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Piramal Capital gets NCLAT permission to expedite DHFL's insolvency proceedings

The National Company Law Appellate Tribunal (NCLAT) has stated that the company's authorised resolution plan for the bankrupt DHFL (Dewan Housing Finance Corporation Limited) cannot be exposed to statutory claims that were previously unknown to Piramal Capital and Housing Finance Limited. This is consistent with earlier Supreme Court decisions holding that all statutory dues payable to the Centre, state governments, and other agencies are waived upon acceptance of the settlement plan. Because Piramal Capital will not have to separately approach statutory bodies for the remission of DHFL's pending dues, the NCLAT judgement will expedite DHFL's insolvency process and minimise the expense of litigation. With these explanations, the NCLAT dismissed Piramal Capital's petition challenging the section of the NCLT judgement that required the successful resolution applicant to proceed to several agencies separately. Senior lawyer A.M. Singhvi, who spoke on behalf of Piramal Capital, contended that requiring a successful resolution applicant to seek separate permissions from all statutory agencies would undermine the plan and render it a "non-starter." Citing the Supreme Court's Essar Steel decision, REED 2019 SC 11505 and Ghanshyam Mishra decision, REED 2021 SC 04534, Piramal Capital argued that the court established a "clean slate" principle that freed the successful resolution applicant from previously unknown claims and barred any attempts to render the resolution plan "unworkable." Senior lawyer Ravi Kadam, who spoke on behalf of DHFL's Administrator, concurred with Piramal Capital's contention that going to every statutory agency for exemptions individually will make insolvency an unending process. However, senior lawyer Ramji Srinivasan, standing for the Committee of Creditors (CoC), contended that the pending appeal against the NCLT judgement should not affect the amount to be made to creditors.

On June 7, this year, the National Company Law Tribunal (NCLT) Mumbai provisionally approved the Piramal Group's Rs. 34,250 crore resolution plan to purchase DHFL. While approving Piramal Capital's DHFL resolution plan, the NCLT ruled: "Approval of resolution plan shall not be regarded as a waiver of corporate debtor's statutory responsibilities, and same shall be addressed with authorities in accordance with the law. On July 19, the NCLAT will hear another appeal against the NCLT ruling, in which 63 Moons claims that Piramal Capital's successful resolution plan will short-change holders of fixed deposits (FDs) and non-convertible debentures (NCDs) at the expense of commercial banks.


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