Piramal Capital drags Anil Ambani companies to NCLT over unpaid dues

Reliance Natural Resources had defaulted on a loan of Rs 526.1 cr from DHFL before it was taken over by Piramal Capital last September for Rs 34,250 cr

Piramal Capital and Housing Finance (PCHFL) has filed bankruptcy proceedings against Anil Ambani-owned Reliance Power (RPL) and its subsidiary Reliance Natural Resources (RNRL). The case has been filed under Section 7 of the Insolvency and Bankruptcy Code (IBC) 2016, in the National Company Law Tribunal (NCLT) Mumbai, to recover dues.

RNRL had defaulted on a loan of Rs 526.1 crore taken from DHFL. The housing finance company was later taken over by the Ajay Piramal-owned Piramal Capital in September 2021 for Rs 34,250 crore. Soon after the acquisition, Dewan Housing Finance Corporation (DHFL) was merged with PCHFL.  PCHFL has initiated recovery proceedings against several defaulters of DHFL. 

Incidentally, Piramal’s son Anand Piramal is married to Anil Ambani's niece and older brother Mukesh Ambani's daughter, Isha Ambani. As PCHFL has moved court, RPL and RNRL are planning to contest the petition because they hold the view that the dues are not as high as claimed by PCHFL.

On January 27, the National Company Law Appellate Tribunal (NCLAT) had ordered DHFL’s committee of creditors (CoC) to reconsider PCHFL ascribing a notional value of Rs 1 to recoverable assets of DHFL worth Rs 45,000 crore. 

According to Piramal’s debt resolution plan, any recovery from loans under default will not go to the lenders but to Piramal, leading to litigation from 63 Moons Technologies – one of the lenders to DHFL. Piramal has moved the Supreme Court against the NCLAT order and the matter is currently pending.

DHFL, a Mumbai-based housing finance company, collapsed after it failed to repay its debt worth Rs 90,000 crore to Indian lenders and was sent for debt resolution under IBC in November 2019. The Reserve Bank of India (RBI) had superseded the board of DHFL in November 2019, and appointed an administrator to manage the affairs of DHFL.

An audit by Grant Thornton, an independent audit firm appointed by the administrator, found that the promoters had diverted funds from the company via various fictitious accounts and from a non-existent branch in Bandra, Mumbai. The Central Bureau of Investigation, the Enforcement Directorate and the Ministry of Corporate Affairs are separately investigating these transactions.

 With the NCLAT order, the CoC will have to reconsider the provision of Section 66 of IBC according to which the recoveries made should go to all the creditors of DHFL. However, the CoC had, in its resolution plan, overlooked this provision to the benefit of Piramal Group, according to a statement from 63 Moons. 

63 Moons argued that the resolution plan of Piramal valued the recoveries from the fraudulent transactions worth more than Rs 45,000 crore at a notional value of Rs 1 and sought to appropriate the future recoveries from these transactions. In other words, by valuing these transactions at an unrealistic and arbitrary value of Rs 1, Piramal attempted to appropriate massive recoveries that were likely to result from the avoidance applications filed by DHFL, 63 Moons said.