July 10, 2019

NCLAT Dismisses HDFC’s Insolvency Plea Against RHC Holding; Upholds Principal Bench Order Which Had Rejected Petition

[ By Bobby Anthony ]

The National Company Law Appellate Tribunal (NCLAT) has dismissed a petition by Housing Development Finance Corporation Ltd (HDFC) to initiate insolvency proceedings against RHC Holding.

A two-member appellate tribunal bench headed by Chairman Justice S J Mukhopadhaya upheld the order passed by National Company Law Tribunal’s (NCLT) principal bench, which had rejected HDFC's petition.

The appellate tribunal bench stated that it found no merit in HDFC's petition, adding that non-bank financial lenders come under the purview of the Reserve Bank of India (RBI) and the company should hence seek remedies from the central bank, and not the bankruptcy court.

Earlier, while passing an order on December 6, 2018, the NCLT had observed that RHC Holding was a non-banking finance company which does not come under the purview of the Insolvency and Bankruptcy Code.

Later, HDFC had had approached the appellate tribunal (NCLAT) to challenge the NCLT's ruling. The mortgage lender had moved the NCLT to recover an amount of Rs 41 crore.

Incidentally, RHC Holding, which is promoted by by billionaire brothers Malvinder Mohan Singh and Shivinder Mohan Singh, had had taken a loan of Rs 200 crore from HDFC in April 2016. RHC Holding had paid the interest for the first quarter on time but began defaulting on its dues later.

According to HDFC, even after adjusting the proceeds from the sale of pledged shares, an amount of Rs 41.09 crore remained to be repaid. Therefore, HDFC filed an insolvency plea against RHC Holding before the NCLT to recover the remaining amount.

In January this year, the appellate tribunal (NCLAT) had issued notices to RHC Holding and other parties, directing them to file their replies.

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