Wadhawan Disputes ₹1,709 Cr Suraksha ARC Claim in HDIL Insolvency, Alleges Circular Deal

The ongoing insolvency proceedings of Housing Development and Infrastructure Ltd (HDIL) have taken a contentious turn, with suspended director Rakesh Kumar Wadhawan challenging the legitimacy of a ₹1,709.69 crore claim admitted by the Resolution Professional (RP), the FPJ reported. 

In a letter dated June 1, 2025, Wadhawan has alleged that Suraksha Asset Reconstruction Company (ARC) — the claimant — acquired HDIL loans from Yes Bank through what he describes as a "fraudulently structured circular transaction." According to him, the ARC did not use independent funds to purchase the loans, but instead allegedly received routed financing from Yes Bank via a group entity, raising questions about whether a genuine transfer of risk and ownership occurred.

Wadhawan claims that this arrangement violates norms laid down by the Reserve Bank of India (RBI) as well as the principles of the Insolvency and Bankruptcy Code (IBC), arguing that such a transaction cannot form the basis of legitimate creditor rights in the corporate insolvency resolution process (CIRP).

He has further alleged that despite multiple written requests, RP Abhay Manudhane has not provided him with the underlying documentation—such as Form C submissions or supporting transaction records—related to Suraksha ARC’s claim. “I have written several times requesting the details... but nothing has been shared,” Wadhawan wrote.

These objections come against the backdrop of a 2020 Central Bureau of Investigation (CBI) chargesheet in the Yes Bank fraud case, which Wadhawan cites in support of his claims. He also referred to a 2022 ruling by the National Company Law Appellate Tribunal (NCLAT), which had flagged similar concerns about the independence and transparency of ARC loan acquisitions in another case involving Suraksha ARC.

Legal experts suggest that the core question now is whether the transaction qualifies as a legitimate sale of financial debt. “If the ARC did not deploy its own capital and merely recycled the lender’s money, the assignment could be considered a sham,” said a Mumbai-based insolvency lawyer.

As of now, neither Suraksha ARC nor RP Manudhane has issued a public response to these allegations. However, the matter is expected to be raised before the National Company Law Tribunal (NCLT) in the coming weeks.

The HDIL insolvency process, admitted into CIRP in 2019, has already faced scrutiny for its slow progress and lack of transparency. The current dispute over creditor eligibility adds another layer of complexity to a case that many see as emblematic of broader concerns within India’s bankruptcy ecosystem.

Legal observers say that if the allegations are proven, the case could become a precedent-setting moment for how Indian institutions deal with related-party transactions and financial engineering in insolvency proceedings.