SAT quashes Sebi’s Rs 20-lakh penalty on DHFL

By: |
October 13, 2020 2:01 AM

The mortgage lender had moved SAT arguing that no action can be taken against the company as it is undergoing insolvency proceedings.

Unhappy with the explanation given by DHFL, the market regulator slapped a penalty of Rs 20 lakh on the company in May.Unhappy with the explanation given by DHFL, the market regulator slapped a penalty of Rs 20 lakh on the company in May.

The Securities Appellate Tribunal (SAT) has quashed a Securities and Exchange Board of India (Sebi) order imposing a penalty of Rs 20 lakh on Dewan Housing Finance Corporation (DHFL) for not complying with norms while issuing non-convertible debentures (NCDs) in 2016-17.

The mortgage lender had moved SAT arguing that no action can be taken against the company as it is undergoing insolvency proceedings.

FE had earlier reported that Sebi sent a show cause notice to DHFL for non-maintenance of debenture redemption reserve (DRR). Companies raising capital through debentures are required to create a debenture redemption reserve as a provision to protect investors, in case of default. Unhappy with the explanation given by DHFL, the market regulator slapped a penalty of Rs 20 lakh on the company in May.

The Committee of creditors (CoC) had earlier decided to extend the deadline for submission of bids for DHFL till October 17. In a lenders’ meeting last month, DHFL administrator R Subramaniakumar said five serious bidders were conducting due diligence for the company.

DHFL had earlier shortlisted 22 applicants for the company. The troubled lender had given applicants the option to bid for the whole company or in parts. Of the total applicants, 14 had submitted expressions of interest (EoIs) for the entire business of DHFL, including KKR India Financial Services, Welspun Group, Adani Group, Oaktree Capital and Bain Capital. DHFL is undergoing insolvency proceedings at the National Company Law Tribunal (NCLT), Mumbai.

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