Relief for UBI: NCLT Declares Former DHFL Chairman Bankrupt Over Rs. 4,546 Crore DHFL Debt [Read Order]
NCLT appointed Mr. Sanjay Kumar Mishra as the Bankruptcy Trustee and directed him to manage the guarantor’s estate, invite claims, distribute assets among creditors, and oversee the process as per the Code and IBBI regulations
The Mumbai bench of National Company Law Tribunal, declared the personal guarantor, the former chairman of the Dewan Housing Finance Corporation Limited (DHFL) bankrupt over dues of ₹4,545,96,56,973.57 related to the Dewan Housing Finance Corporation Limited (DHFL) facility agreements, providing relief to Union Bank of India (UBI).
Union Bank of India,petitioner-financial creditor ,had provided credit facilities to the Corporate Debtor along with Andhra Bank and Corporation Bank, which merged into Union Bank on 01.04.2020. The parties entered into several Consortium Agreements, including the original dated 24.07.2010 and five supplemental agreements until 18.06.2015 (together called ‘DHFL Facility Agreements’).
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The Respondent-personal guarantor executed a Joint Deed of Guarantee on 22.06.2019, personally guaranteeing payment of the Corporate Debtor’s obligations under the credit facilities up to Rs. 50,656.84 crores. The Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor was initiated on 03.12.2019 under Section 7 of the Code. The petitioner filed a claim of Rs. 36,45,56,87,597.83, of which Rs. 35,17,30,39,020 was admitted by the Administrator.
After default under the DHFL Facility Agreements, the petitioner issued invocation cum demand notices on 10.09.2020 and 21.09.2020, seeking Rs. 39,58,30,48,963.71. The Respondent failed to pay, leading to a Demand Notice in Form B on 07.10.2020.
The petitioner filed Company Petition No. 5 of 2021 on 01.12.2020 under Section 95 to initiate insolvency against the Personal Guarantor. During the pendency, the resolution plan for the Corporate Debtor by Piramal Capital & Housing Finance Limited was approved, and the petitioner received part payments.
NCLT Mumbai Bench ,appointed Mr. Devendra Mehta as Resolution Professional on 12.06.2023, who recommended admission of the Section 95 petition on 07.07.2023. NCLT admitted the petition on 02.04.2024 (‘PG Admission Order’) and started insolvency resolution of the Personal Guarantor under Section 100. The Personal Guarantor appealed to NCLAT, which dismissed the appeal on 14.08.2024, and an appeal to the Supreme Court is pending.
The erstwhile RP published a public notice on 08.04.2024 for claims from creditors. NCLT allowed replacement of the RP with Mr. Abhilash Lal on 11.06.2024. The Personal Guarantor was required to submit a repayment plan under Section 105 but did not do so despite repeated requests. Consequently, creditors decided on 20.09.2024 to close the insolvency process and initiate bankruptcy proceedings before the Tribunal.
The Resolution Professional (RP ) filed Interlocutory Application No. 6 of 2025 under Section 112 of the Code, which NCLT Mumbai allowed on 02.01.2025. The Tribunal held that since no repayment plan was received, it would be treated as rejected under Section 114, and the consequences under Section 115(2) would follow, allowing the debtor or creditors to file for bankruptcy.
NCLT later clarified on 29.01.2025 that the Personal Guarantor was not untraceable but was in judicial custody at Tihar Jail, while the rest of the order remained unchanged.
The two member bench comprising Lakshmi Gurung (Judicial Member) and Hariharan Neelakanta Iyer (Technical Member) admitted the petition filed by the Petitioner under Section 123 of the Code to initiate bankruptcy proceedings against the Personal Guarantor. The total debt owed by the Personal Guarantor to the Petitioner as of 28.03.2025, after adjusting amounts recovered from the Corporate Debtor, was Rs. 4,545,96,56,973.57.
The bench noted that the petition was filed within the three-month period allowed under Section 121(2) and included all required documents, including the Joint Deed of Guarantee, relevant orders, account statements, and certificates under the Bankers’ Book Evidence Act.
The tribunal declared Mr. Kapil Wadhawan as bankrupt and appointed Mr. Sanjay Kumar Mishra as the Bankruptcy Trustee. The Registry was directed to provide copies of the bankruptcy order and petition to the bankrupt, creditors, and trustee.
The bankrupt’s estate vested in the trustee, who was responsible for administering the estate, distributing assets, issuing public notices, and managing all proceedings under the Code and IBBI regulations.
The bankrupt was required to submit his financial statement within seven days, and the trustee had to submit preliminary, quarterly progress, and final reports to the Adjudicating Authority and Committee of Creditors.
Trustee fees were to follow IBBI regulations, and the Registry was directed to send e-mail copies of the order to all parties and counsel. The order would remain effective until the bankrupt was discharged under Section 138.
Accordingly the petition was admitted.
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