party), 45 (undervalued transactions) and 50 (extortionate credit transactions) of the IBC.

While directing the NCLT to separately decide the applications under Section 66 (fraudulent or wrongful trading) of the IBC, the court directed that recoveries from the avoidance applications would be appropriated in favour of the Committee of Creditors (CoC) of DHFL, while those accrued from the Section 66 proceedings would be given to Piramal Capital.

The 145-page judgment authored by Justice Trivedi was based on a challenge filed by Piramal Capital against the NCLAT judgment.

Piramal Capital had specifically appealed to the top court against the NCLAT’s decision to modify the resolution plan to the extent that recoveries made under Section 66 of the IBC must be sent back to the CoC.