Supreme Court sets aside NCLAT order on DHFL resolution plan dispute

The National Company Law Appellate Tribunal (NCLAT) ordered the lenders of the former Dewan Housing Finance (DHFL) to reevaluate certain parts of the PCHF's resolution plan, which assigned a nominal value of ₹1 to ₹45,000 crore of DHFL's bad loans classified as avoidance transactions. The Supreme Court overturned this decision on Tuesday.

It upheld the resolution plan for the DHFL, which was adopted in 2021 by the Mumbai bench of the National Company Law Tribunal (NCLT) and the Committee of Creditors (CoC), led by the Union Bank of India. It also allocated a notional value of ₹1 to prospective recoveries exceeding ₹45,000 crore. PCHF then purchased DHFL in September 2021 for a total of ₹34,250 in consideration.

A bench consisting of justices Bela M. Trivedi and Satish Chandra Sharma rendered its decision in the ongoing legal dispute over the DHFL's resolution plan, ordering the NCLAT to reevaluate the applications pertaining to the distribution of ₹45,000 crore in proceeds from avoidance transactions. It was a major issue of disagreement during the previous non-banking financial company's insolvency proceedings.