Posted on 20th June, 2024 (GMT 13:40 hrs)
Transcript
ROLE OF COMMITTEE OF CREDITORS IN DHFL SCAM
- We are back with another video-report on the DHFL scam. This is on the role of the RBI-appointed CoC for DHFL, which was employed to carry out a “litmus test” of the IBC (2016) through the scapegoating of the DHFL victims as laboratory DHFL victims. The IBC is an ill-conceived code that has been amended multiple times. Moreover, the DHFL was not supposed to go into the IBC since it was an ongoing, profitable, solvent AAA-rated NBFC, which did not stop meeting its payment obligations until the Bombay High Court’s order in September-October 2019.
- The CoC did not heed the FD Holders’ legitimate full repayment claims despite multiple lines of questioning, did not allow the erstwhile promoters of DHFL to take part in the resolution process, did not even bother to consider the Wadhawan brothers’ full repayment proposals. It is also to be duly noted that the old promoters of the DHFL, Mr. Kapil and Dheeraj Wadhawan, were not allowed to participate in the RBI-appointed CoC’s resolution process following the (controversial and ineligible) IBC U/S 29A, even though the Hon’ble NCLAT New Delhi declared: “Suspended Director, who was representing the Corporate Debtor and has submitted the Settlement Proposal is entitled to participate in deliberation and negotiation undertaken by the CoC.” (in Sanjeev Mahajan Vs. Indian Bank (Erstwhile Allahabad Bank) & Anr.).
- Why is Mrs. Charu Desai indefinitely postponing the DHFL bankruptcy process in the CoC meetings and consuming cost of Rs.7 lakhs per month and not helping the DHFL Fixed deposit holders to get their money back? The RBI appointed CoC administrator and the representative of the FD-holders had swallowed DHFL victims’ money to continue expensive Resolution Process. If they are to be sued by the DHFL victims, they would fight against the victims by utilizing their money. As public servants, what they have done is probably a case of legal conflict. Therefore, DHFL victims are humbly requesting for returning the fees from the Administrator and Representatives of the RBI-appointed CoC for DHFL.
- It is to be noted that a Resolution Professional comes within the meaning of ‘Public Servant’ under Section 2(c) of the Prevention of Corruption Act, 1988 and Section 233 of IBC does not protect where he has been apprehended red-handed with the bribe amount – Sanjay Kumar Agarwal Vs. Central Bureau of Investigation, Anti-Corruption Bureau, Dhanbad – Jharkhand High Court.
- The entire resolution process carried out by the CoC from 2019 to 2021 seemed to favour Mr. Piramal over other competing bidders such as Oaktree Capitals, Adani Group etc. Adani left the bidding process, perhaps anticipating the nuisances of the bumpy legal hurdles ahead! Oaktree alleged bias of the CoC in favour of Piramal. Was this not due to Piramal’s close tie-up with the BJP?
- NCLT’s verdict (19.05.2021) to reconsider the full repayment proposal of the erstwhile directors of DHFL was left unheard, and Piramal with the CoC got the order revoked within days at the NCLAT on 25.05.2021 without answering the NCLT’s pertinent questions. Whether the same can be admitted as a contempt of court or not requires judicial attention. Mr. Piramal thus presumably violated Article 215 of the Indian Constitution. The CoC said in response to the NCLT’s verdict that if the DHFL was not made an experimental subject of the IBC masterminded by the BJP and sent to the CIRP for insolvency, it would set up a “bad precedent”. Whether good or bad, we must call spade a spade.
- NCLT was forced to approve the resolution plan on 07.06.2021. Piramal “acquired” the DHFL in September 2021 on the basis of the NCLT, the lowest quasi-judicial body’s verdict.
- The NCLAT verdict (27.01.2022) that designated the CoC resolution process to be “contrary to law”, “void” and as containing “material irregularities” was stayed by (in terms of a temporary restraining order or ex parte stay, not a blanket stay order but one that is still pending in the apex court of law) the Hon. Supreme Court on 11.04.2022 after Mr. Piramal approached it on 01.03.2022 without first approaching the High Court. [Cf. Case No. 5046/2022 (25-02-2022 12:31 PM) C.A. No. 001632 – 001634 / 2022 Registered on 25-02-2022].
For the NCLT verdict, view:
In this regard, we wish to cite the NCLT order on the DHFL-case ⤡ [IA 2431 of 2020 in CP (IB) 4258/MB/C-II/2019 Under Section 60 (5), 227 (2), 239 of the Insolvency and Bankruptcy Code, 2016] points 16-19 and 84-89.
nclt-on-dhfl-coc-1 Download NCLT ORDER ON DHFL-COC
As pointed in point 16 a scathing remark that “…it (The COC) has not considered the same (Mr. Kapil Wadhawan’s Resolution Proposal) on its merits or with its commercial wisdom.” One can understand the position of the DHFL-COC being the pet of the RBI and the Government. However, what is puzzling is that Catalyst Trusteeship Limited holds 52.13% (cf. point 69 of the NCLT Order, as per the DHFL-COC’s RP meetings) of the total voting power in the COC though FD and NCD holders hold more than 65% according to the NCLT Order (cf. Point 87: “…the proposal is not made available to FD, NCD holders who constitute more than 65% of vote share of members of COC”).
The answer my friend, is blowin’ in the wind…
For the NCLAT verdict, view:
Once in a Blue Moon Academia 