DHFL Scam: NCLT Declares Kapil Wadhawan Bankrupt, SC Refuses Relief to Dheeraj Wadhawan

DHFL Scam: NCLT Declares Kapil Wadhawan Bankrupt, SC Refuses Relief to Dheeraj Wadhawan

Introduction

The National Company Law Tribunal (NCLT), Mumbai Bench, has declared Kapil Wadhawan, former promoter of Dewan Housing Finance Corporation Ltd. (DHFL), bankrupt after he failed to honour his personal guarantees worth thousands of crores of rupees. On the same day, the Supreme Court refused to grant more time to his brother, Dheeraj Wadhawan, to surrender in the massive loan fraud case.

Factual Background

Kapil Wadhawan had signed a personal guarantee in June 2019 to secure credit facilities for DHFL, with a total exposure of over ₹50,000 crore. After DHFL went into insolvency in December 2019, the claim of Union Bank of India, acting on behalf of a consortium of lenders, was admitted at over ₹35,000 crore. His liability as guarantor was calculated at ₹4,545 crore in March 2025.

Procedural Background

The NCLT acted on a petition filed by Union Bank of India. When the guarantee was invoked in 2020, Kapil Wadhawan failed to make payment. Insolvency proceedings were initiated against him in December 2020 and admitted in April 2024. He was directed to prepare a repayment plan with the resolution professional but failed to respond. Consequently, the creditors voted to close insolvency and press for bankruptcy, leading to the present petition filed in March 2025.

Issues

1. Whether Kapil Wadhawan's failure to honour personal guarantees constitutes a valid ground for bankruptcy?

2. Whether the NCLT's order declaring Kapil Wadhawan bankrupt is justified?

Contentions of the Parties

• Union Bank of India’s Contention: The bank argued that Kapil Wadhawan’s failure to honour his personal guarantees resulted in significant liability, justifying the bankruptcy declaration.
• Kapil Wadhawan’s Contention: Not recorded in the report.

Reasoning and Analysis

The NCLT Bench comprising Judicial Member Lakshmi Gurung and Technical Member Hariharan N. Iyer held that all legal requirements under the IBC had been met. Since Kapil Wadhawan failed to discharge his obligations, the tribunal declared him bankrupt. It also appointed Sanjay Kumar Mishra as the Bankruptcy Trustee and directed that all assets of Kapil Wadhawan stand vested in him for the benefit of creditors.

Meanwhile, the Supreme Court Bench of Justices Sanjay Kumar and Satish Chandra Sharma dealt with a plea by Dheeraj Wadhawan seeking more time to surrender in the ₹34,000 crore bank loan fraud case. The Court refused, holding that he could undergo surgery and receive treatment in custody. The CBI and jail authorities were directed to ensure regular medical check-ups at AIIMS, New Delhi.

Implications

This case underscores the strict approach of the NCLT towards enforcement of personal guarantees and the Supreme Court’s firm stance in ensuring accountability in large-scale financial frauds.

Outcome

• The NCLT declared Kapil Wadhawan bankrupt and vested his assets in the Bankruptcy Trustee.
• The Supreme Court refused to extend time for Dheeraj Wadhawan to surrender, reinforcing judicial scrutiny over the DHFL scam.