NCLAT Vacates Stay On Formation Of HDIL Committee Of Creditors

Paving the way for insolvency proceedings against scam-hit Housing Development and Infrastructure Ltd. to continue, the National Company Law Appellate Tribunal vacated the stay it had granted on formation of a creditors’ committee.

The committee of creditors will be formed as per the Insolvency and Bankruptcy Code, according to law firm MDP & Partners, representing Bank of India—the lead lender that moved the National Company Law Tribunal earlier this year with a plea to initiate insolvency process against HDIL.

The state-run bank had filed the application after HDIL failed to repay dues worth Rs 520 crore. The NCLT had asked the financial creditors and homebuyers to submit their claims against the company by Sept. 8. Meanwhile, HDIL had moved the NCLAT seeking a stay on the formation of committee of creditors, which was granted.

HDIL declined to comment on BloombergQuint’s emailed queries, saying it was still awaiting the copy of order dated Dec. 17.

The NCLAT’s move comes as a relief to 240 homebuyers of HDIL’s stalled Majestic Towers project in Nahur, Maharashtra. The project was launched in 2009. The homebuyers had made 65-70 percent payment and were scheduled to receive their homes between 2011 and 2018. Failing which, they moved the MahaRERA seeking possession, delayed interest and compensation. On Dec. 27, 2018, MahaRERA ordered HDIL to submit the list of allotees within a month and commence construction work on or before April 30, 2019.

In May, an association of homebuyers again filed a complaint with MahaRERA seeking to revoke the registration of the project. Meanwhile, Bank of India moved the NCLT with an application to initiate insolvency proceedings against HDIL. Following which, MahaRERA disposed of the case saying the case is now in the NCLAT and an insolvency professional has been appointed, but with a liberty to file fresh complaint.

The homebuyers then filed an intervenor application before the NCLAT.

“Today’s order comes as a relief for all homebuyers who have already submitted their claims. We want this process to be expedited as soon as possible as per IBC,” Advocate Omkar Khanvilkar of Solicis Lex, representing HDIL homebuyers, told BloombergQuint. “After RERA disposed our case due to ongoing insolvency process with a liberty to approach again, this was one of the recourses.”

The next hearing is on Jan. 17.

HDIL was also in spotlight recently after its directors Rakesh and Sarang Wadhawan were arrested by the Economic Offenses Wing of Mumbai Police in the PMC Bank case. That came after the EOW filed an FIR, alleging that the bank faked loan records to under-report the company as a non-performing asset.

India’s Ministry of Corporate Affairs, too, is examining the book of accounts of HDIL to look for any irregularities. The probe was initiated after the Reserve Bank of India found that PMC Bank had total exposure of 73 percent to HDIL. The loans from the cooperative bank helped HDIL delay insolvency proceedings, the bank’s former Managing Director K Joy Thomas had said.