Relief for Religare Finvest Ltd in SEBI proceedings

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Securities Appellate Tribunal (“SAT”) recently set aside orders passed by Securities and Exchange Board of India SEBI against Religare Finvest
Ltd (“RFL”) directing RFL and others to pay an amount of Rs. 403 crores along-with interest to Fortis Healthcare Ltd (“FHL”).

SEBI had, by an ex parte order in October 2018 contended that funds were siphoned of from FHL by the erstwhile promoters through various group companies. RFL was alleged to have received loans from promoters and was therefore directed to return an amount of Rs. 403 crores (jointly with the promoters) to FHL. RFL presented submissions pursuant to which an order was passed in March 2019 confirming the directions against RFL.

RFL contended before the SAT that it was not a beneficiary of any funds which were allegedly siphoned off and that RFL was only recovering the loan amount paid to various entities. Instead of requiring paying the monies back, RFL had to recover monies from various entities named in the SEBI order. RFL also pointed out that it was under a new professional management with no relation to the erstwhile promoters. SEBI’s submission before the SAT was to the effect that the matter was under further investigation and the directions against RFL were necessary until then.

The SAT ruled that the SEBI order was not a reasoned one as the submissions of RFL were not considered while confirming the directions. SAT ruled that documents furnished by RFL demonstrating that monies transferred to RFL were a repayment of loan ought to have been considered and dealt with.

Further, the SAT ruled that there were contradictory orders passed by SEBI against RFL. The SAT therefore remanded the matter back to SEBI to pass fresh orders if required. As an equitable measure, RFL has been directed by the SAT to maintain assets worth Rs. 200 crores for period of 3 months, in case orders are passed by SEBI.

RFL was represented by Advocates Mr. Ravichandra Hegde and Mr. Robin Shah from Parinam Law Associates.

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