In a sigh of relief, the Delhi High Court has ordered the removal of the ‘fraud’ tag from Religare Finvest Limited (RFL), a wholly owned subsidiary of Religare Enterprises Limited (REL).
HC’s decision came after the RFL filed a Writ Petition before the Court with respect to the declaration of RFL’s account as ‘fraud’ exposure by the lead Bank (State Bank of India).
It is to be noted that SBI had put the RFL’s account on the Reserve Bank of India’s (RBI) Central Fraud Registry.
In an order dated December 18, 2023, the Delhi High Court referring to the Rajesh Agarwal and Ors. (supra) case said, “It is thus seen that in view of the principles laid down in the case of Rajesh Agarwal and Ors. (supra), the impugned action of the respondent deserves to be set aside.”
The Central Fraud Registry was constituted under the Reserve Bank of India (Frauds Classification and Reporting by Commercial Banks and Select FIs) Directions, 2016.
What Religare Finvest Limited contended in court?
According to the High Court order, the copy of which has been fetched by ETBFSI, in its writ peititon, Religare Finvest Limited prayed to the Delhi HC to issue any appropriate writ, order or direction in the nature of certiorari quashing the Respondent’s decision of classifying the Petitioner’s account as ‘fraud’ and including the Petitioner’s account on RBI’s Central Fraud Registry.
It also pleaded to issue any appropriate writ, order or direction in the nature of mandamus for directing the Respondent to remove Petitioner’s name from the fraud list.
Welcoming the court’s order, Dr Rashmi Saluja, Executive Chairperson, REL & CMD RFL said, “We wholeheartedly welcome the Hon’ble High Court’s ruling, acknowledging it as a validation of our steadfast commitment to excellence and integrity.”
“The decision by the Court is evidence of our resolve towards a full-scale revival of the business and establishing Religare Group as a diversified financial services conglomerate. Through our efforts, we have made Religare Finvest Limited business-ready,” she added.
Chief Executive Officer of RFL, Pankaj Sharma said, “We are grateful to the Hon’ble High Court for the removal of the ‘fraud’ tag. We remain unwavering in our pursuit of good work, guided by the principles of fairness, integrity and the relentless pursuit of excellence and revival of the organisation.”
What was the case?
According to the charge sheet filed by the Enforcement Directorate (ED), the Religare Enterprises Ltd’s erstwhile promoters, Malvinder and Shivinder Mohan Singh, laundered Rs 2,100 crore along with a co-accused in the fraud case.
ED said the brothers and co-accused Sunil Godhwani used 19 shell companies to launder the funds. Some of that money was allegedly siphoned off to foreign entities.
The case was registered based on a complaint by a senior Religare manager who had also named NK Ghoshal, a stockbroker and an associate of the Singh brothers.
ED alleged that money was misappropriated from RFL, and siphoned off to “foreign companies.”
It was alleged that Malvinder Mohan Singh, in conspiracy with Shivinder Mohan Singh and Sunil Godhwani, caused RFL to give unsecured loans to the tune for an amount of Rs 2,397 crores on a non-arms‘ length basis and without proper documentation to various shell companies which willfully defaulted in making the repayments.
They were also accused of hatching a well thought-out and organised criminal conspiracy by which a financial scam of huge magnitude has been effected.
On the basis on complain, an FIR 50 of 2019 was registered by the Economic Offence Wing of the Delhi Police under section 409, section 420 and section 120B of Indian Penal Code, 1860.
