DHFL moves Bombay High Court to seek discharge in CBI case

4 months ago 28

Dewan Housing Finance Corporation Ltd (DHFL) has approached the Bombay High Court seeking discharge in the cheating and corruption case, which was registered by the CBI and involves promoters, Kapil and Dheeraj Wadhawan, and Yes Bank founder Rana Kapoor.

What does DHFL say

After being booked by the CBI, DHFL had earlier appealed before the National Company Law Tribunal (NCLT) in Mumbai, through the Corporate Insolvency Resolution Process (CIRP), under the Insolvency and Bankruptcy Code (IBC).

Piramal Capital, which emerged as the successful Resolution Applicant, along with DHFL, was approved by the NCLT. The tribunal also approved a change in DHFL management in favour of Piramal Capital.

The new group wanted the company to be discharged from the case and had, thus, filed a plea before the special court in Mumbai. The special court had observed that the NCLT had approved the change in DHFL management. The court also said that there was no evidence to infer that Piramal Capital had abetted or conspired in the commission of the offences which form the subject matter of the CBI Case.

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However, the court had still refused to discharge the company looking at the strong opposition from the CBI. The court had concluded that DHFL would be prosecuted through its promoters, the Wadhawans, who had allegedly been at the helm of affairs at the time of the commission of the alleged offence, despite being ousted by the RBI in 2019.

It is against the special court order that DHFL approached the Bombay High Court. Advocate Ravi Kadam, appearing for the company, argued, "Section 32A of the IBC laid down a mandate for the Corporate Debtor to be absolved of liability from all criminal offences committed prior to commencement of CIRP from the date of approval of the Resolution Plan."

DHFL plea stated that the impugned order served no purpose other than delaying or derailing the implementation of the resolution plan "which seeks to repay the creditors of the company".

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What does CBI say

Advocate Hiten Venegaokar, appearing for the CBI, submitted that the plea was not maintainable as the Wadhawan brothers had not been arraigned as "necessary respondents". Venegaokar informed the Court that the order of the NCLT approving the CIRP was under challenge before the National Company Law Appellate Tribunal (NCLAT).

"Since the appeal has not attained finality yet, Section 32A of the IBC is not attracted, which seems to be the basis for seeking discharge," said Venegaokar.

He concluded, "There is no error of law or lack/excess of jurisdiction by the court, and in any case, there existed an alternate remedy against the impugned, hence the petition was not maintainable."

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Piramal's points

Piramal also filed a companion petition seeking discharge of DHFL as the successful resolution applicant after having made the highest bid of Rs 37,000 crores. Senior Advocate Abad Ponda, appearing for Piramal, adopted Kadam's submissions on the legal provisions of Section 32A of IBC. He submitted that after having made the bid, Piramal was entitled to get a "clean slate" company and the NCLT order enabled that. He added that even though the NLCAT proceedings were to attain finality, there was no stay on the CIRP approval order.

An intervention was also sought in the plea by Kapil Wadhawan. However, due to a paucity of time, Justice Sandeep K Shinde adjourned the matter for a hearing on September 27, 2021.

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