Says it would also allow the erstwhile promoter to benefit from his own wrong
Permitting Kapil Wadhawan, erstwhile promoter DHFL to present a settlement offer would enable him to benefit from his own wrong and could eventually lead to the liquidation of the company, the Reserve Bank of India has submitted to the National Company Law Tribunal (NCLT).
“…affording the Applicant even an opportunity of presenting a purported settlement offer may amount to permitting the Applicant to take benefit of its own wrong, which led to complete downfall of DHFL and resultantly, the various stakeholders,” the RBI said in its affidavit to the NCLT, noting that Wadhawan is in judicial custody with proceedings against him on allegations of cheating, fraud, siphoning of funds and such other serious offences.
It further said that since the resolution process is at an advanced stage, any interim relief would derail the process and force DHFL into liquidation, adding that the application against it should be dismissed. The NCLT has asked DHFL’s Committee of Creditors (CoC) to consider the offer made by Wadhawan within the next 10 days.
A copy of the ruling reviewed by BusinessLine revealed that the CoC to DHFL, in its affidavit, contended that any settlement application must first be acceptable to the original applicant, in this case the RBI, which should then be willing to withdraw the Corporate Insolvency Resolution Process (CIRP) initiated by it.
“It is only after this that the withdrawal application by the Original Applicant along with settlement proposal (by the promoter, shareholder) can be placed before the CoC for their approval as well,” the CoC had submitted. However, the NCLT bench comprising of judicial member HP Chaturvedi and technical member Ravikumar Duraisamy in its order noted that Wadhawan’s settlement proposal is substantially higher at over one-and-a-half times of the value of the highest bidder, and the same needs due consideration by the Administrator and the CoC.
“It appears that with the settlement proposal thousands of the small investors, fixed deposit holders would be paid fully, thereby thousands of small investors would get 100 per cent of their principal sum outstanding,” the NCLT held.
It also said that Wadhawan has submitted an offer for settlement akin to One Time Settlement (OTS) and there is no express legal bar under the provision of IBC to a promoter for making a proposal for settlement. In his second settlement offer, Wadhawan had offered Rs. 91,158 crore, which is over Rs. 50,000 crore more than the Rs. 34,250 crore being offered by Piramal Enterprises.