FINANCIAL ABUSE OF THE DHFL VICTIMS BY THE RBI: SECOND COMPLAINT TO THE NHRC

Posted on 25/10/2022

Updated on 04/11/2022

Following our previous complaint to the NHRC against the Apex Court of India⤡, on 25/10/2022, another complaint (Diary No. 17901/IN/2022, case no. 4642/25/5/2022) was filed before the National Human Rights Commission (NHRC), India, by pointing out the curtailment or gross violation of business-related human rights (as guaranteed by the United Nations Guiding Principles under the purview of international law ) in the context of the DHFL scam. The complaint provided a brief summary of the DHFL scam along with a prayer for reinstating or restoring the basic financial rights of the small depositors, viz., the FD and NCD Holders. The complaint has been addressed to the Governor of the Reserve Bank of India, for necessary action.

(Though we know that the appeal, on behalf of all the FD & NCD holders, will soon be disposed of by the NHRC; even so, it will make it easier for us to approach the OHCHR.)

A copy of the complaint (in PDF) is provided as follows:

The relief sought on behalf of all the FD and NCD Holders of DHFL is given as follows:

I wish to claim my business related human rights guaranteed by the UN Guiding Principles on Business and Human Rights, the Access to remedy for victims of business related abuses, in the context of financial abuse committed by RBI appointed DHFL CoC. NCLAT declared CoC as contrary to law on 27.01.22, but the SC stayed the order on 11.04.22. I demand the repayment of my principal amount with interest along with compensation for infringing human rights of all the victims.

A supporting document was also attached therewith:

Further updates on the complaint filed shall be provided accordingly.

See Also:

Demanding Expulsion of Mr. Shaktikanta Das, Governor, The Reserve Bank of India: A letter to the President of India VIEW HERE ⤡

N.B: THE ABOVE TEXT OF COMPLAINT IS ALSO BEING PROVIDED BELOW FOR YOUR CONVENIENCE:

The Honourable High Court of Bombay in the case of Reliance Nippon Life Insurance v/s DHFL passed orders (30.09.2019—10.10.2019) that restrained the Dewan Housing Finance Corporation Limited (DHFL) from making payments to any of its secured/unsecured creditors, including the payments to any fixed deposit and NCD holders. DHFL was paying its FD and NCD holders till that time. Under Section 45-IE (I) of the Reserve Bank of India Act, 1934, the Indian central bank removed the board of directors of the DHFL. The reasons cited by the banking regulator for the dismissal of the DHFL board of directors were: inadequate governance and the various defaults on its payment obligations.

The Reserve Bank of India vide its Order No. DOR NBFC(PD) 986/03.10.136/2019-20 dated 20th November, 2019, superseded the Board of Directors of Dewan Housing Finance Corporation Ltd. under Section 45 IE of the Reserve Bank of India Act, 1934; and appointed Shri R. Subramaniakumar as its Administrator with effect from 20th November 2019. The RBI had also, by its press release dated 22 November 2019, constituted a 3-member committee under Section 45 IE of the Reserve Bank of India Act, 1934, to act as advisors to the Administrator, who is also the resolution professional under the Insolvency and Bankruptcy Code (IBC 2016).

On 03/12/2019, CIRP was initiated by an order of the NCLT (C.P. (IB)-4258/MB/2019). DHFL’s erstwhile promoter Kapil Wadhawan offered to repay DHFL’s creditors in full on 14/12/2020. The RBI-appointed Committee of Creditors (CoC) for DHFL rejected it almost immediately (cf. “Bankruptcy will not void personal guarantees”: The Hon’ble Supreme Court. 21/05/2021).

Between 03.12.2019 and 17.01.2021, 19 consecutive meetings were conducted by the RBI-appointed CoC within the pandemic. Competing bidders included the Adani Group, Oaktree Capitals, Piramal Group etc. The Resolution Plan submitted by Piramal Group was finally approved by the RBI-appointed CoC on 15/01/2021, avoiding highest bidder Oaktree Capitals. Previously on 03/12/2021, Oaktree Capitals alleged bias/partiality of the RBI-appointed CoC in favour of the Piramal Group. Wadhawan reiterated his offer for 100% repayment, but it again fell on deaf ears. Throughout the official process, the RBI remained but a silent, passive spectator.

Piramal’s deal marked the decisive financial deprivation of the FD and NCD holders, as their life savings were taken away. The small investors of DHFL thus deprived of their financial rights includes senior citizens, physically challenged persons, ailing patients and widows of the Indian Army personnel. Many of the small investors depended greatly on the interests given by DHFL to get their basic means of subsistence, especially during the pandemic and the economic downfall that the country witnessed in the past couple of years. Following the approved resolution plan, the FD Holders were to only get 23% of their total investment.

Consequently, the RBI approved the Resolution Plan of Piramal (18/02/2021).  

On 19/05/2021, the NCLT ordered the CoC for DHFL to reconsider DHFL’s erstwhile promoter Kapil Wadhawan’s offer of 100% repayment within 10 days. NCLAT set aside NCLT’s order after the Union Bank of India and Ajay Piramal approached the NCLAT with an urgent petition. The RBI-appointed CoC did not even bother to answer the NCLT and thus evidently committed a contempt of the court. On 07/06/2021, NCLT approved the resolution plan of the Piramals, going against its own previous verdict. On 14/06/2021, DHFL’s shares got delisted on BSE & NSE.

On 03/08/2021, the Standing Committee of the Parliament of India on Finance raps IBC over unsustainable haircuts, said that 13,000 cases worth Rs 9 lakh crore were pending. The committee recommended that the design and implementation of IBC must be revisited and a benchmark must be set for the quantum of haircuts. Thus, the conduct of CoCs under IBC got questioned.

Thereafter on September 2021, Piramal Capital and Housing Finance started disbursing merely 23% of the total FD amount to the respective FD Holders of DHFL, the rest of the amount going for a major haircut. All this was done on the basis of the RBI and NCLT (second order) approval of the Resolution Plan.

On 27/01/2022, the NCLAT ordered the DHFL-CoC to consider 63 Moons Technologies’ plea and reconsider its resolution plan in favour of Piramal accordingly. The order clearly declared that the RBI-appointed Committee of Creditors’ (CoC) decision to approve the resolution plan of the beleaguered DHFL was “contrary to law” and the plan containing an “illegal” stipulation on recovery of avoidance transactions is not sustainable. The 63 Moons made its appeal on the basis of Section 66 of the IBC, which, according to the 63 Moons, provides for the “benefit of all the creditors” in the long run. The case questioned the deal of Piramal’s resolution plan, wherein the approx. 45k crore worth of assets of DHFL were bought by paying only a rupee. Hence, the RBI Approval of the “illegal” resolution plan is also at stake, following the NCLAT second verdict.

Piramal approached the Supreme Court on 1st March, 2022, challenging the NCLAT Second Order, followed by Mr. Wadhawan, who approached the Supreme Court with his previous offer for repayment that was rejected by the RBI-appointed CoC.

The Supreme Court stayed the NCLAT Second Order on 11/04/2022. Despite the NCLAT order about the illegality of the DHFL CoC, the apex court of India stayed the said order upon hearing Piramal Group’s petition.

Interestingly enough, the government appointed four independent & unofficial directors on RBI central board on 11/08/2022, perhaps due to the incompetency of RBI Governor Mr. Shaktikanta Das (MA History)!

The stay order of the apex court of India thus completely violated the United Nations Guiding Principles on Business and Human Rights, in this context, the “Access to remedy for victims of business-related abuses”. It is also observed that the whole process infringes or curtails the fundamental human rights of the small depositor Indian citizens in terms of Articles 32, 14, 21 of the Constitution of India.

Presently, Piramal Capital and Housing Finance has acquired DHFL (de facto) by using dubious company names simultaneously: Piramal CHF and Piramal Finance, across various social and print media platforms. Piramal CHF or Piramal Finance (?) is now conducting their business operations freely by financially abusing thousands of small depositors, viz., FD and NCD Holders of DHFL.

Keeping in mind the dictum “International law is the vanishing point of jurisprudence”, if sovereign government cuts a sorry figure to implement the universal statutes on human rights, a financially abused person has to take his/her recourse to the vanishing point, i.e.,  parallel international “law”.

UPDATE:

The case was dismissed on 1st November, 2022.

Disgusted and distressed with the reply, we sent the following mail on 04/11/2022 to the NHRC by forwarding it to the United Nations:

TO

T. Raveendran,

SECTION OFFICER,

SB-2 Section,

NATIONAL HUMAN RIGHTS COMMISSION (LAW DIVISION)

Sub: Human rights compromised with regard to Case No. 4642/25/5/2022 

Dear Mr. Raveendran, 
I am not at all surprised to view your answer to my complaint

on financial abuse⤡ as I already anticipated that my plea would not be entertained, though it is closely related to the United Nations Guiding Principles on Business and Human Rights, viz., the Access to remedy for victims of business-related abuses. Two of my family members also appealed to your commission (Diary No. 17826/IN/2022 and Diary No. 17904/IN/2022), seeking refuge for infringement of business-related human rights. However, all of us got the very same “copy-paste” reply from the concerned Section Officers of the NHRC Law Division. All the previous complaints are available on our website ⤡ ⤡. All these prove the severe impotency of the NHRC. Furthermore, I have also understood that all the fundamental human rights, the freedom of the press etc., are utterly compromised in the “party free” Indian democracy, as reported by various international human rights organizations:

• India Is No Longer a Democracy but an ‘Electoral Autocracy’: Swedish Institute ⤡ (As reported on 11^th March 2021, © The Wire)
• “Democracy under Siege” VIEW HERE ⤡ (©Freedom House)
• India is now only ‘partly free’ under Modi, says report ⤡ (As reported on 3^rd March, 2021 © BBC News) 

Kindly remember the dictum “International Law is the vanishing point of jurisprudence”. It is also to be noted that the NCLT First order and NCLAT Second order have already revealed the illegitimacy of the RBI-appointed CoC for DHFL. 

Moreover, how did you relate an evident case of financial abuse (a different type of ‘capital’ punishment) with “property rights and contractual obligations”? Is it not part of your international human rights obligation to uphold these basic rights of your citizens, since there is a different category in the NHRC e-complaint form entitled “Business and Human Rights“?

As the RBI does not deal with property-related issues, but financial issues, therefore, it is wrong to say that it is merely related to “property or contract” alone. I am forwarding this letter along with the case history of the concerned financial scam to the Office of the United Nations High Commissioner for Human Rights (OHCH

R). It is a matter of regret that as citizens of India, we are demolishing the image of our own country! 

To conclude: I am losing faith in the Indian judiciary. 

Do you have faith in the Contemporary Indian Judiciary? VIEW HERE ⤡

Yours Sincerely,

Rupa Bandyopadhyay

COPY TO:

1. The Office of the United Nations High Commissioner for Human Rights (OHCHR)
P.S:  The overall scenario of the incident of infringing business-related human rights: 

• A WHITE PAPER ON THE DEWAN HOUSING FINANCE CORPORATION LTD. (DHFL) VIEW HERE ⤡