Depositors of DHFL move SC to get dues

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Published: December 14, 2019 5:17:13 AM

While deposits made by deposit holders have either already matured or are nearing maturity, the Bombay High Court and the Debts Recovery Tribunal, Mumbai, have restrained DHFL from making any payments or disbursements, including interest on fixed deposits, the petition said.

DHFL case, RBI, Reserve Bank of India, Bombay High Court, Reserve Bank of India, NCLT, mutual funds, State Bank of India, Union Bank of India, industry newsMittal further told the apex court that the impugned order is being cited by DHFL as a pretext to deny due payments to the public.

The Supreme Court on Friday sought response from the Reserve Bank of India (RBI), Dewan Housing Finance Corporation (DHFL) and its lenders as to why the embattled firm should not be asked to pay its more than one lakh fixed deposit holders, who are at the risk losing their savings after the company stopped making payments to them.

A Bench led by Justice L Nageshwar Rao while seeking response from the RBI, DHFL and a consortium of lenders posted the petition, filed by 97 DHFL deposit holders led by Vinay Kumar Mittal, for further hearing in the first week of January.

After the RBI superseded the board of Dewan Housing Finance, deposit holders spread across the country with overall exposure of Rs 6,000 crore are reportedly at risk of losing their savings.

An administrator has been appointed, and now he will take stock of assets and liabilities. There is already a freeze on payment to creditors and fixed deposit holders who come under the unsecured creditors category under priority of claims, senior counsel Jayant Bhushan said.
Senior counsel KV Viswanathan, appearing for the company, opposed the petition, saying that the matter is pending before the NCLT and the SC should not interfere at this stage.

While deposits made by deposit holders have either already matured or are nearing maturity, the Bombay High Court and the Debts Recovery Tribunal, Mumbai, have restrained DHFL from making any payments or disbursements, including interest on fixed deposits, the petition said.

The HC and DRT have failed to look at the provisions of the National Housing Bank Act and the RBI Act that which mandate that notwithstanding anything inconsistent in any law or instrument, every deposit accepted by a housing finance institution/non-banking financial company, unless renewed shall be repaid in accordance with the terms and conditions of such deposit, the petition filed by counsel Ashish Virmani said. The statutory repayment of deposits to deposit holders should take preference and precedence over the contractual claims of debenture holders.

Mittal further told the apex court that the impugned order is being cited by DHFL as a pretext to deny due payments to the public. The order places the contractual claim of the company at a higher pedestal than the statutory right of deposit holders to receive their money which was deposited with DHFL.

“… it may be clarified as a matter of abundant caution that till date, there has been no direction by RBI or the NHBC restricting repayment of deposits to fixed deposit holders or the interest thereon. Therefore, as such, the interference by the HC and DRT in day-to-day affairs of DHFL is completely illegal,” according to depositors.

Moreover, the order affecting rights of the petitioners has been passed in grave violation of the principles of natural justice, and in a commercial suit between private parties, without the petitioners having been made a party to the proceedings, the petition said, adding that this has affected “investor confidence”.

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