Appellate tribunal questions NCLT’s hurry in forcing CoC to consider DHFL promoter’s settlement offer
While staying the NCLT’s 19th May order asking the administrator and the Committee of Creditors (CoC) in the Dewan Housing Finance Company Ltd (DHFL) to consider ex-promoter Kapil Wadhawan’s one-time settlement offer, the National Company Law Appellate Tribunal (NCLAT) has raised serious question on the order of the adjudicating authority.
The NCLAT said in its order that it is unable to “appreciate the hurry imposed on the administrator and CoC to consider the settlement proposal” of the ex-promoter of DHFL.
The NCLAT also expressed its surprise that NCLT passed the order asking CoC to consider DHFL promoter’s offer when the resolution plan of Piramal Group, approved by the CoC, is already with it, but instead of “deciding the same, the present order has been passed”.
“When even resolution plan requires No Objection of regulator, it needs to be considered if Section 12A could be resorted to bye-pass no objection of regulator,” said the NCLAT.
The bench of Justice AIS Cheema, the officiating chairperson and technical member VP Singh said in its order that regulation 30A of CIRP Regulations requires reasons to be given for application under Section 12A of IBC if filed after issue of Expression of Interest. “Here the matter had proceeded to the stage where even Resolution Plan had been approved and was before adjudicating authority. There would be no end if such reversals are allowed,” observed the bench.
Earlier, the counsel of the appellant (Committee of Creditors) had argued that the original promoter, who was ineligible under Section 29A of Insolvency and Bankruptcy Code, 2016, finds out a route to enter by sending settlement proposals which were not even in accordance with provisions under Section 12A of IBC so as to stall the Corporate Insolvency Resolution Process (CIRP).
Tushar Mehta, the solicitor General of India, arguing in favour of the CoC, said that the Adjudicating Authority was aware that the settlement proposals do not fall either under the category of Resolution Plan nor the same are procedure under Section 12A of IBC but still the adjudicating authority went on to pass the orders as it did in the impugned order.
The Solicitor general further told the tribunal that even the personal guarantee issued by Wadhawan has been invoked and petition has been filed against him. Tushar Mehta further argued that considering all these and other factors appearing from record, the adjudicating authority should not have passed the Order as has been done. He, therefore, requested the appellate tribunal to stay the order of NCLT.
Also Read: Piramal Group’s letter to creditors of DHFL protesting Adani’s ‘unsolicited’ bid
