Bombay high court relief for banks in DHFL debt recovery

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Mumbai | Published: November 14, 2019 2:59:33 AM

The HC had earlier restrained DHFL from making payments to any of its secured/unsecured creditors, including, payments to any FD holders, following a plea by MFs.

The SBI’s counsel argued that DHFL was making regular payments before, however, it failed to honour obligations after the HC’s interim order was passed.

The Bombay High Court has allowed troubled mortgage lender Dewan Housing Finance Corporation (DHFL) to make payments to banks and NBFCs, which have securitisation arrangements with it. Seven lenders led by State bank of India (SBI) had filed an intervention plea seeking vacation from an earlier order. Other petitioners included Union Bank of India, HDFC Bank, Indian Overseas Bank, among others.

The Bombay HC had earlier restrained DHFL from making payments to any of its secured/unsecured creditors, including the payments to any fixed deposit holders, on October 10, following a petition filed by mutual funds. Justice AK Menon said in his order: “The payment to banks and non-bank lenders who purchased loan pool from DHFL will be allowed. DHFL can make all future payments and previous dues which were payable since October 10.”

The SBI’s counsel argued that DHFL was making regular payments before, however, it failed to honour obligations after the HC’s interim order was passed. If the above order wasn’t modified, these securitised loans may slip into the non-performing assets (NPAs) category, the counsel said. DHFL’s counsel in its reply said, “The company has adequate security cover of 1: 1.11 as on September 30 for payments.”

The court has allowed banks and NBFCs to be part of main petition filed by MFs. Edelweiss AMC, Kotak Mahindra AMC, Axis Asset Management and Reliance AMC had moved the Bombay High Court seeking a direction to DHFL to disclose all its assets and liabilities and also to temporarily prevent it from making payments/disbursements to secured and unsecured creditors.

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