Order in the matter of Religare Enterprises Limited

The Securities and Exchange Board of India (SEBI) has issued an order concerning the alleged diversion of funds amounting to Rs. 2315.09 Crores from Religare Finvest Limited, a subsidiary of Religare Enterprises Limited. While an interim order had previously directed the recall of loans and asset restrictions against 16 entities, this new order revokes those directions against 14 of them. SEBI will now proceed with adjudication proceedings against these entities for their alleged role in the fund diversion.

WTM/GM/IVD/ID2/47/2020-21
SECURITIES AND EXCHANGE BOARD OF INDIA
ORDER
Under Sections 11(1), 11(4) and 11B of the Securities and Exchange Board of India Act, 1992 and Regulation 11 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices) Regulations, 2003.
In the matter of Religare Enterprises Limited (REL)
In respect of:

BACKGROUND:
1. Securities and Exchange Board of India (hereinafter referred to as “SEBI”) had passed an ad interim ex-parte order dated March 14, 2019 read with corrigendum dated April 18, 2019 (together referred to as ‘ the Interim Order’) in the matter of Religare Enterprises Ltd. against various entities, including 16 Noticees mentioned in the Table above, viz. OSPL Infradeal Pvt. Ltd., Bharat Road Network Ltd., Platinum Infrastructure Pvt. Ltd., Ad Advertising Pvt. Ltd., Artifice Properties Pvt. Ltd., Best Health Management Pvt. Ltd., Devera Developers Pvt. Ltd., Vitoba Realtors Pvt. Ltd., Fern Healthcare Pvt. Ltd., Modland Wears Pvt. Ltd., Rosestar Marketing Pvt. Ltd., Star Artworks Pvt. Ltd., Tripoli Investment & Trading Co., Volga Management and Consultancy Pvt. Ltd., Zolton Properties Pvt. Ltd. and Ranchem Private Limited, for their prima facie involvement in diversion of funds amounting to Rs. 2315.09 Crores from the books of Religare Finvest Limited (RFL), a subsidiary of Religare Enterprises Limited (REL), for the utilization of promoters and promoter group entities of REL, in violation of the provisions of the SEBI Act, 1992 and the regulations framed thereunder. Vide the Interim Order, SEBI had inter alia directed REL and RFL to initiate steps to recall all the loans, amounting to Rs.2315.09 Crores (approx.), extended directly or indirectly to certain entities including the abovementioned 16 Noticees, along with due interest, within three months of the date of the Interim Order. The said entities were also directed not to dispose of or alienate any of their assets or divert any funds, except for meeting expenses of day-to-day business operations, without the prior permission of SEBI, pending completion of the investigation and till further orders.

2. Subsequently, vide an order dated September 11, 2019 (Confirmatory Order), SEBI had confirmed the said directions, subject to certain modifications, which inter alia included revocation of directions issued in the Interim Order against Bharat Road Network Limited (entity at serial no. 2 in the Table above). Further, vide the Confirmatory Order, the names of OSPL Infradeal Pvt. Ltd. and Bharat Road Network Limited (entities at serial nos. 1 and 2 in the Table above) were also removed from the list of entities from whom REL and RFL were directed to recover the loans and from the list of entities which were prohibited from disposing of their assets without prior permission of SEBI.

3. Pursuant to the completion of investigation in the matter, upon reconsideration of the facts and circumstances of the case in totality, it appears appropriate to substitute the ongoing proceedings under Section 11 / 11B of the SEBI Act, 1992 against the abovementioned 16 entities with adjudication proceedings under appropriate legal provisions, for their alleged role in the abovementioned diversion of funds. I, therefore, in exercise of the powers conferred upon me by virtue of Section 19 read with Sections 11 and 11B of the SEBI Act, 1992, hereby revoke the directions issued vide the Interim Order read with the Confirmatory Order against the entities at serial nos. 3 to 16 in the Table above and also dispose of the ongoing proceedings under Section 11 / 11B of the SEBI Act, 1992 against the entities mentioned at serial nos. 1 to 16 in the Table above.

4. The instant order is being passed without prejudice to the rights of REL and RFL to pursue remedies under law, as deemed appropriate by them, against the abovementioned entities in respect of their roles in the fund diversion.

To know more in details find the attachment file