More than 100 deposit holders of Dewan Housing Finance Corp (DHFL) have moved the Supreme Court seeking a stay on the lender resuming lending operations till the time deposit holders are repaid on maturity. The petition says, “It is inherently contradictory and contrary to law that a financial institution, which is unable to fulfil its statutory obligations to repay its fixed depositors upon maturity, proposes to lend `500 crore a month to third parties.”
FE reported on January 20 that DHFL is planning to commence lending operations from the next week, starting with disbursing Rs 500 crore a month from internal accruals. The petitioners say, “Rather than considering representation of the petitioners on merit, mere lip service was paid by the committee by stating that due process would be followed in the interest of all stakeholders.”
The petition further says it is “arbitrary and completely unreasonable” for DHFL to carry out lending operations without having due regard to statutory provisions, and without fulfilling its repayment obligations to deposit holders. As per the Supreme Court website, the case is likely to come up for hearing on Thursday (23 January).
The petition says the Deposit Schemes Act, 2019 prescribes that amount due to depositors shall be paid in priority over all other debts and all revenues, taxes, cesses and other rates payable to the government. The petition also cites a letter from National Housing Bank (NHB) dated August 14, 2019, mandating that before any resolution, the repayment of public deposits upon maturity in the case of death or critical illness must not be delayed or stopped.
The petition says, “Furthermore, Section 36A and Section 45QA of the National Housing Bank Act 1987, and the RBI Act 1934, respectively, prescribe that every deposit accepted by housing finance institution or non-banking finance company (NBFC) shall be repaid in accordance with terms and conditions of such deposit.” The petitioners, therefore, have urged the apex court that DHFL should not continue lending operations till the time instructions from NHB and the mandate of the law are complied with to pay deposit holders.
DHFL is undergoing a resolution process after the Mumbai Bench of the NCLT (National Company Law Tribunal) admitted the case on December 2, 2019. The bids for the bankrupt mortgage financier are to be invited across three areas – retail, non-retail and slum development authority (SRA) loans.
Source- Financial Express.