Supreme Court restores NCLT approval of Piramal’s DHFL resolution plan; limits NCLAT interference on CoC commercial wisdom

A bench of Justice Bela M. Trivedi and Justice Satish Chandra Sharma heard a batch of consolidated appeals arising out of the Corporate Insolvency Resolution Process of Dewan Housing Finance Corporation Ltd. (DHFL). The appeals tested whether the National Company Law Appellate Tribunal (NCLAT) lawfully modified the resolution plan (RP) approved by the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT), principally on the question whether recoveries from avoidance and fraudulent‑trading proceedings (Sections 43–51 and Section 66 of the IBC) could be retained by the successful resolution applicant (SRA), Piramal Capital and Housing Finance Limited.

The Court allowed the principal appeals by Piramal Capital and Union Bank of India, set aside the NCLAT order dated 27.01.2022 insofar as it directed reconsideration of the RP on the Section 66 point, and upheld the NCLT order dated 07.06.2021 approving the Piramal RP. The Supreme Court reiterated that the IBC entrusts “commercial wisdom” to the CoC and circumscribes judicial review: the Adjudicating Authority under Section 31 examined compliance with Section 30(2) and the NCLAT’s jurisdiction under Section 61 was limited to the statutory grounds enumerated in Section 61(3). The Court clarified the procedure for outstanding avoidance/fraud applications: it directed the NCLT to adjudicate the Administrator’s pending applications under Sections 43, 45, 50 (Chapter III) and Section 66 (Chapter VI) according to the correct statutory schema and to determine appropriation of recoveries — directing that recoveries from Sections 43/45/50 accrue to the corporate creditors (CoC) while consequential recoveries in Section 66 applications may pertain to the SRA as agreed in the RP. The Court, in its reasoning, observed: “The legislature has given paramount importance to the ‘commercial wisdom’ of the CoC, and the scope of judicial review by the NCLT is limited to the extent provided under Section 31, and that of the Appellate Authority (NCLAT) is limited to the extent provided under sub‑section (3) of Section 61.” The Court therefore held that NCLAT had transgressed its jurisdiction by re‑writing a commercial bargain struck by the CoC and approved by the NCLT.

Background DHFL, a regulated housing finance company, entered CIRP after RBI superseded its board and filed a petition. The Administrator collated claims (≈ Rs.82,247 crore), appointed transaction auditors (Grant Thornton) and filed multiple avoidance/fraud applications alleging preferential, undervalued and fraudulent transactions (aggregate claims in avoidance matters ~ Rs.45,050 crore). The Administrator issued an RFRP; Piramal submitted competing RPs and ultimately offered an aggregate consideration of Rs.37,250 crore. The CoC (with votes from banks, financial institutions, NCD classes and fixed deposit holders) approved Piramal’s RP by a large majority (CoC approval ≈ 93.65%). The Administrator moved the NCLT for approval under Section 31; NCLT approved the RP on 07.06.2021. The 63 Moons and other NCD/depositor parties challenged parts of the RP, contending recoveries from avoidance/fraud suits could not be given to the SRA and that depositors’ regulatory rights under RBI/NHB statutes required different treatment. NCLAT on 27.01.2022 set aside the clause allowing the SRA to appropriate recoveries from Section 66 actions and remitted the RP to CoC for reconsideration. The Supreme Court heard consolidated appeals and limited cross‑appeals and restored the NCLT approval while directing the Adjudicating Authority to decide pending avoidance/fraud applications under the correct statutory provisions and to allocate recoveries in accordance with the law and the approved RP’s bargain.

Case No.: 2025 INSC 421 (orig. Civil Appeal Nos. 1632‑1634 of 2022 and connected matters) Case Title: Piramal Capital and Housing Finance Limited (formerly Dewan Housing Finance Corporation Ltd.) v. 63 Moons Technologies Limited & Others Appearances: For the Petitioner(s): Mr. Abhishek Manu Singhvi, Senior Advocate; Mr. Balbir Singh, Senior Advocate; Mr. Tushar Mehta, Senior Advocate (for CoC); Mr. Navin Pahwa (additional counsel) For the Respondent(s): Mr. Nakul Diwan, Senior Advocate (for 63 Moons); Mr. Kapil Sibal, Senior Advocate (for ex‑promoters); Mr. Dhruv Mehta, Senior Advocate (for depositors); Mr. Santosh Kumar Paul (for 63 Moons)