Fixed Deposit Holders are Financial Creditors of the DHFL. The decision about payments to the creditors falls within the commercial wisdom of the CoC, subject to fair and equitable play – Vinay Kumar Mittal Vs. Dewan Housing Finance Corporation Ltd. – NCLAT New Delhi
NCLAT holds that the Adjudicating Authority has not erred on this count in approving the Resolution Plan that proposes extinguishing claims to the Fixed Deposits without discharging their payments in full to Holders of FD. Therefore, it does not contravene the statutory provisions of the NHB Act and RBI Act. As the case may be, the NHB Act or RBI Act does not mandate the FULL payment to the F.D./Deposit Holders. Further, Section 238 of the Insolvency and Bankruptcy Code, 2016, overrides the RBI and NHB Act. Therefore the approved Resolution Plan that stipulates extinguishment of the claims to the F.D. without discharging their payments in full is valid and legal under the Code. The repayment to Fixed Deposits Upon maturity of their deposit, during the moratorium, would not fall within the ordinary course of business for Respondent No. 1, as specified under section 28(1)(k) of the Code. Respondent No. 1 is legally authorised for making loans and investments despite its failure to repay F.D. holders as per the terms of their deposits, but only after approval of the resolution plan under the terms of the Approved Resolution Plan. Any payment made against the F.D.’s during CIRP could fall under the preferential transaction.
