The National Company Law Tribunal in Mumbai has admitted Union Bank of India’s application to initiate insolvency resolution proceedings against Dheeraj Wadhawan, the erstwhile promoter of Dewan Housing Finance (DHFL), for a Rs 3,958-crore default by the mortgage financier. Wadhwan was a personal guarantor against these loans.
The tribunal has also appointed Devendra Mehta as the resolution professional (RP) to ascertain the claims of lenders and compute the personal assets of Wadhawan.
DHFL had availed various term loan facilities of more than Rs 4,000 crore and working capital facilities of Rs 450 crores. Wadhawan had provided unconditional and irrevocable guarantees toward the credit facilities granted by the public sector lender to DHFL.
On November 20, 2019, the central bank superseded the board of DHFL and appointed R Subramaniakumar as the company administrator.
Subsequently, in September 2021, Piramal Capital acquired DHFL for Rs 34,250 crore. It merged DHFL into itself subsequently.
The creditors of DHFL (including FD holders) had recovered an aggregate amount of Rs 38,000 crore from the resolution process of DHFL at the time of approval of the plan. Around 94% of the creditors had voted in favour of Piramal’s resolution plan, which had proposed a recovery of about 46% for the lenders.
Ashish Pyasi, Partner, Aendri Legal, said that on the admission of the petition, the process for insolvency resolution starts. It includes a moratorium so that there is no further prosecution against the personal guarantor.
“The resolution professional will be calling for the claims from the creditor and will prepare a list of them,” said Pyasi. “The personal guarantor shall prepare a repayment plan with the resolution professional, which will be placed before the committee of creditors. Once approved, it will be submitted for final approval.”
Before the tribunal’s order, the lender had argued that as per the facility agreement with DHFL, the bank had issued an invocation cum demand notice to the personal guarantor to pay the outstanding of Rs 3,958 crore on August 31, 2020. As Wadhawan, as a personal guarantor, did not reply to date to the demand notice, the bank has initiated proceedings against him.
While countering this, Dheeraj Wadhawan, through his counsel argued that the demand notice, as mandated under the Insolvency & Bankruptcy Code (IBC), has not been served upon him to date.
He further argued that the lender, through its advocate, sought to serve a copy of the petition upon him at Taloja Jail, Navi Mumbai. Thus, the bank was at all relevant times aware that the respondent (Wadhawan) was in judicial custody, and despite this knowledge, the lender failed to serve the demand notice, as required under the IBC.
The tribunal in its order had observed that the Andhra Bank and Corporation Bank were amalgamated into UBI by a notification of March 4, 2020. Hence, all facilities granted and disbursed by UBI, Andhra Bank and Corporation Bank are considered to have been granted and disbursed by UBI. This led to total credit facilities sanctioned by UBI, Andhra Bank and Corporation Bank at Rs. 4,459.51 crore.
Source: Economic Times