The National Company Law Appellate Tribunal (NCLAT), Principal Bench comprising Justice Ashok Bhushan, Chairperson and Barun Mitra, Technical Member was hearing a bunch of appeals filed by the Ex-Promoter of the Dewan Housing Finance Corporation Finance Limited and allegations regarding fraudulent transactions were against the Ex-Promoters including the Appellant. The NCLAT observed that the impugned order has rightly permitted the Piramal – Successful Resolution Applicant to pursue the avoidance applications filed by the erstwhile Administrator and pending before the Adjudicating Authority.
In a significant judgment, the National Company Law Appellate Tribunal (NCLAT) has upheld the decision that permits the pursuit of avoidance applications in the case involving the Ex-Promoters of Dewan Housing Finance Corporation Limited (DHFL). The Appeals were filed by the Ex-Promoter, who faced allegations of fraudulent transactions, including the appellant. The NCLAT's ruling emphasized the importance of preventing dubious, preferential, undervalued, and fraudulent transactions from escaping scrutiny, thereby safeguarding the interests of creditors.
The NCLAT's decision comes in response to a submission made on behalf of the Union of India, which questioned the interpretation of a previous judgment by the learned single judge in the case of Venus Recruiters Private Limited v. Union of India and Others. The Union of India expressed concerns that accepting the interpretation proposed by the learned single judge would allow those responsible for unscrupulous transactions that led to the liquidation of the corporate debtor to evade accountability. The NCLAT acknowledged the non-commercial nature of the Insolvency and Bankruptcy Code (IBC) and recognized that the purpose of the Act is to bring public money back into the system, ensuring justice and fairness.
The NCLAT further observed that the impugned order rightly permitted the Piramal - Successful Resolution Applicant to pursue the avoidance applications previously filed by the erstwhile Administrator and pending before the Adjudicating Authority. The Appellate Tribunal found no errors in the impugned orders passed by the Adjudicating Authority, which allowed Piramal to pursue these applications and rejected similar applications filed by the Ex-Promoter and other applicants seeking to dismiss such claims. Consequently, the NCLAT dismissed all the appeals, stating that no valid grounds were presented to interfere with the orders passed by the Adjudicating Authority.
This judgment by the NCLAT marks an essential step in the ongoing insolvency proceedings of Dewan Housing Finance Corporation Limited. By upholding the decision to pursue avoidance applications, the NCLAT ensures that transactions suspected of being fraudulent or preferential will be thoroughly investigated, with the aim of protecting the interests of creditors and preventing the perpetrators from escaping accountability.
The ruling also reaffirms the non-commercial nature of the IBC, highlighting its broader objective of recovering public funds and maintaining the integrity of the financial system. It sets a precedent for future cases and strengthens the legal framework governing insolvency and bankruptcy in India.
The outcome of this judgment will have far-reaching implications for corporate insolvency cases and reinforce the commitment to transparency, fairness, and the recovery of public funds in the Indian financial sector.