PMLA court discharges DHFL, grants immunity under IBC after change in management

Mumbai: A special court here discharged Dewan Housing Finance Corporation Ltd (DHFL) as an accused corporate debtor in a money-laundering case, holding that the company is entitled to statutory immunity under the Insolvency and Bankruptcy Code (IBC) following approval of its resolution plan and change in management.

Additional sessions judge RB Rote, designated as special judge under the Prevention of Money Laundering Act (PMLA), allowed the discharge application filed by Piramal Capital and Housing Finance Ltd, which acquired DHFL in 2021 under a resolution proposal cleared by the bankruptcy tribunal.

Once the resolution plan resulted in a complete change in control, the corporate debtor could not be prosecuted for offences committed prior to the commencement of the corporate insolvency resolution process (CIRP), the court noted in its order delivered Tuesday. However, immunity cannot extend to erstwhile promoters, officers or directors who were in charge of the company's affairs or allegedly involved in the offences prior to the CIRP, the court said.


The accused in the case include DHFL's erstwhile directors Kapil and Dheeraj Wadhawan and Yes Bank cofounder Rana Kapoor. They are accused of diverting money that Yes Bank invested in the housing finance company's debentures.

The court noted that the RBI had superseded DHFL's board in November 2019 over governance concerns and payment defaults and appointed an administrator. Insolvency proceedings were initiated thereafter, and the NCLT admitted the company into CIRP in December 2019, imposing a moratorium on proceedings against it. A resolution plan submitted by Piramal Capital & Housing was approved by 93.65% of the committee of creditors and sanctioned by the tribunal in June 2021, resulting in a change in management and an eventual reverse merger.