The Reverse Merger Republic: Piramal Finance, DHFL, and the Architecture of Cunning Capitalism

Posted on 15th November, 2025 (GMT 04:55 hrs)

ABSTRACT

This article examines the DHFL resolution and Piramal Group’s subsequent restructuring as a paradigmatic case of contemporary financial consolidation in India, tracing how regulatory design, corporate strategy, and state-enabled mechanisms converged to produce an outcome that is legally final yet institutionally opaque. It analyses the RBI’s supervisory–administrative dual role, the CoC’s opacity, the judiciary’s tendency toward implied finality, and the structural conflicts that limited independent scrutiny during the insolvency process. The paper then situates Piramal’s rare reverse merger—where the listed parent (PEL) was absorbed into its regulated lending subsidiary (PFL)—as a decisive act executed amidst pending appeals, effectively embedding DHFL-acquired assets inside a newly listed NBFC-ICC. The listing-by-merger, driven by upper-layer regulatory requirements, market optics, and corporate consolidation goals, is shown to function not merely as compliance but as a strategic reorganisation that consolidates control, complicates retrospective accountability, and reconfigures contested assets into an ostensibly neutral balance sheet. By synthesising legal, regulatory, financial and political-economy perspectives, the article argues that the Piramal–DHFL arc reveals a wider architecture of contemporary consolidation—one in which regulatory frameworks, capital markets, and corporate power align to enable irreversible restructurings under conditions of weakened transparency and constrained avenues for redress.

In Continuation With

Ajay Piramal appears to be a “chameleon” of corporate restructuring — repeatedly using mergers, demergers, rebrandings, and structural name-shifts to obscure legacy liabilities and re-emerge in new identities or skins. In that framing, the DHFL acquisition and the subsequent reverse-merger into Piramal Finance Ltd are not isolated events but part of a long-standing legally-cloaked strategy of identity-shifting corporate engineering. This perspective reinforces the argument that the present reverse-merger to be discussed in the course of this article is neither accidental nor merely technical; it is the logical culmination of nearly a decade-long pattern of opacity-driven crony consolidation.

0. Introduction

This article argues that the Piramal restructuring arc — beginning with PCHFL’s reverse merger into DHFL (after acquiring, with a number of controversies, the insolvent entity), its continuation as the renamed PCHFL, its 2025 rebranding as Piramal Finance, and culminating in the 2025 merger whereby Piramal Enterprises Ltd. (PEL) was absorbed into Piramal Finance — when read together with the broader trajectory of the DHFL insolvency, reveals a systemic architecture in which legal instruments (IBC), state institutions (RBI, NCLT), creditor coalitions (CoC), and corporate actors operate in synchrony to privilege speed, consolidation, and corporate continuity over depositor protection, transparency, and substantive accountability.

This consolidated sequence — now reinforced by the NCLT’s approval (7 June 2021) and the Supreme Court’s affirmance (1 April 2025), while conspicuously bypassing the NCLT’s 19 May 2021 and NCLAT’s 22 January 2022 orders that had gone against Piramal — and further legitimised by market-facing commentary that celebrates the process as “simplification,” “value unlocking,” or “regulatory alignment,” reveals what critics argue is a structural design rather than an incidental corporate event. What broking reports frame as operational efficiency acquires a very different meaning when situated within the DHFL timeline: the IBC appears less as a mechanism for truth, justice, accountability, or depositor protection and more as an accelerator for balance-sheet expansion, enabling dominant financial actors to consolidate distressed assets under the cover of procedural legality and technocratic rhetoric.

The consequence is a model of crony cunning capitalism by design, where legal and institutional frameworks produce predictable asymmetries: large, well-connected bidders receive the benefits of corporate absorption, tax efficiencies, and post-resolution recoveries, while retail depositors — the most vulnerable class in the DHFL collapse — are left with fragmented remedies, irreversible losses, and no meaningful institutional recourse. This emerging template, critics argue, is not an aberration but a demonstration of how financial resolution in contemporary India is increasingly structured: rapid for big corporations, opaque for the public, and damagingly irreversible for small savers.

Key, widely-reported factual anchors as used in this account are:

• The reverse merger of Piramal Enterprises into Piramal Finance was executed and advised publicly; law firm Trilegal announced its role in the deal. Trilegal
• The NCLT and related processes approved and implemented the DHFL resolution plan; trading in PEL was suspended as part of the merger procedure. The Times of India
• Judicial developments (Supreme Court and appellate rulings) have reinforced limited judicial interference in approved resolution plans, while the DHFL matter attracted intense litigation and commentary. Mint

I. What is a Reverse Merger — Piramal’s Shocking Transaction: An Overview

In corporate law, a reverse merger occurs when a parent company is absorbed into its subsidiary — the opposite of the conventional consolidation path. Such transactions are exceptionally rare in Indian financial services, especially when the surviving entity is a regulated NBFC/HFC, because they trigger complex regulatory, tax, and disclosure consequences. Yet it is precisely this unusual strategy that the Piramal Group pursued: Piramal Enterprises Ltd. (PEL), the listed parent, was merged into Piramal Finance (PFL), the regulated lending arm that had earlier absorbed DHFL.

Piramal’s Shocking Deal: Parent Company VANISHES into Subsidiary! What Investors MUST Know! VIEW HERE ⤡ (As reported on 13th November, 2025 ©Whalesbook)

Corporate advisers publicly confirmed the structure, and the law firm Trilegal announced its advisory role on the transaction, underscoring that this was not a technical internal shuffle but a deliberate, architected restructuring.

Trilegal acts on reverse merger of Piramal Enterprises with Piramal Finance VIEW HERE ⤡ (As reported on 13th November, 2025 ©Bar and Bench)

A) Why This Reverse Structure Matters

• DHFL-acquired assets are now consolidated inside the surviving NBFC, making the pre- and post-acquisition financial trails more difficult to disentangle.
• The entire lending business — including legacy DHFL assets — now sits under the regulatory identity of PFL, altering listing obligations, capital rules, and disclosure frameworks.
• The merger occurred while appeals, adjudication, and depositor litigation were still ongoing, effectively transforming contested assets into integrated components of a larger, newly listed balance sheet.
• This structural timing severely complicates any future attempt at forensic extraction, tracing of irregularities, or unwinding of disputed transactions.

These mechanics explain why critics view the exercise as strategic consolidation under conditions of unresolved legal and regulatory scrutiny, rather than a neutral corporate rationalization. The essential point: while depositors were still in court, the corporate architecture beneath their claims was being permanently reconfigured.

B) The Listing by Merger: A New Modality of NBFC Consolidation

Piramal’s decision to list Piramal Finance through this merger rather than through an Initial Public Offering (IPO) marks a pivotal development in India’s NBFC landscape. Instead of raising fresh capital, the group chose to convert PFL into the listed entity by absorbing PEL — a move driven not only by “simplicity,” but by a strategic reading of regulatory demands, judicial timelines, and market optics.

How Piramal Finance Got Listed Without an IPO | The NBFC Merger Explained Simply VIEW HERE ⤡ (As reported on 7th November, 2025 ©IndMoney)

1. Regulatory Compliance

• PFL, formerly Piramal Capital & Housing Finance, was reclassified as an “upper-layer” NBFC-ICC, triggering an RBI-mandated requirement to list by September 2025.
• The merger collapses the NBFC footprint into a single, regulated listed entity, improving compliance visibility but concentrating all DHFL-linked assets within one highly scrutinised unit.

2. Corporate Consolidation

• Overlapping roles between PEL and PFL are eliminated, enabling one unified vehicle for all lending operations, assets, and liabilities.
• A 1:1 share swap seamlessly converts PEL shareholders into PFL shareholders, reducing procedural friction and preventing equity dilution.

3. Market Signal & Investor Sentiment

• On listing, PFL debuted at ₹1,260 on NSE, around 12% above the discovered price.
• On BSE, it opened at ₹1,270, reflecting robust initial investor appetite for the consolidated entity.

C) Risks and Wider Implications

1. No Fresh Capital Infusion

Because there was no IPO, Piramal raised no new public equity. Existing capital was simply reorganized — limiting dilution but also foreclosing retail participation as a source of fresh funds.

2. Regulatory Pressure and Compressed Timelines

The mandatory listing deadline exerted pressure to adopt a structure that may have been driven as much by regulatory necessity as by business “profitability” logic.

3. Governance and Transparency Concerns

With the reverse merger:

• Traditional boundaries between PEL (legacy businesses) and PFL (lending operations) disappear.
• This blurs the audit trail, complicating future regulatory or forensic scrutiny — particularly around DHFL assets.

4. Investor Exposure to Hidden Risks

Former PEL shareholders now rely entirely on PFL’s performance, meaning that:

• Any latent problems within the DHFL-acquired portfolio
• Any asset-quality issues or unresolved forensic matters

are now borne by the shareholders of the newly listed entity.

5. Symbolic vs. Substantive Restructuring

Though promoted as “simplification” and “value unlocking”, the merger:

• Functions as a regulatory-driven consolidation,
• Resets liability and governance conditions,
• And produces a cleaner public-facing balance sheet while internalising complex legacy risks.

D) A Larger Reading: Consolidation as Power

Taken together, these developments show that Piramal is using legal form, regulatory incentives, and market structures not merely to comply with norms but to solidify control and reshape its institutional architecture during a pivotal period of unresolved DHFL-related scrutiny.

The listing-by-merger is therefore not just a capital-market event — it is the culmination of a multi-year restructuring designed to integrate assets, streamline regulatory exposure, and stabilise the group’s financial profile.

In this sense, the reverse merger and subsequent listing function as instruments of power: mechanisms through which regulatory regimes, capital-market pathways, and corporate ambition align to favour structurally dominant players — while simultaneously insulating them from retrospective accountability.ulating them from retrospective accountability.

II. Backdrop: The DHFL “Resolution” — Outcomes And Contested Points

DHFL was placed under an RBI-appointed Administrator and pushed into insolvency resolution under the IBC after alleged governance failures and payment defaults became public. The RBI superseded the board, installed an Administrator, and initiated the Corporate Insolvency Resolution Process (CIRP). The Committee of Creditors (CoC), dominated by institutional lenders, then steered the process and selected Piramal as the successful bidder. The resolution plan transferred control, assets, and infrastructure to the Piramal Group, even as multiple legal and factual questions remained unresolved.

Crucially, two judicial orders that had gone against Piramal were never allowed to operate in practice. On 19 May 2021, the NCLT directed the CoC to reconsider the Wadhawan plan. On 27 January 2022, the NCLAT found that the DHFL CIRP suffered from material irregularities and violated the IBC’s statutory framework. Yet, neither order altered the final trajectory of the resolution. Instead, the NCLT’s later approval order (7 June 2021) and, ultimately, the Supreme Court’s decision (1 April 2025) foregrounded the finality of CoC-approved plans and the doctrine of “commercial wisdom,” thereby insulating the Piramal plan from deeper scrutiny.

Retail fixed-deposit holders, meanwhile, received only partial payouts—widely reported at ~23%—despite earlier investigative findings suggesting far greater misappropriations. Public reporting, especially in Mint and other outlets, underscored the stark asymmetry: while institutional creditors shaped the process, ordinary depositors bore the brunt of the losses without meaningful representation or recourse.

The IBC’s architecture played a decisive role. Under the Code, once the CoC and NCLT approve a plan, implementation proceeds immediately unless a higher court explicitly stays the process. No such stay was issued. As a result, Piramal could legally take over DHFL even while appeals, forensic gaps, and contradictory judicial orders remained unresolved. This is the core of what the DHFL case brought to national attention: a “resolution first, adjudication later” model that produces irreversible outcomes before truth or accountability can mature.

A reversed chronology problem lies at the centre of the controversy. Corporate transfer occurred before full forensic clarity, before evidentiary hearings concluded, and before the factual matrix stabilised. In effect, the structure of the IBC allowed the building of irreversible corporate outcomes atop incomplete, disputed, or contested information.

Further exacerbating public concern was the emergence of substantial post-resolution recoveries—cash flows and asset realizations that materialized after control had passed to Piramal. Because such recoveries accrue to the acquirer and not to the original creditors, critics argue that the system embeds a perverse incentive to undervalue distressed assets during CIRP. The result is a structural disadvantage for retail claimants, who lose twice: first through reduced recovery percentages, and again when subsequent recoveries enrich the acquirer rather than restoring depositor losses.

Over the years, Piramal’s consolidation of DHFL has resembled a deliberate occupation of control ahead of legal closure. While the formal resolution plan was still under challenge, Piramal moved swiftly to embed itself deeply into DHFL’s operations — assuming managerial authority and blending legacy operations within its existing finance arm, effectively establishing de facto control in parallel to judicial proceedings. This tactic reframes “acquisition” not merely as a financial bid but as a power play: by initiating operational dominance before final judicial affirmation, Piramal disrupted the traditional sequence of ownership and control, undermining the notion that finality must precede occupancy. This inversion of sequence — control first, legality later — mirrors a pattern in which economic reality is allowed to outrun judicial process, producing a fait accompli where courts merely validate a transformation already executed on the ground.

This pattern of pre-emptive control reflects a broader modus operandi. Rather than waiting for the dust of CIRP to settle, Piramal appears to have used its structural maneuvering — from reverse mergers to balance-sheet transformations — as leverage to entrench its presence in DHFL. In practical terms, this means that the acquirer did not simply buy an insolvent company: it assumed authority over its business while key legal questions were still in flux. For depositors and stakeholders, this raises profound concerns: finality did not follow control; control came first. Such sequencing also exploits the behavioural posture of courts and regulators, who become increasingly reluctant to disturb a transaction that has already been operationalised, no matter how contested or irregular the underlying process may have been. Once the economic integration is underway, institutional actors tend to prioritise continuity over correction, thereby insulating premature occupation from retrospective scrutiny.

The result is an architecture in which occupation produces its own legitimacy: by the time fraud findings shift, appeals are pending, or forensic lapses surface, the corporate landscape has already been reorganized in the acquirer’s favour. This transforms insolvency resolution into an “after-the-fact” legalization of control, not an adjudicative process determining who should rightfully control the company. In the DHFL case, this logic allowed Piramal to embed itself so thoroughly that any later judicial challenge would have been seen as destabilising — even if the challenge was substantively valid.

III. Why DHFL Is Widely Regarded As A Worst “Test Case” Of The IBC

Observers, activists, legal analysts and journalists have often pointed to a cluster of failings that together produce the perception that DHFL epitomized the IBC’s structural weaknesses:

1. Scale versus recovery — critics highlight a mismatch between the reported scale of alleged misappropriation and the relatively very low recoveries for vulnerable depositors. Multiple analyses and reports flagged concerns about undervaluation, unexpected cash recoveries post-transfer, and asset pricing that seemed inconsistent with later recoveries. Invest Yadnya
2. Depositor exclusion — under the IBC, fixed depositors in non-bank housing finance companies are often treated as unsecured creditors with limited voting or protective rights within the CoC framework. This legal classification left retail depositors without meaningful leverage during the negotiation of the resolution plan. IBC Law
3. Opacity in valuation and forensic audit — critics argue that forensic audit scope, data-room access and valuation methods were insufficiently transparent; competing bidders and public commentators raised these issues during the process. The Administrator’s choice of auditors and the limited public disclosure created persistent suspicion. kslegal.co.in
4. Speed over substantive justice — the IBC prioritises rapid resolution to preserve business value. In practice, for large, complex frauds, this can lock contested transfers into place before criminal, civil or regulatory questions are settled — a procedural design that produced the impression of “fait accompli” in DHFL. Judicial deference to the sanctity of approved plans has reinforced the practical permanence of such transfers. Mondaq

Taken together, these structural features explain why many whistleblowers call DHFL the “darkest chapter” of the IBC era: the system delivered a legally tidy corporate resolution while leaving widespread perceptions of injustice and unresolved accountability.

The DHFL outcome has created a new moral hazard template within India’s insolvency ecosystem. The message to large bidders is clear: complex distressed financial firms with dispersed small creditors can be acquired cheaply, swiftly, and with minimal risk of reversal — even in cases involving alleged fraud of unprecedented scale.

DHFL has now emerged as the de facto precedent for what critics describe as “IBC-era oligarchy-building”: a model that demonstrates how distressed public liabilities can be reconfigured into consolidated private corporate power. Far from being an isolated anomaly, DHFL increasingly functions as the test case through which the political–corporate establishment sought to legitimize the post-2016 insolvency architecture. In policy circles aligned with the ruling dispensation, the case is quietly upheld as proof-of-concept that the IBC can resolve failures swiftly and transfer assets to “efficient” hands. Yet in practice, DHFL illustrates the inverse: how an insolvency regime can be mobilized to accelerate balance-sheet expansion for already dominant, well-connected corporate actors. In this sense, DHFL is less an exception than a template—an inaugural demonstration of how state-enabled restructuring can recalibrate markets in favour of select conglomerates while disclaiming responsibility to the very depositors and small investors whose losses subsidized the “resolution.”

IV. Institutional Failures and The “Four-Pillar” Collapse

The DHFL process exposed a deeper problem of institutional circularity: the same institutions that failed in early supervision (including RBI oversight, auditors, and credit rating agencies) became responsible for validating the resolution process. This created a self-reinforcing loop where previous failures were never meaningfully interrogated because the failing bodies themselves certified the cure.

Credit Rating Agencies, though invisible in much of the public debate, enabled the collapse by consistently assigning high ratings to DHFL instruments until very late in the crisis. This systemic ratings failure channelled deposits into a structurally unsound company and later turned retail savings into distressed assets ripe for acquisition — a critical but under-acknowledged link in the chain of responsibility.

A. Reserve Bank of India (RBI)

• Early detection and supervision: public records show RBI intervention (board supersession, appointment of an administrator). Critics argue RBI missed earlier warning signals and did not adequately shield depositors when it administered the resolution. The Times of India
• As administrator: the RBI’s role in managing the data, appointing auditors, and steering the process was criticised for insufficient transparency and for not prioritising small depositors’ interests.

B. Committee of Creditors (CoC)

• Composition and incentives: the COC predominantly represents institutional creditors whose recovery priorities can diverge sharply from retail depositors’. In DHFL, depositors had little formal representation and were therefore structurally disadvantaged in valuation choices and voting on resolution plans. IBC Law

C. Resolution Professional / Administrator

• Data-room, audits and valuation: the RP/Administrator’s control over information raised potential concerns about whether competing bidders had equal access to complete information. Limited forensic scope and post-transfer surprises (e.g., later cash recoveries flagged in reporting) fuelled claims of opacity. kslegal.co.in

D. Adjudicatory Bodies (NCLT / NCLAT / Courts)

• Judicial posture: Quasi-judicial bodies and the Supreme Court have increasingly emphasised limited interference with the commercial decisions of the CoC and NCLT, reinforcing the finality of approved resolution plans. Critics argue, however, that this posture prioritises “market stability” and speedy resolution at the expense of substantive scrutiny — even in cases burdened with serious fraud allegations. In the DHFL matter, for instance, the NCLT on 19 May 2021 directed the CoC to reconsider the Wadhawan resolution plan, and the NCLAT on 27 January 2022 found several material irregularities and statutory violations in the DHFL CIRP; yet, these cautionary orders were effectively sidelined as the resolution proceeded. Ultimately, the Supreme Court’s approval of the Piramal resolution plan on 1 April 2025 came from a bench led by Justice Bela Trivedi, a judge whose decisions are often perceived as aligned with BJP-friendly jurisprudence — a fact that feeds public concern about the political economy of insolvency adjudication. Through its acquiescence, the judiciary helped convert contentious claims into irreversible corporate transfers, cementing a legal regime in which procedural formality often overwhelms substantive justice. Mondaq

The combined outcome is an institutional matrix that can efficiently implement corporate consolidation while producing limited substantive redress for small claimants.

V. Piramal’s Corporate Strategy: Consolidation, Listing And The Reverse Merger In Context

Piramal’s strategic choices can be read on two levels:

1. Corporate-legal rationale: consolidating financial services into a single regulated NBFC simplifies governance, achieves scale benefits, and aligns the organisation with RBI’s scale-based regulatory expectations. The reverse-merger and subsequent listing are consistent with those corporate goals and were publicly advised by legal counsel. Trilegal
2. Strategic consequences: when consolidation occurs immediately after an acquisition of a contested asset (DHFL), it also has the effect of:
   • folding contested recoveries and future cash flows into a broader balance sheet;
   • reducing granularity of disclosures about the original target;
   • making later unwinding or forensic segregation technically and politically harder.

These consequences invite scrutiny. The timing of the merger — during lingering appeals and after contested forensic questions — makes the corporate rationale indistinguishable in public perception from a tactic to “stabilize” the acquired asset in ways that are difficult to unravel. Bar and Bench – Indian Legal news

VI. Piramal’s “Reverse Merger” as the New Face of Cunning Capitalism

According to Sonam Wangchuk, extractive capitalism increasingly rewards “cleverness” rather than “wisdom.” Cleverness is technical intelligence used to maximize advantage (means adjusted to ends, and ends justifying the means!). Wisdom is deep knowledge used to minimize harm, and talk about the welfare and happiness of all.

In this framework, Piramal’s reverse-merger strategy exemplifies what may be called “cunning capitalism”: a mode of hyper-strategic behaviour that is legally sophisticated yet ethically indifferent.

Why this “reverse merger” is cunning, not wise:

• It uses the architecture of IBC — designed for corporate restructuring — to absorb a fraud-scarred company before truth is fully known.
• It relies on technical manoeuvres (reverse merger, balance-sheet folding, regulatory timing) that maximise corporate advantage at the exact moment when small depositors are structurally weakest.
• It embeds contested assets within a larger financial organism, making later separation for justice almost impossible.
• It transforms uncertainty itself into an asset — because undervaluation benefits the acquirer.

Cleverness:
Using legal pathways to solidify control during adjudication.

Lack of wisdom:
Ignoring the ethical and social fallout for lakhs of depositors whose losses become permanently locked in.

Cunning capitalism, therefore, is not illegal; it is worse:
it is perfectly legal, meticulously structured, and entirely misaligned with justice.

In the DHFL–Piramal story, cunning capitalism is not the misuse of law — it is the mastery of strategized law in service of asymmetry.
The tragedy is that the Indian regulatory system rewards this form of cleverness while offering no institutional mechanism for wisdom.

VII. The Political-Economic Dimension: Cronyism, Donations And Perceptions Of Proximity

A critical theme in the public debate is not only whether any illegal quid pro quo occurred, but whether structural proximity to the centre of political power has conferred practical advantages in Piramal’s occupation of the DHFL:

• Public records and investigative reporting document substantial corporate donations routed through electoral bonds and PM CARES from Piramal Finance that disproportionately supported the ruling party BJP in certain periods; media reporting on political donations by Piramal group-associated entities has been part of the public record. These are facts about donations and public reporting; they feed perceptions of proximity and access. National Herald
• The optics — speed of access to distressed assets, judicial deference to the mechanics of resolution, and the ability to execute complex corporate restructurings without prolonged regulatory friction — create an appearance that politically-connected corporates face lower transactional resistance.

Important analytical distinction: pointing to donations, membership of advisory bodies, or other forms of access is not the same as proving corrupt exchange. But, in political-economy terms, structural advantage is real whether or not explicit illegal quid-pro-quo is proven. The DHFL episode crystallized the perception — rightly or wrongly — that politically proximate corporates can convert distressed public assets into consolidated corporate advantage with unusual ease.

The limited mainstream media scrutiny of the DHFL–Piramal consolidation revealed the deepening structural silence around corporate–state alignments. Despite lakhs of affected depositors, national media offered minimal sustained investigation, reinforcing the perception that high-profile financial restructurings exist in a zone insulated from democratic and journalistic oversight.

Activists, journalists, and depositors who raised questions about the DHFL process frequently faced intimidation, “SLAPP” threats, bureaucratic obstruction, or legal pushback. This chilling effect on dissent erodes transparency and further entrenches the perception that critique of politically-connected corporate processes carries personal risk.

VIII. Human Impact, Rights Framing, and the OHCHR Question

From a human-rights and administrative-law standpoint, the DHFL episode raises several arguable claims for international attention:

1. Property and deprivation: retail depositors who placed savings in a regulated housing finance company suffered very large losses under a scheme implemented by state-sanctioned processes. If domestic remedies are exhausted or ineffective, claimants may seek international bodies for redress under certain pathways (for example, human-rights frameworks emphasizing economic and property rights). Invest Yadnya
2. Due process and access to remedy: critics argue that the institutional architecture (RBI as administrator, CoC dominated by institutional creditors, limited judicial intervention) denies effective domestic remedy in practice because implementation proceeds before adjudicatory resolution. This raises arguments that domestic remedies are functionally exhausted if appealing is symbolic and the effective outcome remains unchanged. Mondaq
3. Practical remedies: where domestic courts uphold the finality of resolution plans, victims can still pursue: targeted petitions on procedural or valuation lapses, public interest litigation, regulatory complaints to RBI/SEBI, and human-rights petitions that emphasise systemic deprivation. These routes are difficult, costly and slow — but legally available.

Framing the DHFL case before bodies such as the OHCHR requires demonstrating why it constitutes an exceptional circumstance—namely, that despite the pursuit of all available domestic remedies, systemic delays, procedural barriers, and the protracted denial of justice in the Piramal–DHFL matter have left identifiable groups of victims without effective redress.

IX. Policy Analysis: Why the IBC + Regulatory Architecture Produced This Outcome

Several structural design choices of Indian insolvency/regulatory policy combined to generate the DHFL outcome:

• IBC’s default rule: prioritise commercial resolution and preserve going-concern value over prolonged litigation. This encourages acquirers but diminishes the bargaining power of dispersed retail creditors. Mondaq
• Regulatory classification of depositors: depositors of certain HFCs and NBFCs are treated as unsecured creditors in IBC processes, which places them behind secured institutional creditors in recovery priorities. IBC Law The crisis revealed a sharp socio-economic asymmetry embedded in the IBC. Institutional creditors enjoyed bargaining power, early information, and decisive influence within the CoC, while retail depositors — despite being the most vulnerable class — remained structurally voiceless. This class divide in insolvency governance is a systemic feature, not an accident.
• Information asymmetry: RPs and administrators control access to valuations and forensic material; limited public audit mechanisms allow contested valuations to pass into implemented plans without independent verification. kslegal.co.in
• Judicial deference: courts have signalled reluctance to upset CoC-approved arrangements for fear of market disruption — a norm that privileges finality over exhaustive correction.

Connectedly, the post-2014 policy landscape (NEP and industrial ties emphasising consolidation, state facilitation of “flagship” resolutions) creates incentives favouring large bidders like Mr. Piramal who can operationalise complex acquisitions quickly. This is the structural context in which DHFL sits.

The post-2014 policy environment, with its emphasis on scale, consolidation, and creating large corporate champions, forms an essential backdrop to the DHFL resolution. Regulatory philosophy increasingly prioritises rapid consolidation over granular scrutiny, enabling actors with capital and political proximity to execute complex mergers with minimal institutional friction.

X. Lessons: Legal, Political And Civic

1. Legal reform needs: if the legislative goal is to protect retail depositors, the IBC and related regulatory rules must be amended to grant depositors enforceable priority, class representation in CoC or separate procedural safeguards, mandatory independent forensic and valuation steps in high-fraud cases, and interim transparency mechanisms during sale processes.
2. Regulatory behaviour: central banks and supervisors exercising administrative powers must adopt stricter transparency standards when they act as administrators; public auditors should have a mandated role in large, deposit-taking insolvencies.
3. Judicial posture: courts balancing finality and corrective justice need new doctrinal tools permitting targeted interim forensic review in cases with credible allegations of systemic fraud.
4. Political accountability: the democratic cost of perceived structural favoritism is high — erosions of trust in banks, the markets, and state institutions have long-term political consequences.
5. Civil mobilization and redress: depositors and consumer bodies must document harms precisely, pursue class actions and PILs, and make sustained FOIA/RTI efforts to make valuations and forensic reports public.

XI. Broader Structural Faultlines

1. The Reserve Bank’s “Two-Hat Problem”:
A significant yet understudied contradiction in the DHFL process is that the Reserve Bank of India functioned simultaneously as the regulator responsible for supervising DHFL before its collapse and as the authority that superseded its board, appointed the Administrator, and initiated insolvency proceedings after the collapse. This dual role—legally permitted under the NBFC resolution framework—creates an inherent structural tension: the institution charged with oversight is also responsible for managing the failure of the very entity it monitored. This raises legitimate concerns about conflicts of interest and reduces the scope for independent scrutiny of potential supervisory lapses. The concern is further exacerbated by the RBI’s refusal, in response to RTI requests, to provide critical information such as CoC expenditures, voting patterns, and decision-making records on the grounds that these materials are not held by the Bank. This position effectively closes off transparency for DHFL victims seeking to understand how the resolution was conducted.

2. The Doctrine of “Implied Finality”:
In the DHFL case, the operation of implied finality became clearly visible when the Supreme Court set aside the NCLAT’s modification of a clause in Piramal’s resolution plan concerning the treatment of recoveries from avoidance applications. The Court held that its role was limited to checking procedural compliance under the IBC and that it could not revisit the commercial terms approved by the Committee of Creditors. By declining to reopen questions about valuation, distribution, or the treatment of future recoveries—even where assets worth thousands of crores had been assigned a token value of ₹1—the judgment effectively insulated the plan from further scrutiny. Once the plan entered the implementation stage, all underlying forensic uncertainties, contested transactions, and unresolved questions were treated as closed matters, demonstrating how implied finality operates as a powerful barrier against retrospective correction.

3. Regulatory Silence as a Form of Power:
In cases like DHFL, silence from institutions such as IRDAI, IBBI, DFS, SEBI, CCI, and state regulators contributes as much to the final outcome as explicit judicial or administrative orders. Regulatory non-intervention — especially regarding valuations, related-party transactions, and public communication — becomes a tacit endorsement of the dominant narrative, shaping public perception while evading accountability.

4. The Chilling Effect on Competing Bidders:
Multiple bidders like Oaktree reportedly raised concerns about data-room quality, valuation discrepancies, and lack of transparency. Yet, no institutional mechanism exists to protect bidders who flag systemic irregularities. The result is a self-censoring environment where serious bidders either withdraw or silently accept informational disadvantages, reinforcing the advantage of politically proximate acquirers.

5. The “State-Certified Loss” Problem:
Once a loss figure is accepted by CoC and approved by adjudicatory bodies, it becomes the state-certified truth — even when later recoveries contradict original valuations. This means depositors are forced to absorb losses that the financial system later quietly recoups, creating a structural mechanism where public losses subsidize private gains.

6. The Role of Big Four Consulting Networks:
Large consulting, auditing and advisory firms — often rotating between roles as auditors, valuers, transaction advisers and compliance consultants across different entities in the same ecosystem — create an incestuous landscape of expertise. Their reports attain near-epistemic authority in insolvency cases, even when later events expose glaring valuation or auditing inaccuracies.

7. The “Memory Erasure” Mechanism:
Large financial scandals in India typically fade once the corporate restructuring is complete. In DHFL’s case, once the Piramal consolidation, relisting and reverse merger went through, mainstream discourse rapidly moved on. This temporal erasure functions as a mechanism of power — it ensures that systemic injustices outlast public attention, and unresolved harms become invisible.

8. Judicial Capacity Asymmetry:
Large conglomerates like Piramal Finance Ltd possess the financial endurance for multi-year litigation, while ordinary depositors cannot sustain long legal battles. The law becomes unevenly accessible, even when citizens are substantively correct.

9. Opacity of Intermediary Institutions:
Resolution advisors, forensic auditors, valuers, and consultants operate in legal grey zones with no meaningful public accountability, even though their reports determine the fate of thousands of crores.

10. Inversion of Regulatory Purpose:
Regulators originally meant to safeguard the public end up defending large corporate interests, especially when “commercial wisdom” is invoked to bypass citizen claims. Regulation becomes a shield for power, not protection for people.

11. Temporal Manipulation:
Delays in resolution, documentation, hearings, and grievance redressal exhaust citizens. Time becomes a structural weapon deployed against individuals with limited stamina and resources.

12. Narrative Capture:
Corporate narratives of “revival,” “rescue,” or “reconstruction” overwrite the lived experiences of loss, trauma, and injustice endured by citizens, controlling how the crisis is remembered.

13. Fragmentation of Affected Groups:
Homebuyers, FD-holders, employees, and small borrowers all suffer differently, and therefore mobilize separately. This fragmentation prevents unified collective resistance and benefits the acquirer.

14. Moral Hazard and Future Precedent:
If a conglomerate can acquire a failed company at a fraction of its book value while disputed assets and consumer claims are sidelined, it sets a dangerous precedent encouraging opportunistic acquisitions during crises.

XII. Closing Synthesis — The Architecture of Contemporary Corporate Consolidation

The Piramal reverse-merger and the DHFL resolution together illustrate an institutional logic:

• Law and policy provide a legal pathway for rapid transfer and consolidation.
• Regulatory practice enables implementation with limited public scrutiny.
• Corporate strategy exploits the legal pathway (reverse merger, consolidation, listing) to fold acquired assets into a larger, resilient balance sheet.
• Political economy furnishes the context of access, donations and perceptions of proximity; whether or not illegal exchange occurred, structural advantages are real.
• Social consequence is the displacement of millions of small savers’ claims from public memory into the ledger of a newly configured finance house.

This convergence is not a single scandal but a systemic mode: it combines legal instruments, administrative behaviour and market incentives to transform contested public harms into consolidated corporate assets while leaving ordinary victims with incomplete remedies.

The DHFL case ultimately embodies a crisis of legitimacy: while the resolution is projected to hold legal finality, it lacks moral, social, economic and democratic legitimacy. The unresolved gap between what is simulated to be legally permissible and what is ethically defensible continues to shape public memory, making DHFL a touchstone for the erosion of trust in India’s financial-judicial system.

Disclaimer: The content of this article is intended for informational and educational purposes only and does not constitute legal, financial, or professional advice. The author makes no representations or warranties regarding the accuracy, completeness, or suitability of the information contained herein. Readers should not rely solely on this content for making financial, legal, or investment decisions and are strongly advised to seek independent professional guidance. Any references to individuals, companies, or events are based on publicly available information and reporting; no defamatory intent is intended. The author and publisher disclaim any liability for losses or damages arising directly or indirectly from the use of this information.

SEE ALSO: