Bombay HC Allows DHFL To Make Payments To Banks Under Securitization And Assignment Agreements [Read Order]

The Bombay High Court on Wednesday allowed the crisis hit Dewan Housing Finance Corporation Limited (DHFL) to make payments to banks and lenders modifying its earlier order restraining the housing finance firm from making payments to unsecured creditors.

State Bank of India, Bank of Baroda, Union Bank of India, Indian Overseas Bank, UCO Bank, Canara Bank, Bank of India, DCB Bank, Standard Chartered Bank, IDFC First Bank, HDFC Bank, Aditya Birla Finance Ltd and Aditya Birla Housing Finance Ltd filed the said intervention application in a commercial suit filed by Reliance Nippon and Edelweiss AMC.

Justice AK Menon heard the applications and modified the earlier order to the extent that DHFL will now be able to make payments to those lenders it has a securitisation agreement with.

Senior Advocate Iqbal Chagla appeared for the plaintiffs and submitted that if DHFL confirms that it maintains security cover of 1.1 times the amount of the outstanding non-convertible debentures (NCDs), the plaintiffs have no objection to DHFL making remittances to all these applicants and in accordance with the diverse Assignment Agreements.

DHFL's counsel Senior Advocate Prasad Dhakepalkar took instructions from Amol Walawalkar, the authorized signatory and the Deputy Vice President Legal of DHFL who was present in Court and said that as per the records and the unaudited results of DHFL as on September 30, 2019, the security cover is of 1 to 1.2 times of the amounts in terms of the DTDs and that DHFL shall maintain the same in terms of the DTDs.

Thus, Court observed-

"In view of the statement, the ad-interim order dated 10th October, 2019 is modified to the extent that DHFL shall make payments in accordance with the various Assignment Agreements entered into between DHFL and the Applicants and the other assignees of such loans in cases where such assignees have executed similar Assignment Agreements."

Meanwhile, on Friday the Debt Recovery Tribunal, Pune restricted DHFL from making payments to any of the unsecured creditors.

Click here to download the Order