The Mumbai bench of the National Company Law Tribunal (NCLT) has reserved its order on the plea of the promoter of Dewan Housing Finance (DHFL) to be present in the meetings of debt-laden non-banking finance company (NBFC).
Dheeraj Wadhawan, one of the directors and promoter of DHFL has approached the tribunal with the arguments that they be allowed to be part of the CoC meetings as the former board member of the company.
“The question NCLT needs to clarify is that whether the erstwhile board member of the NBFC, where the board is superseded by the Reserve Bank of India (RBI) can be part of the meetings of CoC or not,” argued senior counsel JJ Bhatt, who was appearing for the Wadhawan in the case. “According to us, they should be allowed, the way suspended board members are allowed in the case of any other Corporate Insolvency Resolution Process (CIRP).”
The counsel for Wadhawan further argued that there is no distinction between the superseded board and suspended board.
While countering this, Ravi Kadam, senior counsel, who appeared for the RBI appointed administrator argued that the board was superseded on November 20 and the administrator had approached the tribunal on November 29 and the NCLT had admitted the DHFL for the resolution on December 3. “Technically when the administrator had approached the tribunal, there was no continuing board and hence they are not entitled to be part of the CoC meetings” argued Kadam.
After hearing arguments from both the sides, a division bench of NCLT, comprising a judicial member Rajsekhar VK and a technical member Ravikumar Duraisamy had reserved the matter for the order.
The troubled home financier has been in a liquidity crisis for over a year. The RBI superseded its board on November 20 and placed it under an administrator. Subsequently, the central bank appointed a three-member advisory committee comprising Rajiv Lall, executive chairman of IDFC First Bank; NS Kannan, MD of ICICI Prudential Life, and NS Venkatesh, CEO of the Association of Mutual Funds in India.
When the tribunal admitted the RBI’s plea, DHFL owed over Rs 83,800 crore to banks, the National Housing Board, mutual funds and bondholders. Of this, about Rs 74,000 crore was secured, while over Rs 9,800 crore was unsecured.
With the RBI’s announcement of the insolvency resolution process for DHFL, an interim moratorium on all claims on the company also kicked in.
Source: The Economic Times, February 21, 2020