In a big setback to deposit holders, the Supreme Court on Friday refused to restrain embattled Dewan Housing Finance Corporation (DHFL) from disbursing loans to the tune of `500 crore per month, as decided by its committee of creditors in its meet in December last year.
A Bench led by Justice LN Rao rejected the depositors’ plea seeking to restrain DHFL from commencing its lending operations till their matured deposits were paid. It said it was not inclined to interfere with the decision of the CoC, which had on December 30 resolved that the interests of depositors would be taken into account in accordance with the IBC provisions. The CoC had also allowed the corporate debtor to commence disbursement of loans to the tune of Rs 500 crore per month.
“We leave it open to the Appellants (depositors) to raise all points and contentions before the CoC, the administrator and if necessary, the NCLT. …We are informed that there are nearly one lakh depositors who have invested their life time earnings with Respondent No.1. Some of the deposits have matured and some of the depositors are critically ill. We have no doubt that the concerns of the depositors and their rights shall be considered in accordance with law,” the apex court said in its judgment.
A petition filed by 97 DHFL deposit holders, led by Vinay Kumar Mittal, had asked the housing finance company to pay its more than one lakh fixed deposit holders with overall exposure of Rs 6,000 crore.
After the RBI superseded the board of DHFL, an administrator was appointed to take stock of assets and liabilities. While the deposits made by deposit holders have either already matured or are nearing maturity, the Bombay High Court and the Debts Recovery Tribunal, Mumbai, had restrained DHFL from making any payments or disbursements, including interest on fixed deposits, the petition said.
The HC and DRT have failed to look at the provisions of the National Housing Bank Act and the RBI Act which mandate that notwithstanding anything inconsistent in any law or instrument, every deposit accepted by a housing finance institution/non-banking financial company unless renewed, shall be repaid in accordance with the terms and conditions of such deposit, the petition filed by counsel Ashish Virmani said, adding that the statutory repayment of deposits to deposit holders should take preference and precedence over the contractual claims of the debenture holders.
Mittal told the apex court that the impugned order is being cited by DHFL as a pretext to deny due payments to the public. On the contrary, the impugned order places the contractual claim of the company at a higher pedestal than the statutory right of the deposit holders to receive their money which was deposited with DHFL, he added. Moreover, the order affecting the rights of the petitioners has been passed in grave violation of the principles of natural justice and without hearing the deposit holders and this has affected “investor confidence.”
Source: Financial Express, February 1, 2020