Religare Finvest (RFL) has represented to the Securities and Exchange Board of India (Sebi) that it is a victim of events which took place when the Singh brothers, Malvinder and Shivinder, were in control of the company.
Religare Finvest, a subsidiary of Religare Enterprises, was earlier, along with Fortis Healthcare, under the control and ownership of the Singh brothers.
The Sebi order on Fortis Healthcare, while directing the company to pursue efforts to recover `403 crore from the Singh brothers, had also put curbs on RFL not to alienate assets.
After the interim Sebi order was passed last year, RFL has responded to Sebi that the company is a “victim of what had transpired in the company when it was under the control of the Singh Brothers”.
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“Huge funds were given as loans to borrowers by RFL. When repayment was done, or where substantial funds were received by the borrowers, another round of financing was made,” RFL said.
RFL has said that there has been similar siphoning off of funds from the company by Singh Brothers, Sebi recently released an order on RFL asking the company to recall the loans to the tune of `2,315 crore from the erstwhile promoters – Malvinder and Shivinder Singh – who had indulged in funds diversion.
The latest Sebi order on Tuesday has, in case of Religare Finvest, said that it should not dispose of or alienate any of its assets or divert any funds except for complying with corrective action plan as stipulated by the Reserve Bank of India. RFL had represented that it has to make payments to banks under the RBI directives.
Fortis Healthcare has said it is taking steps to recover the `403 crore and has also taken various steps against the erstwhile promoter entities. Fortis said it is now being run by completely re-constituted board of directors appointed by its shareholders, which is not under any influence of erstwhile promoter entities.
In a personal hearing at Sebi, Shivinder Singh made the point that Sebi has no jurisdiction to investigate the matter in light of ongoing investigation by SFIO. Blaming his brother Malvinder for being responsible for the alleged violations, Shivinder said that he did not have any involvement in day-to-day affairs of Fortis, RHC or the borrower entities. He was kept in the dark about the violations by Malvinder and Hemant Dhingra, he told Sebi.
Shivinder claimed that he completely retired from corporate life and was removed from Fortis’ decision making process in December 2015. He alleged that Malvinder and RFL were involved in all the alleged violations.