Bombay HC authorizes DHFL plea to remove its name from CBI investigation


The Bombay High Court has granted leave to a petition filed by Dewan Housing Finance Ltd (DHFL) for the discharge of its name and the discontinuance of charges against it in an ongoing investigation by the Central Bureau of Investigation ( CBI).

DHFL argued that since it had been taken over by Piramal Capital & Housing Finance Ltd, it should be exonerated from all previous obligations. The company challenged a special court order from the Central Bureau of Investigation (CBI) on August 20, which had given partial relief by relieving the interim oversight committee, but had denied DHFL’s request to relieve it of the case. .

“The learned judge (CBI) erred in allowing the debtor company (DHFL) to proceed against defendants nos. 2 (Kapil Wadhwan) and 3 (Dhiraj Wadhwan), who was ousted from the board, by the RBI two years ago,” Judge SK Shinde said in his November 16 order.

The company had argued that once a company was admitted into the corporate insolvency resolution process (CIRP) under Section 32(A) of the Insolvency and bankruptcy (IBC), it was exonerated from its previous obligations and the new owner obtained a business of his own. .

Ravi Kadam, lead counsel, appearing for the DHFL, argued that “section 32(A) of the IBC – which came into force on 28 December 2019 – establishes a binding guideline for a corporate debtor (DHFL) be absolved of all responsibility for all criminal offenses committed prior to the start of the CIRP.”

While Hiten Venegaonkar, special counsel appearing for CBI, argued that knowledge of the offense could not be taken twice and therefore until the statutory appeals are decided it would not be appropriate to release the debtor company from criminal liability incurred before the CRIP.

The High Court also dismissed Kapil Wadhawan’s motion to oppose by means of the DHFL.

“Under bankruptcy laws, the successful resolution candidate gets a clean business, free from past liabilities,” said Ashish Pyasi, associate partner at law firm Dhir & Dhir Associates. “The High Court has clarified that any deviation from this position would have a negative impact on the whole process, as the idea here is to protect assets. Former promoters will continue to be subject to prosecution even after this developments under the laws in force.

In July, the National Company Law Tribunal (NCLT) cleared Piramal Capital and Housing Finance to take over DHFL.

On October 1, 2021, the company had informed in its exchange filing of the change in management of DHFL by the appointment of six additional directors, including Ajay Piramal, Swati Piramal, Anand Piramal, Gautam Doshi, Khushroo Jijina and Sohail Nathani. .

Piramal offered to pay Rs 35,250 crore to the creditors of DHFL. Meanwhile, he owed almost Rs 40,000 crore to banks on his total debt of around Rs 87,000 crore.

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