Mumbai: The National Company Law Appellate Tribunal (NCLAT) has stayed the National Company Law Tribunal (NCLT) order directing the lenders of Dewan Housing Finance Ltd (DHFL) to consider the offer by Kapil Wadhawan, the company’s erstwhile promoter. The appellate tribunal also said the appeal should not delay the resolution process currently underway, where the Piramal Group has received the approval to acquire DHFL.
On Monday, the committee of creditors led by Union Bank, and the Reserve Bank of India appointed administrator filed separate applications challenging the Mumbai bench of the NCLT that asked them to evaluate the offer by Wadhawan in the next 10 days. In its appeal, the administrator has termed the NCLT order as “illegal and in breach of settled provision of law”. “The Impugned Order passed by the Hon’ble Adjudicating Authority has been passed without application of mind and without considering facts of the present case,” said the administrator’s appeal.
On 19 May, the NCLT directed lenders to put up the offer to fully settle the mortgage lender’s ₹91,000 crore dues, including ₹43,000 crore in the initial few years, for its “consideration, decision, voting”. The CoC in its appeal said that the NCLT order has been passed without any jurisdiction as there is no provision in law or more specifically under the Code.
“Incorrectly failing to recognise any legal basis, either under Section 29A or Section 12A, which underlay the Second Proposal (Wadhwan’s offer), instead choosing to simply accept Respondent 1’s (Kapil Wadhawan) baseless statement that this was a “precursor” to a settlement proposal under Section 12A of the Code: a concept not recognised under any provision of law,” the administrator’s appeal added
Section 29 A bars promoters from submitting a resolution plan, while Section 12 A deals with withdrawing the company from bankruptcy proceedings, with 90% of the CoC supporting the resolution and the withdrawing application being filed by the applicant.
“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 Respondent 1, which the CoC in its commercial wisdom had chosen not to,” the administrator’s appeal said.
Lenders on the other hand believe that the order could set a bad precedent with more promoters moving the court asking CoC to consider their offer.
“That if the Impugned Orders were allowed to operate, it would be extremely prejudicial as it creates a new process which is contrary to the express provisions of the Code and if allowed the CIRP of a corporate debtor will be a never ending process where parties will be permitted to keep making new offers, without any regard to the sanctity of the process or timelines, including after the CoC has already exercised its commercial wisdom and approved a resolution plan which has been submitted by an eligible resolution applicant in compliance with the Code, related regulations and the process relating to the insolvency resolution of the relevant corporate debtor,” the lenders’ appeal said
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