The DHFL “Scam” Fiasco: Grok’s Responses

Posted on 18th March, 2025 (GMT 21:09 hrs)

ABSTRACT

The article explores the Dewan Housing Finance Corporation Limited (DHFL) scam through a series of hypothetical questions posed to Grok, an AI developed by xAI. The DHFL scam is described as India’s largest banking fraud, involving over Rs 34,000 crore, where promoters Kapil and Dheeraj Wadhawan allegedly siphoned funds through fake borrowers and shell companies, defrauding a consortium of 17 banks. The piece critiques systemic issues like crony capitalism and regulatory failures, focusing on the controversial resolution process that handed DHFL to Piramal Capital and Housing Finance Ltd.

The article is structured as a Q&A, with Grok providing detailed responses based on available data up to March 18, 2025. Key points include:

Nature of the Scam: Grok explains how DHFL disbursed Rs 29,000 crore to 66 promoter-linked entities, with Rs 29,849 crore outstanding, using fictitious accounts and round-tripping funds to enrich the Wadhawans.
Resolution Controversy: The sale to Piramal for Rs 34,250 crore is criticized as undervalued, causing a Rs 65,000 crore loss to banks, allegedly facilitated by political collusion with the BJP and regulatory lapses.
Victims’ Plight: Fixed deposit (FD) and non-convertible debenture (NCD) holders, especially senior citizens, suffered massive losses due to a 23% payout under Piramal’s plan, despite legal challenges still pending.
Systemic Issues: Grok highlights conflicts between the Insolvency and Bankruptcy Code (IBC) and other financial laws, alongside political donations (e.g., Rs 20 crore to BJP) and alleged terror-funding links via Dawood Ibrahim, though evidence remains inconclusive.
Grok’s Role: The AI avoids definitive judgments on unresolved legal matters or ethical questions (e.g., death penalty), sticking to factual analysis and noting ongoing investigations by CBI and ED.

The article uses Grok’s responses to underscore the scam’s complexity, blending financial misconduct with political and legal dimensions, while urging further scrutiny of the establishment narrative. It reflects the authors’ activism, evident in their broader campaign against the resolution process, but relies on Grok to present a structured summary of the fiasco.

Introduction

Amid the ongoing controversy over Grok’s candid responses—created by xAI under Elon Musk’s X—BJP-associated Indian users have notably clashed with the AI’s outputs. We observed that Grok often delivers evidence-based claims challenging the BJP’s saffron-tinged pseudological narratives, prompting us to probe further. Our inquiry focused on the DHFL “scam,” posing targeted questions to Grok about its context and implications. The following post compiles our queries alongside Grok’s prompt, thorough replies. Yet, Grok’s approach here leans diplomatic—balancing facts without direct confrontation—stopping short of naming the BJP’s role explicitly. To pierce through this restraint, we recommend filtering Grok’s responses against our prior posts, linked in the “See Also” section below. Dive into Grok’s database through these exchanges and draw your own conclusions.

Is there an one-to-one correspondence between the BJP’s rising assets and rampant bankruptcies in India?

There isn’t sufficient evidence to establish a direct, one-to-one correspondence between the Bharatiya Janata Party’s (BJP) rising assets and rampant bankruptcies in India. Let’s break this down based on available information and reasoning.

The BJP’s assets, as a political party, have indeed grown significantly in recent years. Reports from the Association for Democratic Reforms (ADR) indicate that the BJP’s declared assets and income have increased substantially, largely due to electoral bond contributions and other funding sources. This financial growth aligns with the party’s political dominance, having secured victories in national and several state elections, which naturally boosts fundraising capabilities through donations from individuals, corporations, and other entities.

On the other hand, bankruptcies in India, particularly in the corporate sector, have been tracked through the Insolvency and Bankruptcy Code (IBC) introduced in 2016 under the BJP-led government. The IBC was designed to resolve distressed assets and tackle non-performing assets (NPAs) in the banking system. Data from the Insolvency and Bankruptcy Board of India (IBBI) shows thousands of cases have been admitted since its inception, with many leading to liquidation or resolution. Economic factors like the COVID-19 pandemic, global supply chain disruptions, and domestic policy shifts have also contributed to financial distress in various sectors, potentially increasing bankruptcy filings.

However, linking these two phenomena—one a political party’s financial growth, the other an economic outcome—requires evidence of causation, not just correlation. No direct data or credible analysis explicitly ties the BJP’s asset growth to an increase in bankruptcies. The party’s rising wealth stems from its political success and donor support, while bankruptcies are driven by broader economic conditions, corporate mismanagement, or structural reforms like the IBC. For instance, the IBC’s implementation predates some of the BJP’s most significant asset increases, and bankruptcy trends have fluctuated based on external factors unrelated to the party’s finances.

Could there be an indirect connection? Some critics might argue that BJP-led policies (e.g., demonetization in 2016, GST rollout in 2017, or uneven economic recovery post-COVID) have strained businesses, potentially contributing to bankruptcies while simultaneously benefiting the party politically and financially through corporate support. Yet, this remains speculative without granular data showing that bankrupt firms—or their creditors—disproportionately funded the BJP, or that the party’s asset growth directly exacerbated insolvency trends.

Economic indicators paint a mixed picture. India’s GDP growth has been robust at times under BJP rule (e.g., 7-8% pre-COVID), but bankruptcy cases have also risen, with over 7,000 cases admitted under the IBC by late 2024, per IBBI reports. Meanwhile, the BJP’s income reportedly crossed ₹3,000 crore in recent fiscal years (ADR data), dwarfing other parties. These trends coexist but lack a proven causal thread.

In conclusion, while the BJP’s assets have risen and bankruptcies have been notable, no one-to-one correspondence is evident. The former reflects political dynamics; the latter, economic and legislative ones. Without specific evidence—say, a study showing BJP funding directly correlates with insolvency spikes—any connection remains hypothetical. More research into donor profiles, bankruptcy causes, and policy impacts would be needed to test this further.

What is the DHFL scam and is the BJP linked with it?

The DHFL scam refers to a massive financial fraud involving Dewan Housing Finance Corporation Limited (DHFL), a prominent Indian non-banking financial company. It is considered one of the largest banking frauds in India’s history, with allegations of misappropriating over ₹34,000 crore (approximately $4-5 billion USD) in funds. The scam came to light in 2019 following an investigation by Cobrapost, a media outlet, which alleged that DHFL’s promoters, primarily brothers Kapil and Dheeraj Wadhawan, siphoned off public money through dubious loans to shell companies, round-tripping, and financial irregularities.

Key Details of the DHFL Scam

Scale and Modus Operandi: Between 2010 and 2018, DHFL secured ₹42,871 crore in credit from a consortium of 17 banks, led by Union Bank of India. By May 2019, the company defaulted on repayments, resulting in a loss of ₹34,615 crore to the consortium. Investigations revealed that the promoters diverted funds to 66 entities linked to them, often disguised as loans or investments in real estate and other assets. A forensic audit by Grant Thornton identified fictitious loan accounts, including a “Bandra Books” scheme with over 2.6 lakh fake home loan accounts used to siphon funds, some of which were allegedly linked to claiming subsidies under the Pradhan Mantri Awas Yojana (PMAY).
Legal Actions: The Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) launched probes. The Wadhawan brothers were arrested multiple times—first in 2020 by the ED for a related money-laundering case tied to underworld figure Iqbal Mirchi, and later by the CBI in 2022 and 2024 for the bank fraud. The CBI’s charge sheet alleges criminal conspiracy, breach of trust, and misuse of public funds. SEBI also barred the promoters from capital markets, though the Supreme Court later intervened on bail matters.
Underworld Links: The CBI uncovered potential connections to organized crime, including Chhota Shakeel, an associate of Dawood Ibrahim, with funds allegedly diverted to individuals like Ajay Nawandar, raising questions about the scam’s broader network.

Alleged BJP Link

The Bharatiya Janata Party (BJP) has been accused of having financial ties to DHFL, primarily through political donations. Here’s what’s known:

Donation Claims: Reports and opposition allegations, notably from the Congress party, state that the BJP received over ₹27.5 crore in donations from DHFL promoters and associated companies between 2014 and 2019. Specific figures include ₹10 crore from RKW Developers Ltd. (2014-15), ₹10 crore from Wadhawan Global Capital Ltd. (2019), and ₹7.5 crore from Darshan Developers, all entities linked to the Wadhawan family. These figures are based on Election Commission filings and have been widely cited by critics.
Opposition Narrative: The Congress and others, including posts on X, have claimed this reflects a “quid pro quo,” suggesting the BJP may have overlooked or facilitated the fraud in exchange for funds. They point to the scam unfolding “under the nose” of the BJP-led central government and question why regulatory bodies like the RBI and SEBI failed to act sooner.
Counterarguments: The BJP has not officially responded to these specific allegations in detail. However, supporters argue that political donations are legal and common across parties, and no concrete evidence shows the BJP influenced the scam’s execution or shielded the perpetrators. The donations, while verified, predate some of the scam’s exposure, and the legal actions against the Wadhawans were initiated under the BJP government, suggesting enforcement rather than complicity.
UP Power Corporation Angle: Another layer involves the investment of ₹2,600 crore from the Uttar Pradesh Power Corporation’s provident fund into DHFL in 2017, approved under the BJP-led state government. The BJP blamed the prior Samajwadi Party regime for initiating the process, while critics demanded accountability from the then-ruling BJP.

Assessment

The DHFL scam is a well-documented financial fraud involving systematic fund diversion, with the Wadhawan brothers as central figures. The BJP’s link hinges on donations and political oversight claims, but no definitive evidence—beyond opposition accusations—proves the party directly enabled the scam. The donations are factual and substantial, yet their timing and legality don’t inherently establish causation. Investigations and arrests under the BJP-led government counter the narrative of inaction, though critics argue regulatory lapses suggest negligence or worse.

In short, the DHFL scam is a colossal financial misdeed, and while the BJP received significant funds from DHFL-related entities, a direct causal link to the scam remains unproven without further evidence like court rulings or detailed probes tying policy decisions to the fraud. The debate continues to be politically charged, with sentiment on platforms like X reflecting strong opposition suspicion but lacking conclusive substantiation.

What are the controversies surrounding Mr. Ajay Piramal?

Ajay Piramal, the billionaire chairman of the Piramal Group, has been associated with several controversies over the years, primarily linked to his business dealings and acquisitions. Below is an overview of some notable controversies based on available information:

DHFL Acquisition and Allegations of Irregularities
One of the most prominent controversies involves the Piramal Group’s acquisition of Dewan Housing Finance Corporation Limited (DHFL) in 2021. The National Company Law Tribunal (NCLT) approved Piramal’s resolution plan, valued at approximately ₹34,250 crore, to take over the insolvent DHFL. However, this deal faced significant scrutiny and legal challenges:

63 Moons Technologies Case: 63 Moons Technologies, a stakeholder in DHFL, challenged the resolution plan, alleging that Piramal acquired assets worth around ₹45,000 crore for a fraction of their value (symbolically described as “paying only a rupee”). They cited Section 66 of the Insolvency and Bankruptcy Code (IBC), which aims to ensure equitable benefits for all creditors. In January 2022, the National Company Law Appellate Tribunal (NCLAT) flagged irregularities in the Committee of Creditors (CoC) process, declaring the 18th CoC meeting “contrary to law” and “void” to that extent. Critics argued this raised questions about transparency and fairness in the acquisition process.
Fixed Deposit Holders’ Losses: Following the acquisition, Piramal began disbursing only 23.08% of the total fixed deposit amounts to DHFL’s fixed deposit holders in September 2021, with the remainder subjected to a significant “haircut” (loss). This move drew criticism for prioritizing corporate interests over small investors.

Piyush Goyal Transaction
Ajay Piramal faced allegations of impropriety related to a business transaction with Union Minister Piyush Goyal. In 2014, four months after Goyal became a minister in the Indian government, he sold his company to Piramal at a reported 1000% premium. Critics, including some activist groups, questioned the ethics and potential conflict of interest in this deal, suggesting it may have involved favoritism or crony capitalism. While no definitive evidence of illegality has been widely established, the transaction fueled debates about the intersection of politics and business in India.
Piramal Realty Scams and Scandals
Piramal Realty, a subsidiary of the Piramal Group, has been accused of involvement in various scams and scandals within the real estate sector. Investigative reports by journalist Krishnaraj Rao highlighted alleged malpractices, including issues related to project delays, misleading marketing, and financial irregularities. These claims have painted a picture of questionable practices in Piramal’s real estate ventures, though specific legal outcomes remain less documented in mainstream sources.
Wikipedia Edits and Activism
In 2023, a group identifying as part of a “web-based non-violent civil disobedience movement” added a “Controversies” section to the Wikipedia pages of Ajay Piramal, Piramal Realty, and Piramal Capital and Housing Finance Limited. This was framed as a protest against “plutocratic, crony-capitalist regimes” in India. The additions highlighted the above issues, including the DHFL deal and the Goyal transaction, though such edits are subject to Wikipedia’s editorial scrutiny and potential removal, as noted by the group themselves.
Broader Criticism of Philanthropy and CSR
Ajay Piramal’s extensive philanthropy through the Piramal Foundation has also drawn skepticism. Critics have questioned whether his corporate social responsibility (CSR) efforts, often touted as altruistic, are a guise to offset wealth accumulated through aggressive business practices. Some have compared this to Mohandas Gandhi’s theory of trusteeship, arguing that Piramal’s wealth extraction from labor and controversial deals undermines the moral foundation of his charitable initiatives.

These controversies collectively paint a picture of a high-profile businessman whose aggressive acquisition strategies and political connections have sparked debates about ethics, transparency, and fairness in India’s corporate landscape. While Piramal has not been convicted of any wrongdoing in a legal sense, the allegations and criticisms have kept him in the public eye as a polarizing figure.

Could the DHFL be considered a “return gift” to Mr. Ajay Piramal for his involvement with the party, i.e., the BJP, in relation to the Flashnet Scam?

The claim that the DHFL scam was a “return gift” to Ajay Piramal for the Flashnet scam originates largely from allegations made by activist groups like Once in a Blue Moon Academia (OBMA) and some critical media narratives, rather than from conclusive evidence in official investigations. Let’s break this down based on the available facts and the context of both events.

### The DHFL Scam Recap

The DHFL scam involves the diversion of over ₹34,000 crore by its promoters, Kapil and Dheeraj Wadhawan, through shell companies and fraudulent transactions, defrauding a 17-member bank consortium. After DHFL’s collapse in 2019, it entered the Insolvency and Bankruptcy Code (IBC) process, and Ajay Piramal’s Piramal Capital and Housing Finance Ltd (PCHFL) acquired it in September 2021 for ₹34,250 crore. This resolution allowed creditors to recover ₹38,000 crore, though small investors like FD and NCD holders faced significant losses, receiving only about 23% of their claims. Critics, including OBMA, argue this process was rigged to favor Piramal, pointing to alleged irregularities and political influence.

### The Flashnet Scam Context

The Flashnet controversy stems from a 2014 transaction where Piramal Estates Pvt Ltd, a Piramal family entity, bought Flashnet Info Solutions, a company owned by Piyush Goyal (then a BJP leader and later a Union Minister) and his wife Seema, for ₹47.8 crore. Flashnet’s assets included real estate and equity investments, but Piramal sold most of these within months, raising questions about the deal’s intent and valuation. The Wire’s 2018 investigation suggested ethical concerns, given Goyal’s political rise and the premium paid (allegedly 1000 times the face value of shares, though this is disputed). Piramal Group defended it as a fair-value business acquisition, not tied to political favors. No legal probe has conclusively labeled this a “scam,” but critics like OBMA call it one, alleging it was a favor to Goyal and the BJP.

### The “Return Gift” Allegation

OBMA and similar voices assert that Piramal’s acquisition of DHFL at a bargain was a reward from the BJP-led government for his earlier purchase of Flashnet, implying a quid pro quo. They point to:

– **Political Donations**: Piramal entities reportedly donated ₹85 crore via electoral bonds to the BJP, per OBMA claims, alongside the ₹27.5 crore from DHFL-linked firms between 2014-2019 noted earlier. This is seen as evidence of a cozy relationship.

– **Flashnet Timing**: The 2014 deal coincided with the BJP’s rise to power, and Goyal’s subsequent ministerial roles (Power, Commerce) fueled speculation of influence.

– **DHFL Resolution**: Critics argue Piramal outmaneuvered higher bidders like Oaktree Capital (₹36,640 crore bid) due to political backing, despite legal challenges (e.g., NCLT and NCLAT rulings questioning the process). OBMA calls DHFL a “gift” for Piramal’s “services” to the BJP.

### Counterpoints and Reality Check

– **No Direct Evidence**: Official investigations (CBI, ED) into DHFL focus on the Wadhawans’ fraud, not Piramal’s acquisition or BJP orchestration. The Flashnet deal hasn’t been legally tied to DHFL’s resolution.

– **IBC Process**: Piramal’s bid was approved by the Committee of Creditors with 94% votes, a legal step under IBC, not a unilateral government decision. Oaktree’s bid, while higher, faced implementability issues (e.g., insurance business sale), as Piramal noted in a 2020 letter to the administrator.

– **Flashnet Valuation**: The “1000 times face value” claim exaggerates; Flashnet’s assets were sold at market rates, per Piramal’s filings. No criminality has been proven.

– **Piramal’s Motive**: Acquiring DHFL aligns with Piramal’s ambition to scale his financial services business, not just a political favor. The deal’s upside (doubling retail lending) is acknowledged even by skeptics.

### Assessment

The “return gift” narrative is a compelling theory driven by circumstantial links—donations, timing, and political proximity—but lacks hard proof. The Flashnet deal raised ethical questions, and Piramal’s DHFL win sparked suspicions of cronyism, especially given the BJP’s governance context. Yet, calling DHFL a direct payoff for Flashnet overstates the evidence. It’s more likely that Piramal leveraged his business acumen and political connections (common in India’s corporate-political nexus) to secure DHFL, rather than it being a scripted reward for a specific past act. The scam’s real victims—small investors—fuel this anger, but the conspiracy remains speculative without judicial or investigative backing as of March 17, 2025.

Is there evidence suggesting that the BJP was involved in terror funding links with figures like Dawood Ibrahim, Iqbal Mirchi, and others in relation to the DHFL Scam?

The question of whether the Bharatiya Janata Party (BJP) is directly involved with Dawood Ibrahim, Iqbal Mirchi, and others in the DHFL scam hinges on a mix of allegations, circumstantial connections, and official investigations. Let’s unpack this based on what’s known as of March 17, 2025.

### The DHFL Scam and Underworld Links

The DHFL scam, involving over ₹34,000 crore siphoned off by promoters Kapil and Dheeraj Wadhawan, has documented ties to underworld figures like Iqbal Mirchi, a known associate of Dawood Ibrahim. The Enforcement Directorate (ED) found that DHFL extended ₹2,186 crore in loans to Sunblink Real Estate Pvt Ltd, a company linked to the Wadhawans, which then purchased three Mumbai properties (Sea View, Marium Lodge, and Rabia Mansion) from Mirchi in 2010. These properties were allegedly bought with proceeds of crime from Mirchi’s drug trafficking and extortion activities, funneled through shell companies and hawala transactions. The ED’s probe, launched in 2019, also uncovered meetings between Kapil Wadhawan and Mirchi in London and Dubai, suggesting a deliberate financial arrangement. Dawood Ibrahim’s broader involvement is inferred through Mirchi’s role as his right-hand man, though direct evidence of Dawood’s personal hand in the DHFL deal is less explicit.

### BJP’s Alleged Involvement

The BJP’s supposed connection to this web comes primarily from political donations and accusations of favoritism, rather than operational involvement in the scam itself:

– **Donations from RKW Developers**: In 2014-15, RKW Developers Pvt Ltd, a DHFL-associated company, donated ₹10 crore to the BJP, as per the party’s filings with the Election Commission. The ED later probed RKW for transactions with Mirchi, including property deals tied to terror funding. Critics, including Congress and activist groups like Once in a Blue Moon Academia (OBMA), argue this donation suggests a quid pro quo, implying the BJP turned a blind eye to DHFL’s shady dealings or even facilitated them. Additional claims point to ₹27.5 crore donated by DHFL-linked entities to the BJP between 2014-2019, per Cobrapost’s 2019 exposé.

– **Political Influence Allegations**: OBMA and opposition figures like Priyanka Gandhi Vadra have claimed a nexus between the BJP, Dawood-Mirchi, and DHFL, citing the party’s governance during the scam’s fallout. They question why the BJP-led government allowed Ajay Piramal to acquire DHFL in 2021 for ₹34,250 crore under the IBC process, despite higher bids (e.g., Oaktree’s ₹36,640 crore), suggesting favoritism linked to Piramal’s own BJP donations (₹85 crore via electoral bonds, per OBMA). The Uttar Pradesh BJP government’s investment of ₹2,600 crore in DHFL from power employees’ provident funds in 2017-2018, later investigated for ties to Mirchi, adds fuel to these claims.

– **Counter-Narrative**: The BJP has not officially addressed these specific allegations head-on but has deflected blame. For instance, they’ve argued that the UP provident fund investments began under the Samajwadi Party’s watch in 2014, before their full control. On the donations, the BJP could argue they’re routine political funding—RKW’s ₹10 crore is dwarfed by larger sums from electoral trusts—and not evidence of collusion.

### What the Evidence Says

Official investigations by the CBI and ED focus on the Wadhawans, Mirchi, and associates like Ranjeet Bindra (a broker arrested in 2019) and Sunblink’s directors. These probes have not named the BJP or its leaders as co-conspirators in the scam’s execution—i.e., no evidence shows BJP operatives directly facilitated the ₹34,000 crore fraud or Mirchi’s property deals. The underworld link is clear through Mirchi, and by extension Dawood, but the BJP’s role appears limited to:

– **Financial Ties**: Accepting donations from tainted companies, which raises ethical questions but isn’t illegal under India’s electoral laws at the time (pre-electoral bond scrutiny).

– **Governance Oversight**: Critics argue the BJP’s administration failed to curb the scam or favored Piramal in its resolution, though the IBC process was creditor-driven, not government-dictated.

### Critical Examination

The establishment narrative—pushed by agencies and the BJP—frames the scam as a corporate fraud by the Wadhawans, with Mirchi as a peripheral player, and denies political orchestration. However, this sidesteps the donation trail and the optics of Piramal’s win, which opposition and activists seize on to allege cronyism. The lack of BJP names in ED chargesheets could reflect either innocence or the limits of investigative scope, given India’s history of politically sensitive probes stalling at the elite level. Conversely, the opposition’s “nexus” theory leans heavily on inference—donations and timing—without a smoking gun tying BJP leaders to Dawood or Mirchi’s operations.

### Conclusion

As of now, there’s no concrete proof the BJP was operationally involved with Dawood Ibrahim, Iqbal Mirchi, or the DHFL scam’s core fraud. The party’s links are indirect: donations from implicated firms and governance decisions open to interpretation. These fuel suspicion of complicity or negligence, especially given Dawood’s fugitive status and Mirchi’s terror ties, but fall short of establishing the BJP as a mastermind or active participant. The truth likely lies in a gray zone—political funding and influence intersecting with corporate malfeasance—rather than a clear-cut conspiracy. Investigations haven’t bridged that gap yet, leaving the question more political than prosecutable.

Can Mr. Ajay Piramal be considered an “adverse possessor” of the DHFL?

The question of whether Ajay Piramal is an “adverse possessor” of Dewan Housing Finance Corporation Limited (DHFL) requires unpacking both the legal concept of adverse possession and the context of Piramal’s acquisition of DHFL. Adverse possession, in legal terms, refers to a situation where someone gains ownership of property by occupying it openly, continuously, and without the owner’s permission for a specified period, typically against the rightful owner’s interests. In the DHFL case, however, Piramal’s acquisition occurred through a formal insolvency process under India’s Insolvency and Bankruptcy Code (IBC), not through an extralegal occupation. Let’s explore this based on the facts surrounding the acquisition and the allegations that have emerged.

### The Acquisition Context

Ajay Piramal, through Piramal Capital and Housing Finance Ltd (PCHFL), acquired DHFL in September 2021 for ₹34,250 crore, following a competitive bidding process overseen by the Committee of Creditors (CoC) and approved by the National Company Law Tribunal (NCLT). DHFL had collapsed in 2019 amid allegations of a ₹34,000 crore fraud by its promoters, Kapil and Dheeraj Wadhawan, leaving ₹87,000 crore in admitted claims from creditors. Piramal’s bid, backed by 94% of the CoC, offered creditors a recovery of about 46% (₹38,060 crore total, including DHFL’s cash reserves), while outbidding rivals like Oaktree Capital (₹36,640 crore) and Adani Group. The process merged PCHFL with DHFL, creating a major player in retail lending under Piramal’s control.

Legally, this was a structured resolution, not an adverse possession. Piramal didn’t seize DHFL by squatting on its assets; he purchased it through a court-sanctioned mechanism designed to maximize creditor recovery. The NCLT, Reserve Bank of India (RBI), and Competition Commission of India (CCI) approved the deal, cementing its legitimacy under Indian law.

### Allegations and Adverse Possession Claims

Critics, including activist groups like Once in a Blue Moon Academia (OBMA) and some fixed deposit (FD) and non-convertible debenture (NCD) holders, have challenged the narrative, arguing that Piramal’s acquisition resembles an “adverse possession” in a metaphorical sense—implying he unjustly took control of DHFL’s assets to the detriment of smaller stakeholders. Their arguments hinge on several points:

– **Undervaluation**: Kapil Wadhawan, from jail, claimed DHFL was worth ₹91,000 crore and offered to repay creditors fully, far exceeding Piramal’s bid. Critics question why the CoC accepted a lower amount, suggesting Piramal benefited from a “sweetheart deal.”

– **Cronyism**: Allegations link Piramal to the BJP via electoral bond donations (₹85 crore from Piramal entities, per OBMA) and the Flashnet deal with Piyush Goyal, framing DHFL as a “return gift” for political loyalty. This implies Piramal leveraged influence to secure DHFL at a discount, akin to taking advantage of a distressed asset.

– **Victim Losses**: FD and NCD holders, many elderly, recovered only 23% of their investments, losing billions collectively. OBMA and others argue Piramal “adversely possessed” DHFL’s value, leaving small investors with crumbs while he reaped long-term gains.

– **Legal Irregularities**: The National Company Law Appellate Tribunal (NCLAT) ruling on January 27, 2022, flagged issues with the resolution, ordering the CoC to reconsider how Piramal would handle ₹38,000 crore in “avoidance applications” (fraudulent transactions recoverable under IBC Section 66). Critics see this as evidence the deal unfairly favored Piramal, who stood to profit from future recoveries without equitably sharing them.

### Evaluating the “Adverse Possessor” Label

Legally, Piramal isn’t an adverse possessor. Adverse possession requires physical occupation and a statutory period (12 years in India under the Limitation Act, 1963), neither of which applies to a corporate acquisition via IBC. Piramal’s control stems from a transparent, creditor-driven process, not a hostile takeover outside legal bounds. The CoC’s 94% approval and judicial oversight contradict the idea of unauthorized possession.

However, the metaphorical critique has traction. The gap between DHFL’s alleged value (₹91,000 crore per Wadhawan) and Piramal’s payment (₹34,250 crore) fuels perceptions of opportunism. Tax benefits, low-interest NCDs (₹19,550 crore at 6.75% p.a.), and DHFL’s cash reserves (₹3,810 crore) reportedly gave Piramal a “bounty” of ₹16,000 crore, per analyst V. Ranganathan’s calculations in Moneylife. This suggests Piramal capitalized on DHFL’s distress, gaining assets at a fraction of their potential worth, much like an adverse possessor might exploit an owner’s neglect—though here, it’s within a legal framework.

The cronyism charge adds a political twist, but evidence is circumstantial: donations and past dealings (e.g., Flashnet) don’t prove the BJP rigged the IBC process. Oaktree’s higher bid was rejected partly due to implementability issues (e.g., insurance arm sale), not just favoritism, as Piramal argued in his 2020 letter to the administrator. Still, the optics of Piramal’s win amid political ties and small investor losses invite skepticism.

### Conclusion

Ajay Piramal is not an adverse possessor of DHFL in the legal sense—his ownership derives from a sanctioned IBC resolution, not an illicit claim. However, the term resonates as a rhetorical critique from those who see his acquisition as exploitative: a well-connected tycoon allegedly profiting from a fire sale while creditors and depositors bore steep losses. The truth lies between these poles. Piramal navigated a lawful process to secure a strategic asset, but the deal’s structure and political context leave room for debate about fairness and who truly “possessed” DHFL’s value. As of March 17, 2025, no court has overturned the acquisition, though ongoing legal challenges (e.g., from 63 Moons Technologies) keep the controversy alive.

After the NCLT’s 19th May 2021 verdict on the DHFL case, why did Mr. Ajay Piramal, accompanied by the CoC, rush to the NCLAT without answering the NCLT within the stipulated period of 10 days? Doesn’t this constitute a contempt of court?

Let’s examine the situation surrounding the National Company Law Tribunal (NCLT) order of May 19, 2021, in the DHFL case, the subsequent actions of Ajay Piramal and the Committee of Creditors (CoC), and whether their appeal to the National Company Law Appellate Tribunal (NCLAT) without addressing the NCLT’s directives within the 10-day timeline constitutes contempt of court.

### The NCLT Order of May 19, 2021

On May 19, 2021, the NCLT Mumbai bench directed the RBI-appointed administrator of DHFL to place a second settlement proposal from erstwhile promoter Kapil Wadhawan before the CoC for consideration, decision, and voting within 10 days, with the outcome to be reported back to the tribunal. Wadhawan’s offer claimed to repay creditors ₹91,158 crore—far exceeding Piramal Capital and Housing Finance Ltd’s (PCHFL) ₹34,250 crore resolution plan, which the CoC had already approved with 94% votes in January 2021 and submitted to the NCLT for final approval. The NCLT’s directive came despite the advanced stage of the Corporate Insolvency Resolution Process (CIRP), where Piramal’s plan was pending adjudication.

The NCLT did not explicitly reject Piramal’s plan but sought to ensure Wadhawan’s proposal—allegedly 150% higher—was evaluated, raising questions about the CoC’s commercial wisdom and the fairness of the process. This order sparked contention, as it appeared to challenge the sanctity of the CoC’s decision under the Insolvency and Bankruptcy Code (IBC).

###

Actions of Piramal and the CoC

Rather than complying with the NCLT’s directive to consider Wadhawan’s proposal within 10 days, the CoC (led by Union Bank of India), the DHFL administrator, and Piramal swiftly appealed to the NCLAT. On May 25, 2021—six days after the NCLT order—the NCLAT stayed the May 19 directive, arguing there was “no scope for negotiations” post-CoC approval, citing the Supreme Court’s Ebix Singapore ruling (September 2020). This ruling emphasized that once a resolution plan is approved by the CoC, the adjudicating authority’s role is limited to verifying compliance with IBC Section 30(2), not reopening negotiations. The NCLAT also clarified that its stay should not impede the NCLT from ruling on Piramal’s plan, effectively prioritizing the existing resolution process.

Piramal and the CoC did not wait out the 10-day period or place Wadhawan’s offer before the CoC as ordered. Instead, they sought immediate appellate relief, bypassing the NCLT’s timeline. On June 7, 2021, the NCLT approved Piramal’s plan, subject to NCLAT and Supreme Court outcomes, implicitly accepting the stay and moving forward without addressing Wadhawan’s proposal.

### Did They Ignore the Order?

Yes, Piramal and the CoC technically ignored the NCLT’s May 19 order by not complying with its 10-day directive. Instead of presenting Wadhawan’s proposal to the CoC and reporting back, they escalated the matter to the NCLAT, securing a stay that halted the order’s enforcement. The CoC and administrator argued that the NCLT lacked jurisdiction under the IBC to mandate such a reconsideration at that stage, calling the order “illegal” and a potential derailment of the CIRP. Piramal echoed this, framing Wadhawan’s move as a sabotage attempt. Their appeal rested on the legal position that the CoC’s commercial wisdom, once exercised, is sacrosanct unless it violates statutory norms—a stance bolstered by the Ebix precedent.

This wasn’t a passive disregard but a strategic pivot to a higher authority, leveraging the appellate process to nullify the NCLT’s instruction before the 10-day window closed (May 29, 2021). The NCLAT’s quick intervention on May 25 validated their approach, suspending the need to comply.

### Is It Contempt of Court?

Contempt of court in India, under the Contempt of Courts Act, 1971, involves willful disobedience to a judicial order or conduct undermining the court’s authority. To assess whether Piramal and the CoC’s actions constitute contempt, consider the following:

– **Willful Disobedience**: The NCLT order was clear—consider Wadhawan’s proposal within 10 days. Piramal and the CoC didn’t comply, opting instead for an appeal. However, they didn’t defy it in isolation; they sought and obtained a stay from the NCLAT within the 10-day period (on day 6). A stay legally suspends the lower court’s order, meaning compliance was no longer required once the NCLAT acted. Courts typically don’t deem actions contemptuous if a party pursues a lawful remedy (like an appeal) and secures relief, even if it skirts the original directive.

– **Legal Precedent**: Indian courts have held that appealing an order, rather than obeying it, doesn’t automatically amount to contempt if done in good faith and within legal bounds. In *R.N. Dey v. Bhagyabati Pramanik* (2000), the Supreme Court noted that seeking appellate relief is a legitimate right, not defiance, unless it’s a sham to delay justice. Here, the CoC and Piramal argued a substantive legal point—NCLT overreach under IBC—supported by the Ebix ruling, and the NCLAT agreed, suggesting their move wasn’t frivolous.

– **Timing and Intent**: The appeal was filed and stayed before the 10-day deadline, indicating urgency rather than outright rejection. Critics might argue this “rushed” approach disrespected the NCLT’s authority, especially since the stay didn’t explicitly nullify the order until later (January 27, 2022, when NCLAT set it aside). Yet, the intent appears tied to protecting the CIRP’s timeline and Piramal’s bid, not mocking the court. The CoC’s appeal labeled the NCLT order as setting a “bad precedent,” reflecting a policy disagreement, not contemptuous defiance.

– **Judicial Response**: Neither the NCLT nor higher courts have pursued contempt proceedings against Piramal or the CoC. The NCLT’s June 7 approval of Piramal’s plan, post-stay, suggests it accepted the NCLAT’s intervention as part of the process. Had it viewed the appeal as contempt, it could have initiated action under Section 425 of the Companies Act, 2013, or referred it to a higher court—but it didn’t.

### Critical Examination

The establishment narrative—upheld by Piramal, the CoC, and later courts—frames this as a defense of IBC’s sanctity, where CoC decisions are near-final. The NCLAT’s stay and eventual ruling (January 2022) reinforce this, prioritizing efficiency over revisiting settled plans. Yet, this sidesteps the NCLT’s apparent intent: to probe whether Piramal’s bid undervalued DHFL, potentially shortchanging creditors (especially small investors, who recovered just 23%). Rushing to the NCLAT could be seen as a power play by well-resourced parties (Piramal, backed by banks) to lock in a favorable outcome, bypassing scrutiny that might have exposed flaws in the ₹34,250 crore deal versus Wadhawan’s ₹91,158 crore claim.

The lack of contempt charges doesn’t absolve the ethical question. Ignoring the NCLT’s order, even with an appeal, risks undermining judicial hierarchy if parties can routinely leapfrog lower courts without consequence. Still, the IBC’s design—favoring speed and creditor autonomy—gave Piramal and the CoC a strong legal footing, and the NCLAT’s swift stay insulated them from liability.

### Conclusion

Piramal and the CoC did not address the NCLT’s May 19, 2021, queries within 10 days, choosing instead to appeal to the NCLAT, which stayed the order on May 25. This technically bypassed the directive, but it doesn’t meet the threshold for contempt of court. The appeal was a lawful challenge, grounded in IBC principles, and the NCLAT’s intervention suspended the order’s enforceability before the deadline. No court has treated it as contempt, and the process culminated in Piramal’s plan being approved on June 7, 2021. While critics might call it a calculated dodge, legally, it’s not contempt—it’s a successful navigation of the system as of March 17, 2025.

Did the NCLAT’s verdict on January 27, 2022, regarding the DHFL-63 Moons case not challenge Mr. Piramal’s claim of ownership over DHFL, prompting him to seek a stay on that order from the Supreme Court on April 11, 2022?

Let’s dive into the National Company Law Appellate Tribunal (NCLAT) order of January 27, 2022, its fundamental challenge to Ajay Piramal’s bid for Dewan Housing Finance Corporation Limited (DHFL), and why Piramal appealed to the Supreme Court of India (SCI) to secure a stay on April 11, 2022, rather than addressing the NCLAT’s directives head-on.

### The NCLAT Order of January 27, 2022

The NCLAT’s January 27, 2022, ruling came in response to a petition by 63 Moons Technologies, a creditor holding over ₹200 crore in DHFL non-convertible debentures (NCDs). This order fundamentally challenged Piramal’s resolution plan, approved by the Committee of Creditors (CoC) with 94% votes in January 2021 and by the NCLT on June 7, 2021. The core issue was the treatment of “avoidance transactions”—fraudulent, undervalued, or extortionate deals worth approximately ₹45,000 crore, identified under Section 66 of the Insolvency and Bankruptcy Code (IBC) as recoverable from DHFL’s erstwhile promoters, the Wadhawans.

Piramal’s plan ascribed a notional value of ₹1 to these potential recoveries, arguing minimal recovery prospects, and stipulated that any proceeds would go to Piramal Capital and Housing Finance Ltd (PCHFL) as the successful resolution applicant, not the creditors. The NCLAT ruled this stipulation “illegal,” asserting that under IBC Section 66, recoveries from avoidance transactions should benefit all creditors, not just the resolution applicant. It directed the CoC to reconsider this valuation and distribution aspect, effectively questioning the fairness of Piramal’s ₹34,250 crore bid—far below Wadhawan’s ₹91,158 crore claim of DHFL’s worth—and its impact on creditors, especially small investors like NCD holders who recovered only 23%.

This wasn’t a full rejection of Piramal’s bid but a significant jolt, reopening a settled plan post-execution (Piramal took over DHFL in September 2021). The NCLAT argued the CoC’s commercial wisdom couldn’t override statutory intent, spotlighting a tension between IBC’s creditor-driven process and equitable distribution principles.

### Why Piramal Appealed to the SCI

Instead of complying with the NCLAT’s directive to revisit the avoidance transaction valuation with the CoC, Piramal, alongside several CoC banks (e.g., Union Bank, SBI, Canara Bank), appealed to the Supreme Court. On April 11, 2022, the SCI, led by Chief Justice N.V. Ramana, stayed the NCLAT order, scheduling hearings for May 5, 2022 (later deferred). Piramal’s decision to escalate rather than address the NCLAT’s concerns reflects strategic, legal, and practical considerations:

1. **Preserving the Deal’s Integrity**

Piramal had already integrated DHFL into PCHFL by September 2021, retaining 3,000 employees, adding 2,000 jobs, and restarting lending across 301 branches. Reopening the plan risked unraveling this merger, disrupting operations, and eroding the ₹34,250 crore investment’s value. Piramal’s February 16, 2022, SCI filing emphasized that the acquisition “remains unaffected” and integration would continue, signaling confidence in overturning the NCLAT ruling.

2. **Legal Backing from IBC Precedents**

Piramal and the CoC leaned on the Supreme Court’s *Ebix Singapore v. CoC of Educomp* (September 2020) and *CoC of Essar Steel v. Satish Kumar Gupta* (2019) rulings, which upheld the CoC’s commercial wisdom as near-sacrosanct once a plan is approved, limiting judicial interference unless statutory violations are blatant. They argued the NCLAT overstepped by questioning a ₹1 valuation—a common practice for uncertain recoveries—and the CoC’s decision to allocate proceeds to Piramal. The appeal framed the NCLAT order as “bad in law” and “unimplementable,” risking CIRP derailment.

3. **CoC Support and Bank Appeals**

Surprisingly, major CoC banks also challenged the NCLAT order, despite its potential to boost their recoveries (₹45,000 crore versus Piramal’s ₹1). This suggests alignment with Piramal, possibly to avoid delays or renegotiations that could destabilize the 46% recovery (₹38,060 crore) already secured. The banks’ stance baffled experts, who noted they traded potential billions for certainty, hinting at broader systemic pressures to finalize high-profile resolutions like DHFL—the first financial institution resolved under IBC.

4. **Avoiding Wadhawan’s Leverage**

Kapil Wadhawan’s shadow loomed large. His repeated settlement offers (e.g., December 2020, May 2021) claimed full repayment, accusing the CoC of undervaluing DHFL. The NCLAT’s push to reconsider echoed his narrative, potentially strengthening his legal challenges (he appealed the NCLAT’s May 25, 2021, stay to the SCI in June 2021). Piramal and the CoC saw this as a sabotage risk, preferring to lock in the existing plan via appellate relief.

### Why Not Address the NCLAT Order?

Addressing the NCLAT’s directive—reconvening the CoC to reassess avoidance transactions—posed multiple risks:

– **Time and Cost**: The CIRP had already stretched from November 2019 to September 2021. Reopening it in 2022 would delay finality, increase administrative costs, and erode creditor confidence in IBC timelines.

– **Uncertainty**: Valuing ₹45,000 crore in speculative recoveries was dicey; the CoC had deemed them negligible, and revisiting could spark disputes over methodology or derail Piramal’s bid if a higher value emerged.

– **Legal Vulnerability**: Compliance might weaken their stance in higher courts, implying the NCLAT’s jurisdiction was valid. By appealing, Piramal preserved the argument that the CoC’s original decision was unassailable.

### The SCI Stay on April 11, 2022

The SCI’s stay halted the NCLAT’s mandate, freezing the “controversial” order’s effect. Piramal’s counsel, A.M. Singhvi, argued the ₹1 valuation was part of a holistic ₹37,250 crore package (cash and non-cash), not an isolated giveaway, and within CoC discretion. The stay signaled judicial willingness to test the NCLAT’s interpretation against IBC norms, prioritizing stability over renegotiation. Critics, like 63 Moons, saw this as Piramal dodging accountability, alleging a “hand-in-glove” nexus with banks to “dupe” retail investors—a charge unproven but resonant given the NCD/FD losses.

### Critical Lens

The establishment narrative—CoC autonomy and Piramal’s lawful win—clashes with the NCLAT’s push for equity, exposing IBC’s fault lines. Why did banks back Piramal over a potentially richer haul? Was Piramal’s rush to the SCI a defense of business logic or a dodge of scrutiny? The ₹1 valuation, while legally defensible, smells of opportunism when juxtaposed with ₹45,000 crore in play, fueling perceptions of cronyism tied to Piramal’s alleged BJP links (e.g., ₹85 crore in electoral bonds). Yet, no court has voided the bid as of March 17, 2025, suggesting Piramal’s strategy—escalate, stay, and outlast—worked within the system’s design.

### Conclusion

The NCLAT’s January 27, 2022, order challenged Piramal’s bid by targeting the avoidance transaction clause, aiming to redirect billions to creditors. Piramal went to the SCI, securing a stay on April 11, 2022, to safeguard his executed deal, banking on IBC precedents and CoC support rather than risking a CoC rethink. It wasn’t about addressing the “controversial” order’s merits but neutralizing its threat—legally astute, if ethically debated. The SCI’s final word, still pending by some accounts, will settle this tug-of-war, but Piramal’s move reflects a calculated bet on judicial reinforcement over renegotiation.

When Will the DHFL Victims Recover their Money?

Whether DHFL victims—primarily fixed deposit (FD) and non-convertible debenture (NCD) holders—will fully recover their money remains uncertain as of March 17, 2025, and hinges on multiple ongoing factors. These stakeholders, many of whom are retail investors like senior citizens, lost significant savings when Dewan Housing Finance Corporation Limited (DHFL) collapsed in 2019 amid a ₹34,000 crore fraud orchestrated by promoters Kapil and Dheeraj Wadhawan. Here’s an analysis based on the current status, legal proceedings, and recovery efforts.

### What Has Happened So Far

DHFL entered the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC) in November 2019, the first financial institution to do so under RBI referral. In September 2021, Piramal Capital and Housing Finance Ltd (PCHFL), led by Ajay Piramal, acquired DHFL for ₹34,250 crore, a resolution approved by the National Company Law Tribunal (NCLT) on June 7, 2021. This included ₹14,700 crore in upfront cash and ₹19,550 crore in NCDs payable over 10 years at 6.75% interest. Creditors, including a 17-bank consortium owed ₹87,000 crore, recovered about 46% (₹38,060 crore, factoring in DHFL’s ₹3,810 crore cash reserves).

For FD and NCD holders, the outcome was bleaker. Classified as unsecured creditors under IBC’s priority hierarchy (Section 53), they rank below secured financial creditors like banks and the National Housing Bank (NHB). The resolution plan allocated:

– **FD holders with up to ₹2 lakh**: Full recovery (100%).

– **FD/NCD holders above ₹2 lakh**: Approximately 23% of their principal, with losses estimated at ₹8,000-10,000 crore collectively for 77,000 retail FD holders and 3,500 institutional depositors.

This disparity—banks recovering nearly half their dues while small investors lost over 75%—sparked outrage, with groups like Once in a Blue Moon Academia (OBMA) and affected depositors decrying the process as inequitable.

### Current Recovery Prospects

As of March 17, 2025, several avenues could influence whether victims see further recovery:

1. **Avoidance Transactions (Section 66, IBC)**

The NCLAT’s January 27, 2022, order challenged Piramal’s plan, ruling that ₹45,000 crore in fraudulent transactions (e.g., loans to 66 Wadhawan-linked shell companies) should benefit all creditors, not just Piramal, who had valued them at ₹1. Piramal and the CoC appealed, securing an SCI stay on April 11, 2022. If the SCI overturns the NCLAT and reallocates these funds, unsecured creditors could see additional payouts—potentially billions. However, the case remains unresolved, and recovery depends on successful litigation and asset tracing, a process historically slow and uncertain in India.

2. **Criminal Probes and Asset Seizures**

The CBI and Enforcement Directorate (ED) have pursued the Wadhawans and associates since 2019. By mid-2024, the CBI had arrested Dheeraj Wadhawan (May 2024) and filed chargesheets against Kapil, Dheeraj, and 74 others for defrauding banks of ₹34,615 crore. Assets seized include luxury watches, paintings (e.g., ₹34.7 crore worth by Tyeb Mehta and Manjit Bawa), an AgustaWestland helicopter, and properties like a London flat bought with ₹300 crore of diverted funds. The ED has attached ₹1,827 crore in assets tied to the Yes Bank-DHFL scam, including those of co-accused like Sanjay Chhabriaa and Avinash Bhosale. If liquidated, these could yield funds, but distribution to unsecured creditors isn’t guaranteed—banks and the government often take precedence in such cases.

3. **Pending Litigation**

Challenges persist. 63 Moons Technologies, an NCD holder, drove the NCLAT ruling, while Kapil Wadhawan’s appeals (e.g., against the NCLAT’s May 2021 stay) linger in the SCI. Depositors have also filed pleas, like a Supreme Court petition by OBMA in 2021, seeking relief. A definitive SCI ruling could shift recoveries, but delays—common in India’s overburdened courts—cloud timelines.

4. **Piramal’s Future Gains**

Critics argue Piramal’s low bid (versus DHFL’s alleged ₹91,000 crore value) and tax benefits (₹16,000 crore “bounty,” per Moneylife) let him profit while victims suffered. If avoidance recoveries materialize, Piramal’s stance—that they’re his under the plan—could be contested, though his legal victories so far (SCI stay, NCLT approval) bolster his position.

### Likelihood and Challenges

– **Partial Recovery Possible**: If avoidance funds are recovered and redistributed, FD/NCD holders might see incremental gains—perhaps 10-20% more—based on past IBC cases like Essar Steel, where creditors clawed back extra via litigation. However, ₹45,000 crore is speculative; KPMG’s 2016-2019 audit pegged ₹29,000 crore as diverted, and actual recovery could be far less due to laundering (e.g., overseas assets).

– **Full Recovery Unlikely**: The IBC prioritizes secured creditors, and DHFL’s admitted claims (₹87,000 crore) dwarf Piramal’s payout. Unsecured creditors historically recover 5-25% in Indian insolvencies (IL&FS, Jet Airways), aligning with the 23% here. Fraud scale and asset dissipation (e.g., shell companies, underworld links like Chota Shakeel) further dim full restitution hopes.

– **Systemic Barriers**: Slow courts, incomplete probes (e.g., Dawood-Mirchi ties), and political influence allegations (Piramal’s BJP donations) complicate efforts. The NHB, fully repaid its ₹10,000 crore refinance, exemplifies how public institutions often shield themselves, leaving retail victims exposed.

### Sentiment and Activism

Victims remain vocal. Posts on X from 2021 (e.g., Ashok Khemka’s critique of NHB’s role) echo ongoing frustration, with depositors forming groups to lobby the Finance Ministry and media. OBMA’s campaigns—like #Save_DHFL_FD_NCD_Holders—push for justice, but tangible outcomes lag.

### Conclusion

DHFL victims may recover more money if avoidance transactions yield significant assets and courts mandate broader distribution—a process that could stretch years. However, full recovery is improbable given IBC’s structure, the fraud’s magnitude, and enforcement gaps. As of now, the 23% payout stands as the baseline, with hope pinned on unresolved legal battles and asset seizures. For many, especially retirees who lost life savings, this offers cold comfort—justice feels distant, and the system’s tilt toward banks and tycoons like Piramal stings deeply. Check back as SCI rulings or CBI/ED breakthroughs unfold; they’ll shape the final tally.

Could the CBI’s closure report in January 2025, which absolves the Wadhawans of all criminal conspiracy due to lack of evidence, work in favour of the DHFL victims?

The Central Bureau of Investigation’s (CBI) closure report filed on January 25, 2025, regarding a specific aspect of the DHFL case—namely, the alleged creation of 2.6 lakh fictitious home loan accounts tied to the Pradhan Mantri Awas Yojana (PMAY) subsidies—marks a significant development. This report concluded that, after over three years of investigation, there was insufficient evidence to establish a criminal conspiracy involving DHFL promoters Kapil and Dheeraj Wadhawan in this particular matter. Let’s explore what this means and whether it could turn in favor of the DHFL victims, primarily the fixed deposit (FD) and non-convertible debenture (NCD) holders who lost substantial savings.

### The CBI Closure Report: Context and Scope

The closure report pertains to a case registered in 2021, distinct from the broader ₹34,615 crore bank fraud probe initiated in June 2022. It focuses on allegations that DHFL fabricated 2.6 lakh home loan accounts, some used to claim ₹1,887.2 crore in PMAY interest subsidies (₹539.4 crore received, ₹1,347.8 crore pending). A forensic audit by Grant Thornton, commissioned by DHFL’s new board, revealed a fictitious “Bandra Branch” used to generate these accounts, often for borrowers who had already repaid loans. The CBI’s final report, submitted to a special court in Delhi, found no evidence of a deliberate conspiracy by the Wadhawans to orchestrate this fraud, suggesting it may have been an operational or accounting irregularity rather than a premeditated criminal act. The court’s decision—whether to accept the closure or order further investigation—is pending as of March 17, 2025.

This closure doesn’t absolve the Wadhawans of all charges in the DHFL saga. The larger bank fraud case, involving ₹34,615 crore diverted to 66 shell companies, remains active. Kapil Wadhawan is in jail, Dheeraj was arrested in May 2024, and chargesheets filed in October 2022 and April 2024 name them alongside 74 others, including ex-bank officials like Alok Kumar Misra. The PMAY case is a subset, and its closure doesn’t negate the broader allegations of fund siphoning, falsified books, and promoter misconduct.

### Implications for Victims

Could this closure benefit FD and NCD holders seeking recovery? Let’s assess the possibilities:

#### Potential Positive Impact

1. **Reopening Kapil Wadhawan’s Settlement Offer**

Kapil Wadhawan has repeatedly claimed DHFL’s value exceeds ₹91,000 crore and offered full creditor repayment, contrasting Piramal’s ₹34,250 crore acquisition in 2021. The closure report, by weakening one fraud narrative, might bolster his argument that the company’s collapse was mismanaged rather than entirely fraudulent. If courts or creditors revisit his proposal—prompted by this report—it could lead to a reassessment of DHFL’s asset valuation, potentially unlocking more funds for distribution. Unsecured creditors (FD/NCD holders) might then claim a larger share, especially if avoidance transactions (₹45,000 crore) are revalued beyond Piramal’s ₹1 estimate.

2. **Legal Leverage for Victims**

Activists like OBMA and depositor groups could use the report to argue that the Wadhawans’ culpability was overstated, shifting blame to systemic failures (e.g., CoC decisions, Piramal’s bid). This might pressure the Supreme Court (SCI), where the NCLAT’s January 2022 order on avoidance transactions is stayed (April 11, 2022), to prioritize equitable distribution over Piramal’s gains. A ruling favoring creditors could channel recovered assets to victims, not just banks.

3. **Political and Public Pressure**

The report’s “lack of evidence” finding could fuel public narratives of investigative overreach or cronyism (e.g., Piramal’s alleged BJP ties). This might spur government or RBI intervention, such as a special fund for depositors, though no precedent exists post-IBC.

#### Why It Might Not Help

1. **Limited Scope of the Closure**

The PMAY case involves ₹1,887.2 crore—significant, but a fraction of the ₹87,000 crore in total claims. Even if recovered, it wouldn’t cover the ₹8,000-10,000 crore lost by FD/NCD holders. The main fraud—₹29,000 crore to shell companies—remains under prosecution, and the closure doesn’t undo Piramal’s legal ownership or the CoC’s 46% recovery split, which shafted unsecured creditors.

2. **IBC’s Rigid Hierarchy**

Under IBC Section 53, unsecured creditors rank below secured ones (banks, NHB). The resolution plan is final, and Piramal’s integration of DHFL is complete. Reopening it requires overturning multiple court orders (NCLT June 2021, SCI stay), a tall order even with the closure report. Avoidance recoveries, if any, are contested, and Piramal’s claim to them (per the plan) has judicial backing so far.

3. **Practical Recovery Hurdles**

The CBI’s broader probe has seized assets (e.g., ₹1,827 crore by ED, luxury items), but liquidation is slow, and overseas laundering (e.g., London flat) complicates retrieval. The closure report doesn’t accelerate this or shift priority from banks, who’ve already recouped ₹38,060 crore, including NHB’s full ₹10,000 crore.

4. **Court Acceptance Uncertain**

If the Delhi court rejects the closure and orders further PMAY probe, it could reinforce fraud charges, negating any victim leverage. Even acceptance might not prompt a reevaluation of the larger case, given its separate evidence base (KPMG audit, ED findings).

### Critical Perspective

The establishment narrative—Piramal’s lawful acquisition, CoC’s wisdom—clashes with victim cries of injustice. The closure report pokes a hole in the “Wadhawans-as-masterminds” story, hinting at mismanagement over malice in one slice of the scam. Yet, it’s a stretch to see it unraveling Piramal’s deal or the IBC framework, built to favor speed and secured creditors. Victims’ best shot—avoidance funds—remains mired in SCI limbo, and the report doesn’t directly free those assets. It’s a symbolic win for the Wadhawans’ defense, but translating that into victim relief demands a seismic legal shift, not just a CBI backtrack on a ₹1,887 crore subplot.

### Conclusion

The January 25, 2025, closure report absolving the Wadhawans of PMAY-related conspiracy offers a glimmer of hope but no game-changer for DHFL victims. It might nudge courts or creditors to reconsider DHFL’s worth or distribution, potentially clawing back a fraction more for FD/NCD holders—say, 5-10% beyond the 23%—if stars align (SCI rules against Piramal, assets are recovered). Full recovery, though, is a pipe dream under IBC’s constraints and the fraud’s scale. The report’s impact hinges on the Delhi court’s ruling and whether victims can wield it to shift the narrative. For now, it’s a footnote in a saga where banks and Piramal have largely cashed out, leaving depositors grasping at straws. Watch the SCI and CBI’s next moves—they’ll dictate if this turns the tide.

Justice Bela M. Trivedi, currently overseeing the DHFL cases in court, is there any indication of confirmation bias favouring the BJP, potentially undermining the victims’ interests?

There’s no definitive evidence to conclusively prove that Justice Bela M. Trivedi exhibits confirmation bias in favor of the BJP, specifically in the context of the DHFL (Dewan Housing Finance Corporation Limited) cases. However, I can provide some context based on her background and judicial record to help you assess the question.

Justice Bela M. Trivedi served as the Law Secretary to the Gujarat government from 2004 to 2006, during Narendra Modi’s tenure as Chief Minister. This association has led some to speculate about potential bias in cases involving the BJP or central government, given Modi’s current role as Prime Minister and leader of the BJP. Critics might argue that her past proximity to a BJP-led administration could subconsciously influence her rulings in favor of government-aligned interests.

Regarding the DHFL case, it involves allegations of a massive bank loan scam where the CBI claims that Kapil Wadhawan, Dheeraj Wadhawan, and others orchestrated a criminal conspiracy causing a Rs 34,615 crore loss to a consortium of 17 banks. The case has significant political and economic implications, and any perceived leniency or harshness could be scrutinized for bias. However, as of March 18, 2025, there’s no specific ruling or action by Justice Trivedi in the DHFL case documented in the provided references that directly indicates bias toward the BJP or against the victims (the banks or public interest).

Her judicial track record offers a mixed picture. She has demonstrated independence in some instances—for example, recusing herself from the Bilkis Bano case, which involved the remission of sentences for convicts in a Gujarat-related matter, suggesting an awareness of potential conflict of interest. She has also dissented in significant Supreme Court cases, showing she doesn’t always align with the majority or government positions. Yet, in other rulings, like her stance on stringent bail conditions under the Prevention of Money Laundering Act (PMLA) or her quips during hearings (e.g., the weight loss comment), some perceive a conservative or tough-on-crime approach that could align with BJP’s law-and-order narrative.

On the flip side, critics might point to her appointment as chairperson of the Mahanadi Water Disputes Tribunal in December 2024, amid political tensions between BJP and opposition parties like the BJD, as a move by the central government to place a trusted figure in a sensitive role. While this doesn’t directly tie to the DHFL case, it fuels speculation about her alignment with BJP interests.

Without specific rulings or statements from Justice Trivedi in the DHFL case showing favoritism—like dismissing evidence against the accused or unduly protecting government-linked entities—it’s speculative to assert confirmation bias. The victims’ perspective (banks or defrauded parties) would depend on whether her decisions appear to hinder justice or accountability, but no such outcome is clearly documented yet.

In short, her past role under Modi and some of her judicial tendencies could raise reasonable questions about bias, but there’s no concrete evidence in the DHFL context to confirm she’s acting against victims in favor of the BJP. You’d need to monitor her specific actions in the case as it unfolds for a clearer answer.

If the domestic remedies for the DHFL victims in India have been exhausted, can they seek justice from the OHCHR under the United Nations based on financial abuse, especially considering that the NHRC, India, has been delisted from the Global Alliance of National Human Rights Institutions (GANHRI) and has hitherto neglected the appeals of the DHFL victims?

Yes, DHFL victims could potentially approach the Office of the High Commissioner for Human Rights (OHCHR) under the United Nations to seek justice for financial abuse, provided certain conditions are met, particularly the exhaustion of domestic remedies in India. Here’s a breakdown of the situation and the applicable process:

Exhaustion of Domestic Remedies

The OHCHR, through mechanisms like the Human Rights Council Complaint Procedure (established under Resolution 5/1), allows individuals, groups, or NGOs to submit complaints about human rights violations, including economic rights abuses such as financial abuse, once domestic remedies are exhausted. “Exhausted” means that all available legal avenues in India—courts, the National Human Rights Commission (NHRC), and other relevant bodies—have been pursued without satisfactory resolution, or if those remedies are proven ineffective or unreasonably prolonged. In the DHFL case, if victims have appealed to the NHRC and courts (e.g., Supreme Court or High Courts) and received no adequate redress, this criterion could be satisfied. The NHRC’s failure to act, combined with its delisting from the Global Alliance of National Human Rights Institutions (GANHRI) in 2023 due to concerns over independence and compliance with the Paris Principles, could strengthen the argument that domestic mechanisms are ineffective.

Financial Abuse as a Human Rights Issue

Financial abuse, in the context of the DHFL scandal—where a Rs 34,615 crore loss to 17 banks allegedly stems from a criminal conspiracy—could be framed as a violation of economic rights under international law. The International Covenant on Economic, Social and Cultural Rights (ICESCR), ratified by India, includes the right to an adequate standard of living (Article 11) and social security (Article 9). If the DHFL victims (e.g., depositors, investors, or affected bank stakeholders) can demonstrate that the scam directly undermined their livelihoods, savings, or economic stability, and that the state failed to protect them or provide remedies, this could fall within the OHCHR’s purview. Additionally, the UN Declaration of Basic Principles of Justice for Victims of Crime and Abuse of Power (1985) recognizes victims’ rights to restitution, compensation, and access to justice, which could apply if state negligence or complicity is alleged.

NHRC’s Delisting and Implications

The NHRC’s delisting from GANHRI doesn’t strip it of domestic authority, but it signals to the international community that it may not meet global standards for independence, transparency, or effectiveness. This could bolster the victims’ case at the OHCHR by highlighting systemic flaws in India’s human rights framework. If the NHRC ignored or inadequately addressed the DHFL victims’ appeals, this inaction could be cited as evidence of an ineffective domestic remedy, justifying escalation to the UN level.

Process to Approach the OHCHR

Human Rights Council Complaint Procedure: Victims or their representatives (e.g., NGOs) can submit a written complaint to the OHCHR, detailing the financial abuse, its impact, and the exhaustion of domestic remedies. The complaint must:

Be in one of the UN’s six official languages (e.g., English).
Include specific facts (names, dates, losses, etc.) and evidence.
Avoid being solely based on media reports or politically motivated rhetoric.
Show that the issue isn’t already under review by another UN body or treaty mechanism.

Outcome: This procedure doesn’t result in binding rulings or direct compensation but aims to address “consistent patterns of gross and reliably attested violations.” The OHCHR could investigate, publicize findings, or recommend action to the Human Rights Council, pressuring India to respond.
Alternative Mechanisms: Victims could also explore submitting communications to UN Special Rapporteurs (e.g., on extreme poverty and human rights or on the right to development) or, if applicable, treaty bodies like the Committee on Economic, Social and Cultural Rights, though the latter requires an Optional Protocol India hasn’t ratified for individual complaints.

Challenges

Evidence Burden: Victims must provide detailed, substantiated claims linking the financial abuse to human rights violations and state failure.
Scope Limitation: The OHCHR focuses on “gross” violations, so the case must demonstrate widespread or severe impact beyond individual losses.
Political Sensitivity: India’s cooperation with UN bodies varies, and it may resist international scrutiny, citing sovereignty.
Non-Binding Nature: OHCHR recommendations aren’t enforceable; they rely on diplomatic pressure or reputational consequences.

Conclusion

Yes, DHFL victims can approach the OHCHR if domestic remedies, including appeals to the NHRC and courts, are exhausted or demonstrably futile. The NHRC’s delisting and inaction could support their claim of ineffective recourse. However, success hinges on framing the financial abuse as a human rights violation with clear evidence and navigating the UN’s procedural and practical limitations. It’s a viable step for visibility and pressure, but not a guaranteed path to direct justice or compensation.

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