NCLT Admits Insolvency Plea Against DHFL's Ex-promoter Dheeraj Wadhawan

The Union Bank of India's application to initiate insolvency resolution proceedings against Dheeraj Wadhawan, the former promoter of Dewan Housing Finance (DHFL), has been admitted by the National Company Law Tribunal in Mumbai. This is due to a default of Rs 3,958 crores by the mortgage financier, and Wadhawan was a personal guarantor against these loans.

Devendra Mehta has been appointed by the tribunal as the resolution professional (RP) to assess the claims of lenders and calculate the personal assets of Wadhawan.

DHFL had taken various term loan facilities of more than Rs 4,000 crores and working capital facilities of Rs. 450 crores. Wadhawan had provided unconditional and irrevocable guarantees towards the credit facilities granted by the public sector lender to DHFL.

On 20 November 2019, the central bank superseded the board of DHFL and appointed R Subramaniakumar as the company administrator. Subsequently, in September 2021, DHFL was acquired by Piramal Capital for Rs 34,250 crores, and it was merged into itself subsequently.

During the resolution process of DHFL, the creditors (including FD holders) recovered a total amount of Rs 38,000 crores at the time of approval of the plan. Around 94 per cent of the creditors had voted in favour of Piramal's resolution plan, which had proposed a recovery of about 46 per cent for the lenders.

The lender had issued an invocation cum demand notice to the personal guarantor, Dheeraj Wadhawan, to pay the outstanding amount of Rs 3,958 crores on 31 August 2020, as per the facility agreement with DHFL. However, Wadhawan did not respond to the notice, and the bank initiated proceedings against him.

Wadhawan, through his counsel, argued that the demand notice, as mandated under the Insolvency & Bankruptcy Code (IBC), was not served upon him to date. He also stated that the bank knew he was in judicial custody but still failed to serve the demand notice, as required under the IBC.

The tribunal, in its order, noted that Andhra Bank and Corporation Bank had merged into UBI by a notification issued on 4 March 2020. Therefore, all facilities granted and disbursed by UBI, Andhra Bank, and Corporation Bank are considered to have been granted and disbursed by UBI. This resulted in total credit facilities sanctioned by UBI, Andhra Bank and Corporation Bank amounting to Rs 4,459.51 crore.