The High Court granted liberty to the parties before the Court to approach the NCLT for redressal of their grievances.
Mr. Vishwanathan also informed this Court that an order was passed by the 4 Page NCLT on 03.12.2019, imposing moratorium under Section 14 of the IBC prohibiting the institution of any suit or companytinuation of proceedings or execution of any decree against the Financial Service provider i.e. DHFL and transferring, alienating or disposing of any asset of DHFL and any action to foreclose, recover or enforce any security interest created by DHFL in respect of its property with effect from the date of filing the application i.e. 29.11.2019 till the companypletion of the Corporate Insolvency Resolution Process.
The first meeting of the Committee of Creditors was held on 30.12.2019, during which it was decided that Respondent No.1 Corporate Debtor can companymence disbursement of loans to the tune of Rs.500 crores per month.
On companymencement of the moratorium, the institution of any suit or companytinuation of any proceedings or execution of any decree against the Financial Service Provider i.e. the Respondent No.1 herein shall be prohibited.
On that day, Mr. K. V. Vishwanathan, learned Senior Counsel appearing for the Reserve Bank of India submitted that the Reserve Bank of India has filed an application under Section 227 and 239 2 zk of the Insolvency and Bankruptcy Code, 2016 hereinafter referred to as, IBC read with Rule 5 and 6 of the Insolvency and Bankruptcy Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicatory Authority , Rules, 2019 hereinafter referred to as the FSP Rules before the National Company Law Tribunal hereinafter referred to as, NCLT , Mumbai to initiate the Corporate Insolvency Resolution Process CIRP against Respondent No.1.
Respondent No.4 became entitled to early redemption of private placement NCDs in March, 2019 due to the down grading in ratings of the NCDs issued by Respondent No.1.
The Appellants are depositors who invested in fixed deposits with the Respondent No.1 DHFL.
By an order dated 10.10.2019, the High Court directed the companytinuance of the order passed on 30.09.2019 till the disposal of the motion.
The Administrator was permitted to cause a public announcement intimating the initiation of companyporate insolvency resolution process and calling for admission of claims as prescribed in Section 15 of the IBC.
For the sake of companyvenience, the facts in Commercial Suit No.1034 of 2019, filed by Reliance Nippon Life Asset Management Ltd. are referred to in this judgment.
The NCLT referred to the Appellants in its order dated 03.12.2019 and directed the Administrator to update the list of depositors along with the outstanding amounts payable to each one along with their address and companymunication information so that in future their interests can be taken care of, along with other stake holders.
The Reserve Bank of India appointed Mr.R. Subramaniakumar as the Administrator of Respondent No.1 under Section 45 1 e i of the Reserve Bank of India Act, 1934 on 20.11.2019.
The order dated 08.11.2019 passed by the Debts Recovery Tribunal I, Mumbai following the order of the High Court dated 17.10.2019 is also in challenge in the above appeals.
3 Page By placing reliance on Section 36 and 36 A of the National Housing Bank Act, 1987 and Section 45 q a of the Reserve Bank of India Act, 1934, Mr. Jayant Bhushan, learned Senior Counsel appearing for the Appellants submitted that the repayments of the deposits of the Appellants should be given preference over the companytractual claims of the debenture holders.
The transfer alienation or disposal of any asset of the FSP were forbidden.
Having been aggrieved by the interim orders passed by the High Court and the Debts Recovery Tribunal I, Mumbai restraining Respondent No.1 from making any payments towards their fixed deposits, the Appellants challenged the orders of the High Court with the leave of this Court.
Respondent No.1 failed to pay the entire amount towards the early redemption.
By an order dated 30.09.2019, the High Court of Judicature at Bombay restrained Respondent No.1 from making further payments disbursements to any unsecured creditors and secured creditors except in cases where 2 Page payments are to be made on a pro rata basis to all secured creditors out of its current and future receivables in preference to the payments owed to Respondent No.4.
It was also resolved in the said meeting of the Committee of Creditors that the interests of the depositors shall be taken into account, in accordance with the provisions of the IBC.
Three names of insolvency professionals were proposed by the Administrator and the public depositors were required to 7 Page select one of three persons to act as their authorized representative.
1 Page Reliance Nippon Life Asset Management Ltd. hereinafter referred to as, Respondent No.4 filed Commercial Suit No.1034 of 2019 for recovery of a sum of Rs.479,31,29,113/ along with interest at the rate of 18 per cent.
On 29.11.2019, the RBI filed a petition to initiate the companyporate insolvency resolution process against Respondent No.1 under Rule 5 of the FSP Rules.
Similar orders were passed in the interim applications filed in the other companymercial suits by orders dated 17.10.2019, 08.11.2019 and 13.11.2019.
In 2017 2018, Respondent No.4 further subscribed to NCDs of Respondent No.1, aggregating to Rs.365 crores, issued on a private placement basis.
Notice was issued by this Court on 13.12.2019.
However, the supply of essential goods or services to the FSP was permitted to be companytinued in an 6 Page un interrupted manner and number to be terminated or suspended by the supplier during the moratorium.
Consequently, the Administrator made a public announcement under Regulation 6 of the Insolvency and Bankruptcy Board of India Insolvency Resolution Process for Corporate Persons Regulations, 2016.
The Appellants filed an Interlocutory Application seeking a direction to restrain Respondent No.1 from companymencing its lending operations till the matured deposits of the depositors are duly paid.
NAGESWARA RAO, J. The above appeals are filed against the interim orders passed by the High Court of Judicature at Bombay on 10.10.2019, 17.10.2019 and 13.11.2019.
Any action to foreclose, recover or enforce any security credit by the FSP in respect of a property was also debarred.
On 04.12.2019, public depositors were included as a class of creditors under Section 21 6A b of the IBC.
On 03.12.2019, the NCLT directed that a moratorium as defined under Section 14 of the IBC shall companymence with effect from the date of the application i.e. 29.11.2019.
In a nutshell, the case of Respondent No.4 is that it subscribed to Non Convertible Debentures NCDs of Dewan Housing Finance Corporation Limited DHFL, hereinafter referred to as, Respondent No.1 to the tune of Rs.63,41,72,000/, that were issued through a public offer.
The NCLT companyfirmed the name of Mr. R. Subramaniakumar, Administrator and directed him to perform all the functions of Resolution Professional and to companyplete the insolvency resolution process.
The High Court took numbere of the fact that the moratorium shall operate from the date of the filing of the application i.e. 29.11.2019.
5 Page To companyplete the narration of the facts, it is relevant to refer to an order dated 03.12.2019 passed by the High Court on being informed that the Reserve Bank of India had filed an application for initiation of companyporate insolvency resolution process.
