The Supreme Court in Vinay Kumar Mittal vs Dewan Housing Finance Corporation Ltd delivered a crucial banking law judgment on 31.01.2020. The case relates to DHFL, a housing finance company regulated by RBI and NHB. Appellants are depositors who invested fixed deposits with DHFL. They challenged Bombay High Court orders dated 10.10.2019, 17.10.2019, 13.11.2019 which restrained DHFL from making payments to depositors. DRT order dated 08.11.2019 was also challenged.
During pendency, RBI filed CIRP application against DHFL under Section 227 of IBC read with FSP Rules. NCLT Mumbai imposed moratorium on 03.12.2019. RBI appointed Administrator Mr. R. Subramaniakumar. Public depositors were included as class of creditors under Section 21(6A)(b) of IBC. Supreme Court held that depositors claims shall be considered by Committee of Creditors and Administrator without being influenced by High Court interim orders. Court did not interfere with CoC decision dated 30.12.2019 to allow lending operations. Depositors can raise all contentions before CoC, Administrator and NCLT. As the law stands, depositors rights must be protected in DHFL resolution process.
Facts: DHFL Default; High Court Restrained Payments; RBI Filed CIRP
Respondent No.4 Reliance Nippon filed suit for recovery of Rs 479 cr against DHFL for NCDs. High Court restrained DHFL from making payments to unsecured creditors except pro-rata to secured creditors. Similar orders in other suits. Appellants are depositors. They argued deposit repayments should get preference under Section 36, 36A of NHB Act, 1987 and Section 45Q(a) of RBI Act, 1934 over debenture holders. On 29.11.2019 RBI filed CIRP application. NCLT imposed moratorium from 29.11.2019. All suits and recovery actions prohibited. Administrator appointed. Public announcement made. Depositors included as class of creditors.
Legal Issue: Whether Depositors Claims Get Preference Over Secured Creditors During DHFL CIRP
Supreme Court did not decide merit. Court said depositors are represented by Authorized Representative before CoC. All points can be raised before CoC, Administrator and NCLT. High Court interim orders cannot influence CoC consideration of depositors claims. CoC on 30.12.2019 allowed DHFL to do fresh lending of Rs 500 cr per month and said depositors interests will be taken care of as per IBC.
Ratio Decidendi: Depositors To Be Heard In CIRP Process
Court recognized nearly 1 lakh depositors invested lifetime earnings. Some deposits matured, some depositors critically ill. Court expressed that concerns of depositors and their rights shall be considered in accordance with law. Moratorium under Section 14 IBC applies. But depositors as financial creditors have right to be part of CoC through authorized representative. RBI and Administrator to ensure depositors interests are protected.
Conclusion:
Depositors Rights To Be Considered In DHFL Resolution
Vinay Kumar Mittal vs DHFL is key dhfl depositors rights supreme court 2020 ibc precedent. Supreme Court 31.01.2020 refused to interfere but ensured depositors voice in CIRP. Depositors to pursue claims before CoC and NCLT. Important judgment for HFC depositors and RBI regulated entities.
