DHFL Case : NCLAT Stays NCLT Order Directing Lenders to Consider Kapil Wadhawan's Proposal
Moneylife Digital Team 25 May 2021
In a major relief for the Piramal group, the Reserve Bank of India (RBI) appointed DHFL administrator and the lenders, the National Company Law Appellate Tribunal (NCLAT) has stayed the earlier order issued by Mumbai bench of National Company Law Tribunal (NCLT). The Mumbai bench NCLT  had directed lenders of beleaguered Dewan Housing Finance Ltd (DHFL) to consider to consider the former promoter Kapil Wadhawan's settlement offer.  Piramal group, which had won the bid for DHFL had also separately moved NCLAT to challenge the NCLT order. Kapil Wadhawan is currently in judicial custody for his alleged misdeeds. 
On Tuesday, the division bench, headed by Justice AIS Cheema and VP Singh in an oral order stayed the directive passed by the NCLT’s Mumbai bench on 19th May. 
The NCLAT has also agreed to hear pleas by the Committee of Creditors (CoC) and DHFL's RBI-appointed administrator and the Piramal Group challenging the Mumbai NCLT order. The pending appeals will be heard on 25th June 2021. NCLAT  has also clarified that its order or the pending appeals should not come in the way for NCLT to decide the approval of the plan (Piramal’s plan) selected by the CoC of DHFL. Piramal’s resolution plan is currently awaiting the final nod from the NCLT. 
It may be recalled that R Subramaniakumar, the RBI-appointed administrator for DHFL, and the lenders had yesterday moved the NCLAT against the NCLT order. The tribunal had given the CoC a period of 10 days to consider his offer and come back to the court with its decision by 31st May.
In January this year, the CoC voted in favour of selling DHFL to the Piramal group under the bankruptcy process. The NCLAT's direction today came over an urgent petition moved by the Union Bank of India on behalf of the CoC of DHFL. 
In its appeal before the NCLAT, Piramal group pointed out that NCLT had reserved judgement in granting nod to Piramal resolution plan in January 2021. In its appeal, the Piramal group affirmed that the NCLT order will cause havoc and destroy the Insolvency and Bankruptcy Code (IBC) fabric and, hence, it must be stayed. It was also noted that Mr Wadhawan's proposal is neither a settlement offer, nor a resolution plan. Lenders too have written an appeal along similar lines.
In his appeal to NCLAT filed late on Sunday night, the DHFL administrator had also questioned the timing of the NCLT order. The appeal says “The impugned order has the effect of creating a disruption from the strict discipline of the timelines set out under the CIRP and has the effect of compelling the CoC to vote on a settlement proposal offered by Kapil Wadhawan, which the CoC in its commercial wisdom had chosen not to”.
DHFL had gone bankrupt in 2019 with more than Rs 90,000 crore in debt to various lenders, including banks, mutual funds and retail investors who invested in the company’s fixed deposits (FDs) and non convertible debentures (NCDs).
DHFL’s lenders have been reluctant to consider Mr Wadhawan’s offer after careful consideration of the legal advice from their counsel. Lenders have also cited lack of credibility. Wadhawan too has not sent any formal proposal with valuations attached to proposed asset sales.  
Kamal Garg
3 years ago
Market grapevine suggests many other things which are non-verifiable as of now, probably, would never surface. The fact is that this intervention by NCLT at such late stage when all the concerned regulators/agencies have already approved the resolution plan, gives credence to the veracity of market grapevine.
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