Updated: November 18, 2021 11:30:01 am
The Bombay High Court on Tuesday allowed a plea by Dewan Housing Finance Corporation Ltd (DHFL), and set aside the order of a special court rejecting the plea seeking discharge in the cheating and corruption case involving its promoters, Kapil and Dheeraj Wadhawan, and Yes Bank founder Rana Kapoor.
DHFL had argued that since it had undergone Corporate Insolvency Resolution Process (CIRP) and a new entity Piramal Capital and Housing FInance Ltd had taken over as successful applicant, it should be absolved and discharged from all earlier liabilities, including criminal proceedings registered against it prior to CIRP. However, the special CBI court had rejected its plea for discharge, prompting DHFL to approach the HC.
A single-judge bench of Justice Sandeep K Shinde passed the order in the plea by DHFL, which sought direction to quash and set aside the August 20 direction of the special CBI court.
Senior advocate Ravi Kadam for DHFL had argued that the National Company Law Tribunal (NCLT) had conducted the CIRP and had approved Piramal Capital as the successful resolution applicant, after which the DHFL had filed an application in special court seeking discharge or dropping of proceedings against it, as per section 32A of the Insolvency and Bankruptcy Code (IBC).
It had said that while the special court discharged the interim monitoring committee, it rejected DHFL’s plea, which was arbitrary. Kadam said the special court rejected the plea on the grounds that DHFL would be prosecuted through its promoters Kapil and Dheeraj Wadhawan, which was misconceived and therefore sought relief from the HC.
Advocate Hiten Venegaonkar for the CBI had opposed the plea, stating that the NCLT order was under challenge in the National Company Law Appellate Tribunal (NCLAT), and the cognizance of the offence cannot be taken twice, therefore, till the statutory appeals are decided, it would not be appropriate to discharge corporate debtor DHFL of criminal liabilities incurred prior to CIRP. He also added that rejection of the discharge plea by the special court did not suffer from any error, and DHFL could have recourse to alternate remedy, hence the plea was not maintainable.
The Piramal Capital had also filed an intervention plea, argued through senior advocate Aabad Ponda, concurring with DHFL’s submissions and said that it has a right to clean slate company, which the NCLT order had enabled, and DHFL can be discharged as NCLAT has not stayed the NCLT order which approved the CIRP.
“I hold that the application preferred by the successful resolution person, was not premature,” the court held.
Allowing DHFL’s plea, the bench held, “The CBI judge has committed an error by permitting the prosecution of the Corporate Debtor to the accused nos. 2 (Kapil Wadhawan) and 3 (Dheeraj Wadhawan), who were ousted from Board of Directors, by the RBI two years ago. The impugned order is quashed and set aside.”
The court also said an intervention plea by Kapil Wadhawan to oppose DHFL’s plea does not survive, and disposed of the same.
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