Mumbai: Rakesh Kumar Wadhawan, the suspended director of Housing Development and Infrastructure Limited (HDIL), has addressed a letter to Abhay Manudhane, the Resolution Professional (RP) appointed in HDIL’s Corporate Insolvency Resolution Process (CIRP), strongly objecting to his decision to admit the claim of Suraksha Asset Reconstruction Company Limited (Suraksha ARC) amounting to Rs 1,709.69 crore.

When contacted, RP Abhay Manudhane did not respond to queries regarding the matter. The reporter also sent messages on WhatsApp, including a voice note over not picking up of phone call, but received no response. Multiple phone calls also went unanswered

In the letter dated June 1, Wadhawan termed the RP’s admission of the claim as an “unlawful admission” and urged immediate corrective action.

The letter requests the RP to treat the communication as a formal objection to the claim and demands re-examination and withdrawal of the admitted amount, along with revocation of any voting rights granted to Suraksha ARC in the Committee of Creditors (CoC).

“Failing which, I will be constrained to approach the National Company Law Tribunal (NCLT) for appropriate directions and relief against this clear miscarriage of process,” the letter states.

Wadhawan further alleged that he had written several emails to the RP requesting details and Form C of the admitted claims, but the RP has failed to provide any of the documents sought.

“The admission of this claim is legally untenable and contrary to the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC), the RBI’s regulatory framework, and binding judicial pronouncements,” Wadhawan said in his letter.

According to him, the claim is based on loan assignments that were allegedly fraudulently structured and executed between Suraksha ARC and Yes Bank. He refers to the 2020 chargesheet filed by the Central Bureau of Investigation (CBI) in the Yes Bank fraud case, which highlights that Suraksha ARC acquired these loans from Yes Bank by allegedly circumventing RBI norms.

Wadhawan claims that the funds used by Suraksha ARC to purchase the loans were allegedly disbursed by Yes Bank itself to a sister concern of Suraksha ARC, thereby creating a circular transaction devoid of any genuine financial consideration or independent risk transfer.

“Such a transaction violates RBI’s prudential norms and fails the test of a true and lawful assignment of debt. Therefore, Suraksha ARC cannot be treated as a legitimate financial creditor under Section 5(7) of the Code. The debt, due to the allegedly fraudulent nature of the transfer, does not qualify as financial debt,” the letter reads.

Wadhawan also cited a National Company Law Appellate Tribunal (NCLAT) order dated September 8, 2022, in the matter of Ocean Deity Investment Holdings Limited vs Suraksha Asset Reconstruction Limited. He noted that the NCLAT clearly held that the loan assignments to Suraksha ARC were not bona fide.

“This conclusion is further supported by the audit report annexed to the CBI chargesheet, which highlights alleged fraudulent disbursal patterns and misuse of financial channels that violate the spirit of insolvency and financial regulations. Your acceptance of Suraksha ARC’s claim and allowing them to vote in the CoC materially compromises the fairness of the CIRP. Such actions also contradict your statutory obligations under Section 25 of the IBC to conduct the process with integrity, transparency, and full compliance with applicable law,” Wadhawan stated.