The Securities and Appellate Tribunal (SAT) has thrown out an appeal by Shivinder Singh, former promoter of pharma company Ranbaxy, against a SEBI order asking Religare Enterprises Ltd and Religare Finvest Ltd to recall loans of ₹2,065 crore extended to more than 20 entities.
A part of the money was parked by Religare in Laxmi Vilas Bank, based on which the bank had extended loans to Shivinder Singh and his brother Malvinder. The bank, on the verge of collapse, had to be rescued.
Singh’s lawyer argued that his client had no role in the entire diversion of funds, which was done by other individuals who are being probed in the case.
He argued that SEBI’s ex parte March order was passed without issuing a notice to Singh. Orders of such nature can only be passed in rare and compelling circumstances, which were absent in this case, he said.
Two years ago, SEBI had received complaints alleging financial mismanagement, diversion of funds and violation of board-approved policies by Religare Finvest for the benefit of its erstwhile promoters and entities linked to them.
SEBI ordered a forensic audit, which found diversion of funds through fixed deposits with Lakshmi Vilas Bank, investment in non-convertible debentures and other irregularities.
In March 2019, SEBI directed the two Religare entities to recall the loans and barred recipients from disposing of their assets.
The SAT said Singh didn’t challenge SEBI’s ex parte ad-interim order of March 2019. Also, he was a director and promoter in the two entities during the time of fund diversion. As such, Singh’s argument that he had nothing to do with the diversion cannot be accepted in principle at this stage, the Tribunal said.