A special PMLA court in Mumbai has discharged Dewan Housing Finance Corporation Limited from the case linked to the Yes Bank deal. This relief comes as the company is now under new management. The judge noted the firm’s liability ceases to exist with this change.
Special judge RB Rote emphasized this point clearly. The discharge is crucial for the new management to start afresh.
However, the legal battle is far from over for individuals. The previous directors and officials allegedly responsible for the fraud will still face trial.
The court stated that extinguishing the corporate debtor’s criminal liability allows a clean break. This enables the new management to begin on a clean slate, free from past burdens.
DHFL’s advocate, Karan Kadam, presented key arguments. He cited the resolution plan approved by the NCLT on June 7, 2021.
The plan was submitted by the erstwhile Piramal Capital and Housing Finance Ltd. This entity is now known as Piramal Finance Ltd.
A critical part of the approved plan involved a reverse merger. The Successful Resolution Applicant was reverse merged into DHFL, with DHFL remaining as the surviving legal entity.
Additionally, the company had already been discharged from the predicate offence by the High Court. This formed a foundational part of the defense’s case.
The Enforcement Directorate’s prosecutor, Sunil Gonsalves, opposed the plea. He argued that DHFL should not be discharged.
His contention centered on the absence of a specific provision for prosecuting the company in the predicate offence. However, the PMLA contains specific clauses regarding liability.
The PMLA provision states that every person in charge at the time of the contravention is deemed guilty. This provision shifts the focus squarely onto individuals.
Thus, while the corporate entity finds relief, the individuals from the old regime remain in the legal crosshairs. The trial will proceed against the former directors and officials.
This ruling highlights the complex interplay between corporate restructuring and criminal liability. It draws a clear line between the past and present management of DHFL.
The case continues to be a significant chapter in India’s financial fraud narratives. The focus now moves to the trial of the individuals involved.