In Brief
The Supreme Court examined the insolvency of DHFL, a major housing finance company accused of large-scale financial fraud. The core issue was whether recoveries from fraudulent trading applications (Section 66 of IBC) should benefit the successful resolution applicant (Piramal) or all creditors. The NCLAT had interfered with the approved resolution plan directing reconsideration of this clause. The Supreme Court held that the NCLAT transgressed its limited jurisdiction and that applications under Section 66 are distinct from 'Avoidance Applications' under Chapter III. The Court reaffirmed that once a resolution plan is approved by the requisite majority of creditors and meets statutory requirements, judicial review is restricted to specific grounds. Commercial wisdom of creditors receives paramount importance. The Court dismissed challenges by fixed deposit holders and ex-promoters, holding the resolution plan complied with applicable law and the CoC's decision was binding on all creditors represented by authorized representatives.
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