A court in Mumbai recently closed the proceedings against Dewan Housing Finance Corporation Limited (DHFL) in the Yes Bank–DHFL money laundering case. [Dewan Housing Finance Corporation Ltd v. Enforcement Directorate]
Additional Sessions Judge RB Rote ruled that the company was entitled to immunity under Section 32A of the Insolvency and Bankruptcy Code (IBC) after approval of its resolution plan.
In an order dated February 2, the special court said,
“The liability of a corporate debtor for an offence committed prior to the commencement of the corporate insolvency resolution process shall cease, and the corporate debtor shall not be prosecuted for such an offence from the date the resolution plan has been approved."
The case stemmed from the alleged quid pro quo involving former Yes Bank MD and CEO Rana Kapoor and DHFL’s erstwhile promoter-directors Kapil and Dheeraj Wadhawan.
According to the Enforcement Directorate (ED), Yes Bank invested ₹3,700 crore in DHFL debentures between April and June 2018. In return, DHFL allegedly paid ₹600 crore to DOIT Urban Ventures Pvt Ltd, a Rana Kapoor-linked entity, in the garb of a loan against sub-standard properties having a value of only ₹39.66 crore.
In the case under Prevention of Money Laundering Act (PMLA), the central agency claimed that the proceeds of crime in the case were about ₹5,050 crore, of which ₹4,450 crore went to DHFL.
ED also said the DHFL was used by its promoter-directors in connivance with Rana Kapoor to park and siphon illegally obtained money.
However, Judge Rote noted that DHFL had undergone corporate insolvency resolution process (CIRP) on a petition filed by the Reserve Bank of India before the NCLT in Mumbai.
The Court said DHFL satisfied the statutory conditions under Section 32A(1) - the resolution plan was approved under Section 31 IBC, it resulted in change in management and control and the change in management was in favour of persons who were not related to the corporate debtor.
“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 Court observed.
It, however, clarified, that erstwhile officers/directors and others allegedly involved in the case shall continue to be prosecuted, notwithstanding that the corporate debtor’s liability has ceased.
NCLT had approved the resolution plan submitted by erstwhile Piramal Capital and Housing Finance Limited on June 7, 2021. As part of a reverse merger, Piramal Capital was merged into DHFL, and the corporate debtor remained the surviving entity.
The name of the company was then changed from DHFL to Piramal Capital and Housing Finance Limited with effect from November 3, 2021.
The Court noted that the Supreme Court on April 1, 2025 confirmed NCLT’s approval of the resolution plan and dismissed challenges by Kapil and Dheeraj Wadhawan and others.
It also noted that DHFL had already been discharged from the predicate offence by Bombay High Court on November 16, 2021 under Section 32A.
Advocates Karan Kadam briefed by the disputes team from Trilegal led by Ashwyn Misra and Chitra Rentala, senior associate Parikshith Kezhkekara; and associate Priyanka Vishnoi appeared for DHFL.
Special public prosecutor Sunil Gonsalves appeared for ED.
[Read Order]