Kapil Wadhawan moves SC over NCLAT stay against his Rs 91,000-cr DHFL offer

Kapil Wadhawan, the erstwhile promoter of Dewan Housing Finance Limited (DHFL), has moved the Supreme Court asking for a stay on the National Company Law Appellate Tribunal order, which stayed an earlier order of the Mumbai Bench of National Company Law Tribunal (NCLT) asking the committee of creditors (CoC) to consider the settlement offer Wadhawan put forward.

“We are asking for a stay of the NCLAT order and a revival of the NCLT order. Our argument is, we have come with a settlement offer, which is Rs 50,000 crore more than what the successful resolution applicant has offered,” said Rohan Dakshini, partner at Rashmikant and Partners, who are appearing before the SC on the Wadhawans’ behalf.

“So, at least the commercial viability and feasibility of the plan should be considered by the CoC. If they find it unviable they can reject it. But, they should not shut it out on technical grounds, considering there is a larger amount that is being offered,” he said.

“Interestingly, when the matter was before NCLAT, the finding of the NCLT that 65 per cent of the CoC are not even aware of the settlement offer that the erstwhile promoters have put forward was not challenged,” Dakshini added.

In a letter to the administrator in December, Wadhawan had reiterated his offer to pay the entire outstanding principal of Rs 91,158 crore to creditors. In his letters, Wadhawan had said around Rs 9,062 crore was lying with DHFL, according to the company’s balance sheet. He said this will be utilised for upfront repayment of outstanding debts of small investors and the major breakup would be to non-convertible debentures (NCDs) held by the public.

The lenders, the Reserve Bank of India (RBI), and the Competition Commission of India (CCI) have approved the resolution plan of Piramal Group, which has offered to pay Rs 37,250 crore, with upfront cash of Rs 12,700 crore.

Last week, the lenders, the RBI-appointed administrator of DHFL, and Piramal Group moved the NCLAT, challenging the order passed by the NCLT, which asked them to consider Wadhawan’s offer, saying there was no basis in law for such an order.

Lenders in their appeal stated that if the order was allowed to operate, it would create a process contrary to the provisions of the IBC.The bankers were apprehensive about considering the promoter’s settlement offer because the account was declared “fraud” by them. Wadhawan is in jail on money-laundering charges.

The appellate tribunal in its order had said, “....here the matter had proceeded to the stage where even (the) resolution plan had been approved and was before (the) adjudicating authority. There would be no end if such reversals are allowed. There is no dispute regarding the fact that the resolution plan has already been approved and is before the adjudicating authority.”

Without deciding the same, the present order has been passed”.

The NCLAT had asked the respondent — in this case Kapil Wadhawan — to file a reply within two weeks. The matter was slated to be heard again on June 25. But, they said, the pendency of the appeal before it should not come in the way of the NCLT passing orders in approving the resolution plan, on which hearing has concluded and the order is reserved.

DHFL became the first financial services company to be referred to the NCLT by RBI in November 2019 after it defaulted on its payments and the lenders failed to find a resolution under the June 7 circular of the RBI.

The creditors have claimed dues of Rs 87,000 crore. The liquidity crisis after the collapse of IL&FS in 2018 led to DHFL’s downfall. Before that, it was one of the largest mortgage lenders in the country.