Mumbai: DHFL Gets PMLA Relief In Yes Bank Deal; Former Directors To Face Trial

Mumbai: The special court under the Prevention of Money Laundering Act (PMLA) has discharged Dewan Housing Finance Corporation Limited (DHFL) from the case linked to the Yes Bank-DHFL deal, as the company has now been taken over by the new management. Special judge RB Rote noted that with the new management the liability of the firm ceases to exist.

However, the previous directors and officials responsible for the alleged fraud would continue to face the trial. “The extinguishment of the criminal liability of the corporate debtor is apparently important to the new management to make a clean break with the past and start on a clean slate,” the special court said. It was contended by DHFL advocate Karan Kadam that the resolution plan submitted by the erstwhile Piramal Capital and Housing Finance Ltd (now Piramal Finance Ltd) for the corporate debtor (DHFL) was approved by the National Company Law Tribunal (NCLT) by an order dated June 7, 2021.

It was further submitted that, as part of the approved plan, the Successful Resolution Applicant (SRA) i.e. erstwhile Piramal Capital and Housing Finance Ltd was reverse merged into DHFL in such a way that the latter remained as the surviving legal entity. Besides, the company has been discharged from the predicate offence by the High Court.

The plea was opposed by ED prosecutor Sunil Gonsalves, who claimed that DHFL cannot be discharged as there was no particular provision for prosecuting the company in the predicate offence. However, in the PMLA, there is specific provision that every person who, at the time the contravention was committed, was in charge of and was responsible to the company… shall be deemed to be guilty.

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