Mumbai Court Discharges DHFL in ₹5,050 Crore Money Laundering Case After Insolvency Resolution

A special court in Mumbai has discharged the now-defunct Dewan Housing Finance Corp Ltd in a ₹5,050 crore money laundering case, holding that the company, now under new ownership, is entitled to statutory protection following the completion of its insolvency resolution process.

Immunity Limited to the Corporate Entity​

While granting relief to DHFL as a corporate entity, the court made it clear that the protection does not extend to individuals linked to the alleged offences. Those who were involved in the company’s affairs prior to the insolvency process will continue to face prosecution.

The order, passed on February 2 and made available on Wednesday, stated that once a resolution plan is approved by the competent authority, the corporate debtor cannot be held liable for offences committed in the past. The court observed that such protection is essential to allow new management to sever ties with legacy issues and operate with a clean slate.

Former Promoters and Executives Still Liable​

The court underlined that former officers and directors who were directly or indirectly involved in the alleged wrongdoing before the insolvency process remain accountable. They can continue to be prosecuted and punished in accordance with law.

Among those named as key accused are Rana Kapoor, along with members of his family, and former DHFL promoters Kapil Wadhawan and Dheeraj Wadhawan.

Allegations Linked to Yes Bank Loans​

According to investigators from the Enforcement Directorate, Kapoor allegedly received hundreds of crores in kickbacks connected to loans extended by Yes Bank to DHFL and its group entities. The agency has alleged misuse of official position to secure undue financial benefits amounting to ₹5,050 crore through bribery, corruption, and laundering of funds.

Background of the Insolvency Resolution​

DHFL was acquired by the Piramal Group in 2021 following a successful insolvency resolution. As part of the approved plan, the acquiring entity was merged into DHFL, with DHFL continuing as the surviving legal entity. Subsequently, the merged company was renamed Piramal Capital and Housing Finance Ltd in November 2021.

DHFL’s legal counsel argued that the approval of the resolution plan effectively extinguished the company’s past criminal liability, a position that found favour with the court.

Court’s Final View​

After considering submissions from both sides, the court concluded that DHFL, being a juristic person, cannot be prosecuted once the conditions attached to statutory protection following insolvency resolution are met. On this basis, the court ordered the discharge of DHFL in the money laundering case, while allowing proceedings to continue against the individuals involved.