DHFL Case: NCLAT Asks Committee of Creditors To Consider 63 Moon’s Petition
Moneylife Digital Team 27 January 2022
The National Company Law Appellate Tribunal (NCLAT), on Thursday, asked the committee of creditors (CoC) of Dewan Housing Finance Corp Ltd (DHFL) to consider the petition of 63 moons technologies ltd (63 moons) (formerly Financial Technologies (India) Ltd). 63 moons holds over Rs200 crore worth of non-convertible debentures (NCDs) in DHFL. 
 
In the order, the bench of justice M Venugopal (acting chairperson), VP Singh (member- technical) and Dr Ashok Kumar Mishra (member-technical), says, "...the present appeals ought to be allowed. The term in the resolution plan that permits the successful resolution applicant to appropriate recoveries, if any, from avoidance applications filed under section 66 of the Insolvency and Bankruptcy Code (IBC) ought to be set aside. The resolution plan be sent back to the CoC for reconsideration on this aspect."
 
In its petition, 63 moons has alleged that Piramal Capital and Housing Finance Ltd has ascribed Re1 value against the assets worth Rs40,000 crore diverted fraudulently by the Wadhawans, erstwhile promoters of DHFL.
 
In a release, 63 moons says, “With this order, now the CoC have to reconsider the provision of section 66 of (IBC), which mandates that the benefit should go to all the creditors of DHFL. However, the CoC had, in its resolution plan, overlooked this provision to the benefit of the Piramal group. If CoC considers this without alteration of provision of section 66 of IBC, all creditors of DHFL will be benefited. 63 moons is the only company which challenged the decision of CoC in NCLAT.”
 
In a regulatory filing, Piramal Enterprises Ltd, the parent of Piramal Capital & Housing Finance, says, "With reference to the Piramal's resolution plan, most appeals filed by several parties before the NCLAT against Piramal's approved DHFL resolution plan were disposed off on 27 January 2022. In the case of one of the appeals, which was limited to the extent of challenging the distribution of proceeds (if any) from fraudulent transactions to the benefit of the resolution applicant, NCLAT has ordered it to be re-considered by the CoC."

"We have analysed the detailed judgment of the NCLAT and consulted our legal advisors. We are confident and will continue to pursue the matter as multiple legal options are available to us for our future course of action, including approaching the Apex court. The DHFL acquisition by Piramal group remains unaffected and the business integration continues as envisaged," it added.
 
Earlier in September last year, Piramal completed the acquisition of DHFL for Rs34,250 crore, which includes a cash component and NCDs. It had upfront cash of Rs14,700 crore and NCDs of Rs19,550 crore. The NCLT-approved plan shows 93.65% of financial creditors voted in favour of Piramal Capital & Housing Finance’s Rs37,250 crore resolution plan.
 
DHFL also marked the first instance of a finance company being referred to the IBC (Insolvency and Bankruptcy Code, 2016) process. At over Rs40,000 crore, the case had the highest ever public exposure to its liabilities because it enjoyed a high AAA credit rating almost until the collapse. 
 
Piramal Capital & Housing Finance says, it has retained over 3,000 employees of the DHFL and is also adding over 2,000 new jobs in the merged entity.
 
 
Comments
r_ashok41
5 months ago
It is very clear that Piramal group and the coc are hand in glove with this and they would definitely be getting a part of it as and when it happens and since all NCD investors are small people and spread all across india and do not have much say and for namesake coc did a due diligence .The least coc could have done was whoever gives a better deal for the 40K crores should be considered and also say an amount of 5 lakh all ncd investors will get their complete money.
Kamal Garg
Replied to r_ashok41 comment 5 months ago
With all my modesty and restraint and to say the least, it has been a big fraud on not only the NCD holders but even to equity holders also.
david.rasquinha
5 months ago
Three points to ponder .
1. I agree that 40K crore and Rs. 1 are miles apart and the valuation sounds strange. BUT. If the 40K crore book is worth far more than Rs. 1, how is it that nobody else bid a better price for the book? Ultimately the market sets the value.
2. How many times will the SC have to rule that the COC's decision on commercials is not to be questioned or second-guessed by the courts?
3. How long will it take for our courts to understand that a quick resolution, even if less than perfect, offers more value than a perfect resolution that is stretched out for years?
Kamal Garg
5 months ago
In most people's view, assigning a value of Re 1 to an overall assets of Rs. 40,000 crores was definitely a fraud and further to completely write-down/extinguishment of entire share capital and assigning a zero value was also a big fraud.
r_ashok41
5 months ago
63 moons have been telling the same earlier also and good to see NCLAT has reopened the same.COC and Piramal group should be taken to task for conniving with each other to dupe the investors.This sort of action by them should be penalised so that tomorrow once again the same does not happen .
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