63 Moons Drags Piramal to NCLT For Imputing Re. 1 Value to DHFL's Assets
63Moons Technologies has filed a plea before the National Company Law Tribunal (NCLT) against Piramal Capital and Housing Finance for ascribing 'Re.1' value to the assets or transactions of Dewan Housing Finance Corporation (DHFL). It was alleged that the assets have a recovery potential of more than '₹40,000 crore'.
DHFL is one of India's largest housing finance companies and it is facing insolvency proceedings. This year Piramal made a request for the Resolution Plan (RP) to acquire the company and the same was approved by the committee of creditors (COC).
63 Moons is the promoter of commodity bourse MCX that has accused Piramal for illegally pocket the money that is likely to be recovered from the debtors of DHFL.
DHFL's insolvency process is being run by an RBI-appointed administrator. Piramal's resolution plan has been overwhelmingly approved by DHFL's creditors and it has been scrutinized and approved by relevant regulators (RBI and Competition Commission of India).
63 Moons is a financial creditor of DHFL and it has filed a challenge before the NCLT against the approvals given by the CoC and the RP to Piramal. The allegation of the company is that an unreasonable value has been determined of the assets of DHFL and it is not the genuine value of its assets.
63 Moons has filed a petition before the NCLT wherein it has mentioned that instead of assigning fair value to the transactions, which are worth more than ₹40,000 crore, Piramal has assigned ₹1 for any recovery made.
It was further highlighted in the said petition that on 10 September 2020, the original RP was modified as per the meeting of COC. Subsequently, Piramal, to the detriment of the interest of DHFL creditors, ascribed a grossly arbitrary and unreasonable value.
63 Moons has argued that recoveries from the reversal of transactions (of DHFL) in terms of section 66 of Insolvency and Banking Code (IBC) would solely benefit Piramal.
It was further contended that when an entity is declared insolvent then certain transactions are to be avoided as per the Insolvency & Bankruptcy Code (IBC), otherwise, it will affect its financial position. These transactions are called avoidable transactions.
The purpose of avoiding certain transactions is to maximize the value of assets and the equitable distribution to all stakeholders. That according to the provisions of the IBC there are basically three types of avoidable transactions that comprise preferential transactions, undervalued transactions, and extortionate credit transaction.
The petitioner stated that in the instant case, DHFL's avoidable transactions arise as erstwhile promoters are accused of fraud, money laundering, and other illegal acts.
The petition filed by 63 Moons before the NCLT is opposed by Piramal and by the CoC of DHFL and the RBI-appointed administrator. It was argued that the petition has no base and it is liable to be dismissed for being meritless.