If CoC-under-IBC is the King, is Justice Just a Ritual?
If CoC-under-IBC is the King, is Justice Just a Ritual?
If CoC-under-IBC is the King, is Justice Just a Ritual?
Posted on 15th April, 2025 (GMT 08:55 hrs)
ABSTRACT
The article critically examines the Indian judiciary’s handling of the DHFL insolvency case under the Insolvency and Bankruptcy Code (IBC), questioning whether justice is becoming a mere formality. It highlights the overarching dominance of the Committee of Creditors (CoC) in the insolvency resolution process, where their decisions are treated as final with minimal judicial scrutiny. This unchecked supremacy, the article argues, has allegedly led courts—including the Supreme Court—to endorse CoC decisions without thorough examination, thereby reducing judicial oversight to a ritualistic procedure. A major concern is the exclusion of the Wadhawan family from the Corporate Insolvency Resolution Process (CIRP), despite their offer to repay the entire debt, and the opaque handling of their final settlement proposal, which was not shared with Fixed Deposit and Non-Convertible Debenture holders who held considerable voting power. The piece further raises serious questions about potential biases within the CoC, particularly the preference shown toward a specific bidder, and criticizes the judiciary for failing to probe these allegations effectively. Ultimately, it calls for greater judicial accountability and intervention to uphold justice, transparency, and fairness, especially in high-stakes financial cases affecting a wide spectrum of stakeholders.
In Continuation With
Examining the Supreme Court’s Ruling on the DHFL “Fraud” (?) Cases VIEW HERE ⤡
Remembering Stan Swamy, G. N. Saibaba, Bilkis Bano, Sanjiv Bhatt, Umar Khalid, Sharjeel Imam, and countless others who stood for justice…
After thoroughly analyzing the stance adopted by the Supreme Court of India in its April 1st verdict regarding the DHFL “scam” cases, we have noted several additional observations concerning specific statements made in the verdict, including summaries of the learned parties and the judgment analysis. Below are the relevant excerpts from the verdict:
Pages 8-9 of the Verdict
Page 24 of the Verdict
Page 29 of the Verdict
Pages 81-82 of the Verdict
Page 98 of the Verdict
Pages 113-114 of the Verdict
Pages 136-137 of the Verdict
The aforementioned elements, unified by a common point of contention—namely, the CoC’s decision being “the” ultimate—prompted us to contemplate the following:
If the CoC’s decision on a resolution plan, approved by a (tyranny of…?) majority, is deemed final and binding, and the NCLT merely endorses the CoC’s conclusion with its presupposed “commercial wisdom,” what is the purpose of initiating numerous judicial proceedings across various levels of the court system?
Why was the CoC verdict, if final and binding, examined through the long-chain of appeals via the NCLT, NCLAT, High Court, and Supreme Court?
Isn’t the plethora of hearings, arguments, and appeals, along with the interminable waits for date after date (tarikh pe tarikh), rendered superfluous and redundant in this context?
Let us put this further in the form of a hypothetical proposition:
Therefore (for argument’s sake), if the Supreme Court is correct in its assertion, then the NCLT and NCLAT were incorrect in highlighting the loopholes of the RBI-appointed CoC-led RP for DHFL under the IBC through their verdicts dated 19.05.2021 and 27.01.2022, respectively! Should they be penally reprimanded by the apex court due to this reason?
However, it appears that the entire judicial drama surrounding the DHFL “scam” (?) has unfolded as a validating ritual, reinforcing the confirmation bias prevalent among the upper echelons of the Indian judiciary and fueled by the cunning tactics of the ruling BJP. It has been stated (as far as we know) that Justice Bela Trivedi⤡, whose bench issued this verdict, has repeatedly aligned with the BJP. We are sorry to state that this verdict is a glaring instance of imperatives without logical argumentation.
Yes, the lengthy and expensive court process in relation to the DHFL cases cannot simply be classified as “due process of law,” as victims endure unending anguish for five years due to unjust and illegitimate financial abuse.
All of this has been done while keeping the following areas untouched:
No Proof of Fraud by Wadhawans:
In January 2025, the CBI stated that there was no conclusive evidence of fraudulent transactions by DHFL under the Wadhawans. Yet, this finding had no bearing on the court’s overall approach to their role in the insolvency proceedings.
Exclusion of Wadhawans from CIRP Without Reason:
The Wadhawans were barred from participating in the CoC-led Corporate Insolvency Resolution Process (CIRP). Despite offering full repayment proposals, their offers were summarily ignored—without any explanation provided in the court’s reasoning.
Oaktree’s Allegations of Bias Ignored:
Oaktree Capital explicitly alleged a pre-existing bias within the CoC in favour of Mr. Ajay Piramal. What led to such a serious accusation? Why did the court not probe these claims further?
Suppression of Settlement Proposal from Majority Stakeholders:
The final settlement proposal was not made available to the Fixed Deposit and NCD holders, who together represented 65% of the voting strength. This lack of transparency severely undermines the democratic character of the process.
Unfulfilled Promises to Small Depositors:
Mr. Piramal had publicly promised to pay 10% more than the admitted claims to small depositors. However, only 23% of their dues were ultimately disbursed—amounting to nothing short of financial abuse.
BJP–Underworld–Corporate Nexus Unaddressed:
The court remained silent on the alleged nexus between the BJP and the underworld for the purpose of terror-funding/political donations/political charity, involving names like Dawood Ibrahim and Iqbal Mirchi, and routed through entities such as RKW Developers and Dheeraj Realty. This significant context, arguably central to the case’s outcome, was omitted entirely. On whose orders?
The Alchemy of ₹45,000 Cr Reduced to ₹1:
How did ₹45,000 crore worth of DHFL assets get valued at ₹1 for resolution purposes? The judgment offered no adequate explanation or criteria for this corporate alchemy. Why is it unreasonable to suspect that the takeover by Mr. Piramal was a political return gift for long-standing support to the BJP—possibly through mechanisms like the Flashnet Fraud (In collusion with BJP Union Minister Piyush Goyal) and Electoral Bonds scam?
RBI-Appointed CoC’s Expenditures Remain Unknown!
Moreover, small depositors have been kept in the dark regarding the CoC’s expenditures during the resolution process. What should have been publicly accessible information has instead been shrouded in an apparent intent to conceal, a deliberate will-to-hide, perhaps! Our Right to Information (RTI) request on this matter received no response from the relevant authorities, who seem to be in a state of perpetual slumber.
Circumventing NCLT Orders with Alleged Impunity:
The NCLT’s order dated 19th May 2021 was disregarded by Mr. Piramal and the CoC, who swiftly approached the NCLAT to have it overturned. Could this constitute contempt of court? The Supreme Court, notably, chose not to engage with this question.
IBC as an Asset-Drainer:
As highlighted in our earlier post ⤡, recent reports indicate that the IBC has not fulfilled its commitments regarding asset recovery or maintaining the insolvent company as a viable entity or a running/ongoing concern. Instead, it has consistently prioritized corporate interests, mostly neglecting the concerns of small depositors. This critical shortcoming in the incoherent, heavily amended IBC has gone unchallenged in the Supreme Court’s ruling.
In light of the above critique, we must sincerely commend the NCLT and NCLAT for their courageous verdicts on 19.05.2021 and 27.01.2022, as these orders highlighted critical points where the CoC’s actions were found to be unlawful and rife with material irregularities in the exercise of powers by the resolution professional, along with a blatant disregard for the appeals of ex-promoters.
To this end, the Supreme Court’s April 1st verdict on the DHFL insolvency appears less a milestone in judicial clarity and more a symptom of a deeper malaise within the Indian legal-financial nexus. The judgment, rather than addressing the substantive issues raised by various stakeholders—ranging from small depositors to competing bidders—allegedly serves to validate a flawed and opaque resolution process orchestrated by a selectively empowered CoC.
By sanctifying the so-called “commercial wisdom” of a body that has repeatedly been accused of bias, procedural opacity, and exclusionary practices, the Court has, perhaps complicitly (as alleged by certain victims), sanctioned a dangerous precedent: that financial power and political proximity can override accountability, due diligence, and democratic participation. The alleged conspiracy of silence on grave allegations—be it the underworld-political-corporate entanglement, the questionable asset devaluation, or the systemic suppression of dissenting voices—further erodes public trust in institutions meant to uphold justice and economic equity. Is it due to the blurring of divide amidst the judiciary and the political executive?
What is left behind is not just the debris of DHFL’s corporate failure, but the scattered, unacknowledged grief of lakhs of small depositors, investors, and citizens who placed their faith in the judiciary. Their wait—for redress, for recognition, for justice—remains indefinite; and until these silences are confronted and these systems reformed, the DHFL debacle will stand as a chilling testament to how legal processes can be ritualized into irrelevance in service of entrenched interests.
Disclaimer: In this article, we underscore the importance of paripraśna (counter-argumentation; Gītā, 4.34) without any intention of maligning, disrespecting or disparaging the wis(h)dom of the Supreme Court of India with any motive of contempt. It is alleged by some that Mr. Piramal and the CoC may have exhibited such contempt in the NCLT’s initial order dated 19.05.2021.
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