The Supreme Court upheld the commercial wisdom of the Committee of Creditors (CoC) in approving the resolution plan for Dewan Housing Finance Corporation Limited (DHFL), emphasizing limited judicial review under the Insolvency and Bankruptcy Code (IBC). The Court ruled that recoveries from avoidance applications under Section 66 of the IBC could be appropriated by the successful resolution applicant, while recoveries under Sections 43, 45, and 50 would benefit the creditors. The Court clarified that the National Company Law Appellate Tribunal (NCLAT) exceeded its jurisdiction by interfering with the CoC’s decision. The appeals by fixed deposit holders and ex-promoters were dismissed, affirming the primacy of the CoC’s commercial decisions under the IBC.
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Facts of The Case:
The case involved the insolvency resolution of Dewan Housing Finance Corporation Limited (DHFL), a housing finance company and non-banking financial company (NBFC). The Reserve Bank of India (RBI) superseded DHFL’s board due to financial irregularities and initiated Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC). The Committee of Creditors (CoC) approved Piramal Capital’s resolution plan, which included a clause allowing recoveries from fraudulent transactions (Section 66 of IBC) to be retained by Piramal, while recoveries from preferential and undervalued transactions (Sections 43, 45, and 50) would benefit creditors. Certain creditors, including 63 Moons Technologies and fixed deposit holders, challenged the plan before the National Company Law Appellate Tribunal (NCLAT), arguing that all recoveries should go to creditors and that the plan violated statutory protections for depositors under the RBI Act and National Housing Bank (NHB) Act. The NCLAT partially modified the plan, directing reconsideration of the treatment of Section 66 recoveries. On appeal, the Supreme Court reversed the NCLAT’s decision, upholding the CoC’s commercial wisdom and the validity of the resolution plan. The Court also dismissed challenges by ex-promoters, ruling they had no right to participate in CoC meetings after the board’s supersession. The judgment reinforced the limited judicial review of CoC decisions under the IBC.
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Procedural History:
The procedural history of the case began when the Reserve Bank of India (RBI) superseded the board of Dewan Housing Finance Corporation Limited (DHFL) in November 2019 and filed an insolvency petition before the National Company Law Tribunal (NCLT), Mumbai, under the Insolvency and Bankruptcy Code (IBC). The NCLT admitted the petition in December 2019 and initiated the Corporate Insolvency Resolution Process (CIRP). During the resolution process, Piramal Capital’s resolution plan was approved by the Committee of Creditors (CoC) with a 93.65% majority in January 2021. The NCLT approved the plan in June 2021, rejecting objections from certain creditors and ex-promoters. Dissatisfied creditors, including 63 Moons Technologies and fixed deposit holders, appealed to the National Company Law Appellate Tribunal (NCLAT), which in January 2022 partially modified the plan, directing reconsideration of recoveries from fraudulent transactions under Section 66 of the IBC. Piramal Capital, Union Bank of India, and other stakeholders then appealed to the Supreme Court, which in April 2025 overturned the NCLAT’s modification, restoring the original resolution plan and affirming the CoC’s commercial discretion under the IBC. The Supreme Court also dismissed appeals by ex-promoters and fixed deposit holders, concluding the litigation.
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Court Observation:
The Supreme Court made several key observations while upholding the resolution plan for DHFL. It emphasized the primacy of the Committee of Creditors’ (CoC) commercial wisdom under the Insolvency and Bankruptcy Code (IBC), noting that judicial interference is limited to verifying compliance with statutory requirements under Section 30(2). The Court clarified that recoveries from avoidance applications under Sections 43, 45 and 50 of IBC must benefit creditors, while those under Section 66 (fraudulent/wrongful trading) could be retained by the successful resolution applicant (Piramal Capital) as per the negotiated terms. It held that the NCLAT had exceeded its jurisdiction by modifying the approved resolution plan, as such interference undermines the finality and binding nature of CoC decisions under Section 31 of IBC. Regarding fixed deposit holders’ claims, the Court observed that neither the RBI Act nor NHB Act mandates full repayment of deposits during insolvency resolution, and their treatment under the plan was a commercial decision of the CoC. The Court also distinguished between “suspension” of directors under IBC (which grants limited participation rights) and “supersession” under RBI Act (which terminates all rights), holding that ex-promoters had no locus to challenge the process after board supersession. The judgment reaffirmed that resolution plans must be examined holistically rather than through isolated clauses, and that courts should not second-guess commercial arrangements approved by creditors.
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Final Decision & Judgement:
The Supreme Court, in its final judgment, allowed the appeals filed by Piramal Capital and Union Bank of India while dismissing the challenges raised by other stakeholders. It set aside the NCLAT’s modification of the resolution plan and restored the NCLT-approved version, upholding the CoC’s commercial decision to allocate Section 66 recoveries to Piramal Capital. The Court ruled that the resolution plan complied with all statutory requirements under Section 30(2) of the IBC and that the NCLAT had improperly interfered with the CoC’s commercial wisdom. It dismissed the appeals filed by fixed deposit holders, holding that their claims were appropriately addressed under the plan and that no statutory violation of the RBI Act or NHB Act had occurred. The Court also rejected the ex-promoters’ appeals, affirming that they had no participatory rights after the RBI’s supersession of DHFL’s board.
The judgment reinforced the IBC’s objective of value maximization through creditor-driven resolution processes while maintaining limited judicial review. All pending avoidance applications were directed to be decided by the NCLT in accordance with the differentiated treatment of recoveries under the approved plan – with Sections 43/45/50 recoveries going to creditors and Section 66 recoveries to Piramal Capital. The Supreme Court’s decision provided finality to DHFL’s resolution while reaffirming the primacy of creditor autonomy under the IBC framework.
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Case Details:
Case Title: Piramal Capital and Housing Finance Limited (Formerly Known as Dewan Housing Finance Corporation Limited) v. 63 Moons Technologies Limited & Others Citation: 2025 INSC 421 Date of Judgment: April 1, 2025 Judges/Justices Name: Justice Bela M. Trivedi And Justice Satish Chandra Sharma
Download The Judgement