DHFL Insolvency: Uttar Pradesh Power Corporation Trust Moves NCLT Seeking Release Of Deposits

The Uttar Pradesh Power Corporation Contributory Provident Fund Trust moved the National Company Law Tribunal to recover dues from Dewan Housing Finance Corporation Ltd.

The trust, which manages the power corporation’s provident fund, claimed that the beleaguered non-bank lender owes it more than Rs 148 crore that it invested in DHFL’s fixed deposits. A separate application was filed by a group of deposit holders who sought release of their fixed deposits.

The counsel representing the trust and deposit holders told the tribunal that claims have been made with the committee of creditors to DHFL through email apart from representations.

A two-member bench of the NCLT, comprising judicial member Rajasekhar VK and technical member Ravikumar Duraisamy, granted two weeks’ time to DHFL’s administrator to reply and directed the trust to wait for the CoC’s decision. The bench also asked DHFL’s administrator to convene a CoC meeting to consider representations made by the deposit holders and report the outcome at the next hearing.

Rohan Rajadhyaksha, counsel representing DHFL’s administrator, however, sought more time to respond. He informed the tribunal that the next meeting of the creditors may be held this month.

The dispute stems from the Bombay High Court and the Debt Recovery Tribunal’s interim orders to hold repayment by the home financier to its fixed depositors. Last month, however, the CoC to DHFL agreed to restart lending at a rate of Rs 500 crore a month. Following this, some deposit holders moved the Supreme Court seeking the release of their deposits. The apex court, however, dismissed the petition, refusing to interfere in the insolvency process at an early stage, and directed the deposit holders to approach the CoC or the NCLT.

What Deposit Holders Argued

The counsel who represented the provident fund trust and the deposit holders argued:

• DHFL’s committee of creditors agreed to restart lending contrary to the National Housing Bank’s direction restricting payments to third parties.
• DHFL must release the money invested by the provident fund trust and deposit holders before making payments.
• The CoC deliberated upon the claims made by the trust and deposit holders but hasn’t decided the matter which has precluded the non-bank lender from releasing or making payments against the deposits. This prompted the deposit holders to file an application in the NCLT.

The Tribunal will next hear the matter in March.