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Piramal Capital and Housing Finance Limited v. 63 Moons Technologies Limited

Civil Appeal · 2025 INSC 421Decided 1 Apr 2025
Civil Appeal Nos. 1632-1634 of 2022 (with connected Civil Appeal Nos. 1707-1712, 2989-2991, 2402, 2413-2415, 2567, 2987-2988, 8123-8125, 3694-3695, 6286, 2396 of 2022 and Diary No. 6037 of 2022)
Justice Bela M. Trivedi · Justice Satish Chandra Sharma

Background

Dewan Housing Finance Corporation Limited (DHFL), a major housing finance company, went into insolvency after the RBI superseded its Board over financial irregularities. During the CIRP, the Committee of Creditors (CoC) approved a resolution plan submitted by Piramal Capital and Housing Finance Limited, and the NCLT approved it. On appeal, the NCLAT modified the plan, ruling that Piramal (the Successful Resolution Applicant) could not appropriate recoveries from "avoidance applications" (claims against fraudulent or preferential pre-insolvency transactions) and sent that part back to the CoC. Multiple parties (Piramal, a creditor bank, 63 Moons Technologies (a fixed-deposit/NCD holder), DHFL's former directors, and various employee provident fund trusts) filed cross-appeals to the Supreme Court.

Decision Breakdown

The Supreme Court set aside the NCLAT's modification and restored the NCLT's original approval of the resolution plan. It held that the commercial wisdom of the CoC in approving a resolution plan is largely beyond judicial second-guessing, and the NCLAT had overstepped by rewriting commercial terms of an approved plan. On the specific dispute, the Court clarified that recoveries from avoidance applications under Sections 43, 45 and 50 of the IBC (preferential/undervalued transactions) must go to the CoC, while recoveries under Section 66 (fraudulent trading/wrongful trading) go to the Successful Resolution Applicant, since these are legally distinct categories. Appeals by the former directors (who had vacated office on RBI's supersession and were in custody) and by various employee funds were dismissed for lack of merit.

Lesson Learnt

Once a resolution plan under the IBC is approved by the Committee of Creditors and the NCLT, appellate tribunals have very limited power to alter its commercial terms; and money recovered from different types of "avoidance" claims (fraudulent transactions versus preferential/undervalued ones) is legally earmarked for different beneficiaries under the Code.

Official source (sci.gov.in)View Judgment (PDF)

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