DHFL has argued that since it was acquired by Piramal Capital & Housing Finance Ltd., it should be freed from all earlier liabilities. The company has challenged the August 20 order of a special Central Bureau of Investigation (CBI) court, which had granted partial relief by granting leave to the interim monitoring committee, but rejected the prayer for discharge of DHFL from the case.
“The learned (CBI) judge has committed an error by allowing the prosecution of the accused against the corporate debtor (DHFL). 2(Kapil Wadhawan) and 3 (Dhiraj Wadhawan), who were ousted from the board of directors by RBI two years ago,” Justice SK Shinde said in his November 16 order.
The company had argued that once a company is admitted under the corporate insolvency resolution process (CIRP) under section 32(a) of the Insolvency and Bankruptcy Code (IBC), it is relieved of the earlier liabilities, and the new owner gets a clean company.
Senior advocate Ravi Kadam, appearing for DHFL, argued that “Section 32(a) of the IBC – which came into force on December 28, 2019 – gives a mandatory direction to a corporate debtor (DHFL) to be free from all liability of the debtor.” Liabilities from all criminal offenses committed before the commencement of CIRP.”
Whereas Special Counsel Hiten Venegaonkar, appearing for CBI, argued that cognizance of offense cannot be taken twice and hence, till the time the statutory appeal is decided, the corporate of criminal liability committed before CRIP. It would not be fair to release the debtor.
The High Court has also dismissed the intervention application filed by Kapil Wadhawan to oppose the plea of DHFL.
“Under bankruptcy laws, the successful resolution applicant gets the company free of any past liabilities,” said Ashish Pyasi, associate partner at law firm Dhir & Dhir Associates. “The High Court has clarified that any deviation from this stand will adversely affect the entire process, as the idea here is to protect the property. Even after this development, the erstwhile promoters will continue to face prosecution under the existing laws.
In July, the National Company Law Tribunal (NCLT) allowed Piramal Capital and Housing Finance to take over DHFL.
On October 1, 2021, the company in its exchange filing had informed about the change in management of DHFL through appointment of six additional directors including Ajay Piramal, Swati Piramal, Anand Piramal, Gautam Doshi, Khushru Jijina and Sohail Nathani. ,
Piramal has offered to pay Rs 35,250 crore to the creditors of DHFL. During that time, banks were owed Rs 40,000 crore out of a total debt of about Rs 87,000 crore.