However, the court clarified that although DHFL has been dismissed as a legal entity, immunity does not extend to persons involved in the case.
Judge RB Rote of the special PMLA court, in the February 2 judgment, held that DHFL is entitled to legal immunity after the successful resolution process under IBC, a legislation that provides for a time-bound process for resolution of insolvencies and liquidation of corporate entities and individuals.
The court order, made available on Wednesday, emphasized that the relevant IBC provision shows that once the resolution plan is approved by the judicial authority, the corporate debtor will not be liable for any previous violation.
“Eliminating the criminal liability of the corporate debtor is apparently important for the new management to make a clean break with the past and start with a clean slate,” the court noted, citing Supreme Court precedents.
The court underlined that immunity under the IBC was not available to the “former officers/directors…who were directly or indirectly involved in the commission of such offense before the commencement of the Corporate Insolvency Resolution Process (CIRP)”.
They will continue to be “prosecuted and punished” for such a crime committed by the corporate debtor, the court said.
Debt-ridden DHFL was acquired by Piramal Group in 2021 and merged into a group company.
YES Bank co-founder Rana Kapoor, his family members and former DHFL promoters Kapil Wadhawan and Dheeraj Wadhawan are among the prime suspects in the case.
According to the investigation agency Enforcement Directorate (ED), Kapoor received several hundred crores of rupees as kickbacks for fake loans extended by Yes Bank to DHFL and its group companies.
The ED has argued that Kapoor misused his position to extract unnecessary financial benefits of ₹5,050 crore for himself, his family members and associates by engaging in bribery, corruption and money laundering.
DHFL’s lawyer Karan Kadam had earlier submitted that “the applicant Piramal Capital and Housing Finance Ltd (now known as Piramal Finance Ltd) has undergone corporate insolvency resolution process under IBC 2016.
The resolution plan submitted by the firm for the corporate debtor has been approved by the National Company Law Tribunal (NCLT) by its order dated June 7, 2021, Kadam contended.
He submitted that as part of the approved resolution plan, the successful resolution applicant (SRA), formerly Piramal Capital and Housing Finance Ltd, was reversely merged into the corporate debtor – DHFL – such that the corporate debtor remained the surviving legal entity.
The name of the newly merged entity was changed from Dewan Housing Finance Corporation Ltd to Piramal Capital and Housing Finance Ltd on November 3, 2021.
Kadam has submitted that the approval of the resolution plan has resulted in compliance with the following requirements as specified in Article 32A of the IBC.
The company pointed out that the Bombay High Court had already cleared DHFL of the predicate offense (part of a more complex criminal activity) being investigated by the Central Bureau of Investigation (CBI).
However, the ED has submitted that DHFL cannot be dismissed on account of the approval of the resolution plan by the NCLT or dismissal in the predicate offence.
In the predicate offense (CBI case), there was no special provision for prosecution of the company, the probe agency said.
However, the Prevention of Money Laundering Act (PMLA) has a specific provision that any person who was in charge and responsible for the running of both a company and the company at the time the offense was committed will be considered guilty, the report said.
The special court, after considering both arguments, held that “DHFL is a legal entity”.
“Although Section 70 of the PMLA (enacted in 2002) provides that a company shall be deemed guilty of the offence, the immunity conferred under Section 32-A of the IBC, a subsequent law (2016), has an overriding effect,” the court noted.
The judge concluded that the corporate debtor cannot be prosecuted if the conditions of Article 32-A of the IBC are met.
Therefore, in view of the IBC provisions, the court dismissed the DHFL.
Published on February 5, 2026
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