The NCLAT has upheld the NCLT order to initiate insolvency proceedings against HDIL, and rejected the plea of its promoter Rakesh Wadhwan. A three-member bench of the appellate tribunal observed that the NCLT had given ample opportunity to Housing Development & Infrastructure Ltd (HDIL) to settle the matter amicably with its lenders, but it has failed to make the payment or arrive at a settlement.
Earlier on August 20, 2019, the Mumbai bench of National Company Law Tribunal (NCLT) had directed to initiate insolvency proceedings against HDIL, after allowing the insolvency plea filed by Bank of India, claiming default of a loan of Rs 522 crore by the realty firm.
"In view of our finding as aforesaid, no interference is called for against the impugned Order dated August 20, 2019. Therefore, Appeal fails," said the NCLAT bench headed by Acting Chairperson Justice B L Bhat.
The National Company Law Appellate Tribunal (NCLAT) also rejected the contentions of Wadhwan that order was passed by the NCLT without granting any opportunity to the company to file a reply and was a violation of the principle of Natural Justice.
Terming it "erroneous", the NCLAT said HDIL was granted ample opportunity to file reply but chose not to do so.
"On perusal of record from the paper book, it is apparent that again and again time was granted to the Corporate Debtor (HDIL) from February 1, 2019 to March 28, 2019, in view of the possibility of the settlement," the appellate tribunal said.
Despite taking several opportunities from the NCLT for settlement with the financial creditor, HDIL defaulted in making the payment.
"Therefore, the contention of the Appellant that Order has been passed without affording an opportunity for filing Reply, in violation of the principle of natural justice is without any basis," the NCLAT said.
The appellate tribunal also observed that this was the second time the lenders had to approach the NCLT for the default of the same debt.
Earlier, Bank of India had moved a plea to initiate insolvency against HDIL in 2018, however, it was not pressed as the company had offered a one-time settlement.
"Based on that offer, the Adjudicating Authority (NCLT) permitted the withdrawal of the earlier Petition by its Order dated September 25, 2018," the appellate forum said.
Following this HDIL, then in compliance of one-time settlement issued post-dated cheques which were returned, dishonoured and Bank of India was constrained to file fresh proceeding under Section 7 of the Code, the NCLAT observed.
"In the second Petition again, the Adjudicating Authority provided several opportunities to the Corporate Debtor considering the scope of the settlement. However, after the failure of any hope of settlement, the Order of admission was passed against the corporate debtor," it noted.
Earlier on July 10, a Mumbai-based court had refused bail to Rakesh Wadhawan and Sarang Wadhawan.
The Wadhawan duo are accused in the multi-crore rupee Punjab & Maharashtra Cooperative (PMC) Bank scam case.
HDIL promoters Rakesh Wadhawan and his son Sarang are accused, besides several others, in the Rs 4,355-crore PMC Bank scam, which surfaced in September last year.
The case is being probed by Enforcement Directorate, along with Economic Offences Wing of Mumbai police.
The case stems from massive loans given by PMC Bank to HDIL.
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