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DHFL resolution: SC to hear Piramal Group, top banks’ appeals on Tuesday


Money & Banking

Some top banks and Piramal Group had made separate appeals before SC

 The Supreme Court will Tuesday together hear the separate appeals of both Piramal Group and certain top banks in the erstwhile DHFL resolution matter. 

The matter will come up on Tuesday and has also been listed in the SC’s cause list, sources said.

It may be recalled that the apex court had on April 11 stayed the National Company Law Appellate Tribunal’s (NCLAT) order that ruled a stipulation in the DHFL resolution plan as “illegal”, on recovery of avoidance transactions.

An SC bench headed by Chief Justice of India N V Ramana had also then issued a notice on separate appeals filed by the Piramal Group firm as well as some top banks forming part of the Committee of Creditors (CoC) in the erstwhile DHFL’s resolution matter. It had then posted the case for hearing on May 5.

The Piramal Group had moved the apex court against the NCLAT ruling in the 63 moons challenge. NCLAT had — in the matter of the 63 moons challenge — in January 2022, set aside the term in the DHFL resolution plan permitting Piramal Group (successful resolution applicant) to appropriate recoveries from avoidance transactions. 

Piramal Group, which had acquired DHFL last September, filed the appeal in the Supreme Court on February 16, and the case was registered on February 25.

NCLAT had, in the 63 moons challenge order in January, sent the authorised resolution plan back to the CoC to reconsider this aspect of the valuation of avoidable transactions about the recoverable belongings.

As part of the resolution plan, the CoC agreed to Piramal Group getting all future recoveries of bad loans (amounting to about ₹38,000 crore) falling under avoidance transactions and accepted ₹1 from Piramals as the value assigned for such a benefit. 63 moons (one of the creditors with ₹200 crore invested in DHFL NCD’s) had challenged this CoC decision.

63 moons had argued before the adjudicating authorities that the Piramal Group could not appropriate all recovery from the vast amount of DHFL loans listed in ‘avoidance applications’ under Section 66 of the IBC.

NCLAT had ruled this stipulation as “illegal” and noted that all recoveries on avoidance transactions should go for the benefit of only the creditors and not the successful resolution applicant. In bidding for DHFL, the Piramal group had not factored in any recoveries from avoidance transactions. It was argued that there would be minimal recovery and, hence, a value of one rupee was ascribed to this large outstanding.

Under the IBC, “avoidance transactions” are recognised as undervalued, fraudulent or extortionate by the previous promoter.

In March this year. Several top banks forming part of the CoC in the erstwhile DHFL’s resolution matter had knocked on the doors of the Supreme Court in an appeal against the NCLAT order that had given the entire set of financial creditors a seemingly better deal than what the CoC had agreed for in the resolution plan.

The banks that went for an appeal against the NCLAT’s January 2022 order include Union Bank of India (on behalf of itself), State Bank of India, Bank of India, Canara Bank, Punjab National Bank and the Central Bank of India.

Published on May 09, 2022

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