The National Company Law Appellate Tribunal stayed an order that directed creditors of Dewan Housing Finance Corp. to consider a settlement offer by its promoter Kapil Wadhawan.
The National Company Law Tribunal’s Mumbai bench last week asked the Committee of Creditors to consider and vote on the offer by Wadhawan within 10 days. According to the NCLT’s order, since the settlement proposed to pay over Rs 91,000 crore to the financial creditors, which is higher than the Rs 37,250-crore offer by winning bidder Piramal Group, the financial creditors must duly consider the proposal.
DHFL’s CoC led by the Union Bank of India, the Reserve Bank of India-appointed administrator and the Piramal group, the successful bidder in the ongoing IBC proceedings of DHFL, filed an appeal in the NCLAT.
Solicitor General of India Tushar Mehta, arguing on behalf of the CoC, opposed the NCLT order. He said neither the NCLT has the powers to pass such an order, nor the CoC has the power to consider the offer.
The statute doesn’t contemplate settlement proposal by a promoter of a financial company and the inherent jurisdiction of the tribunal can never overtake the statutory mandate, the Solicitor General told the NCLAT bench.
Senior Advocates Shyam Divan, Ravi Kadam and Abhishek Manu Singhvi joined the Solicitor General in opposing the NCLT order.
“There’s been a complete ambush by the promoter. Which zoo does this animal belong to? It’s neither a settlement proposal nor a resolution plan,” Singhvi argued.
Senior Advocate Sudipto Sarkar, representing Wadhawan, told the bench the key objective for the offer was maximising value. He pointed out that 65% of the creditors of the company are small depositors and the proposal by Wadhawan will pay them in full.
The NCLAT bench, however, issued a notice and stayed the NCLT order. The NCLAT bench comprising Justice AIS Cheema and VP Singh will now take up the case next on June 25.