HC allows banks to recover loan amount from DHFL

MUMBAI: The Bombay high court has granted relief to a clutch of banks by allowing Dewan Housing Finance Limited (DHFL) to pay back loans extended by the lenders to the debt-laden home financier.

The order was passed by the court after the banks sought relaxation of an October order in a suit wherein DHFL was restrained from making payments to any creditors.

The court granted the relief provided DHFL maintained a security cover equal to 1.1 times the amount of the outstanding non-convertible debentures it owed to Reliance Nippon Life Asset Management, which filed the suit.

A bench of justice A K Menon was informed several banks, including State Bank of India, Bank of Baroda, Union Bank of India, Indian Overseas Bank, UCO Bank, Canara Bank, DCB Bank, Standard Chartered Bank, IDFC First Bank, HDFC Bank, Aditya Birla Finance Ltd and Aditya Birla Housing Finance Ltd had filed an intervention application in the suit.

The October stay was granted by the high court after Reliance Nippon claimed in the suit that DHFL had executed Debenture Trust Deeds (DTDs) with it and to safeguard its interest, the home financier should be restrained from making payments.

While the intervention application of the banks was heard, the counsel for Reliance Nippon said that if DHFL maintains a security cover 1.1 times the amount of the outstanding non-convertible debentures (NCDs), it had no problem in the company paying the banks.

Counsel for DHFL submitted that as per the records and the unaudited results of DHFL as of 30 September, 2019, the security cover was equal to 1 to 1.2 times of the amounts in terms of the DTDs and DHFL shall maintain that.