Vinay Kumar Mittal & Others V/s Deewan Housing Financial Corporation Limited    

Case No.: Civil Appeal 654-660 of 2020

The appeals have been filed pursuing to interim orders passed by the High Court of judicature at Bombay and Debt Recovery Tribunal-1, Mumbai.

To have a clear understanding of the facts a context has to be understood with regards to Reliance Nippo Life Asset Management Ltd.

Reliance Nippo Life Asset Management Ltd. invested a sum of 479, 31,29,113/- in non-convertible debenture of Deewan Housing Finance Corporation Ltd. on some date in the public issue of the company with the interest rate of 18% p.a. Reliance in further tune invested a sum of Rs 63,41,72000/- by subscribing to non-convertible debenture on private placement basis. Over the period, the company was entitled to the early redemption of the funds due to consistent degradation in the credit rating of the security. DHFCL failed to pay the entire amount invested by Reliance. The Bombay High Court passed an order stating that the company (DHFL) will not be allowed to make any payments to its secure or unsecured creditors except in case of payments to be made on pro-rata basis within preference to the money owed to Reliance.

The order passed by the Bombay High Court and Debt Recovery Tribunal restricting the payments by DHFL was in adverse interest of the depositor who deposits their life saving with DHFL. The Reserve Bank of India filed for Corporate Insolvency Resources Procedure (CIRP) by making an application under provision of Insolvency & Bankruptcy Code, 2016 before National Company Law Tribunal. Further NCLT under section 14 of Insolvency and Bankruptcy Code, 2016 imposed restriction on DHFL with regards to disposing, paying, alienating or in any way altering with the assets of the company also such company will not be a party or suit nor will be executing any decree by any court against the Financial Service Provider until the process of CIRP comes to an end. An administrator was appointed by the Reserve bank of India for CIRP such administrator after making public announcement for the purpose of registering all the claims against the company included the depositor under a class of creditors, represented by the appropriate representatives by the consent of the depositors.

1. The order passed by the Bombay High Court restricting the company to make payments will be in adverse interest of the depositor or not?
2. Appointment of administrator for the CIRP of the company will result in protecting the depositor’s interest.

The Honorable Supreme Court of India in its observation stated that the Corporate Insolvency Resolution process should be initiated as at the date of application by Reserve Bank of India before National Company Law Tribunal impeded of any other order passed by the court.

The administrator appointed by the Reserve Bank of India should make a public announcement regarding the submission of all the claims and register the dues payable in the preferable order for the due process of payment.

There should be a committee of creditors formed with an appropriate representative to secure the interest of the class of creditors and the corporate debtors should commence the disbursement the loan amount to the tune of 500 crores per month.

The honourable court decides after hearing the arguments of all the Learned Senior Counsel that the right of deposit holder will be kept paramount with proper representation by the authorized representatives and will be allowed to make all contention they have to regarding their rights. Hence disposing all the appeals.