NCLT Re­fuses to Stay Reli­gare Plan to In­fuse .₹ 500 cr into Sub­sidiary

In­dia Hori­zon Fund had wanted co’s res­o­lu­tion to in­fuse amount into Reli­gare Cap stayed

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New Delhi: In­dia Hori­zon Fund has suf­fered a set­back af­ter the Na­tional Com­pany Law Tri­bunal on Fri­day de­clined to stay Reli­gare En­ter­prises’ res­o­lu­tion to in­fuse ₹ 500 crore in its cap­i­tal mar­kets sub­sidiary to re­pay a loan and stall an­other bond is­suance com­ing up for vot­ing on Septem­ber 21.

The court has asked Reli­gare to file a re­sponse to In­dia Hori­zon Fund’s claims and the case will next be heard on Novem­ber 8, said a per­son close to the de­vel­op­ment. The Mauritius-based fund had asked for an ur­gent hear­ing to stay the mat­ter af­ter the sup­port­ing share­holder IDBI Trustee­ship lost on block­ing the res­o­lu­tion in a sep­a­rate law­suit be­fore the Bom­bay High Court. “NCLT has de­clined to stay the res­o­lu­tion passed by the share­hold­ers of the com­pany dated Septem­ber 11, 2017,” Reli­gare En­ter­prises told the BSE on Fri­day evening. NCLT’s or­der was awaited when this re­port went to print.

Lalit Ku­mar, Dheeraj Nair, part­ners at J Sa­gar As­so­ciates which is rep­re­sent­ing Reli­gare En­ter­prises and Tri­le­gal, rep­re­sent­ing In­dia Hori­zon, de­clined to com­ment. In­dia Hori­zon Fund had asked NCLT Delhi for an ur­gent hear­ing to stay Reli­gare En­ter­prises’ Septem­ber 11 res­o­lu­tion to give ₹ 500 crore to Reli­gare Cap­i­tal to re­pay a loan by Axis Bank that is fall­ing due. It had also sought a stay on an­other res­o­lu­tion to raise funds via bonds of ₹ 500 crore which comes up for ap­proval on Septem­ber 21.

The Mauritius-based firm, which holds a 5.59% stake in Reli­gare En­ter­prises, also moved to the tri­bunal seek­ing an ouster of the com­pany board on grounds of mis­man­age­ment and op­pres­sion of mi­nor­ity share­hold­ers. IDBI Trustee­ship has a 5.53% stake.

At the hear­ing, IDBI Trustee­ship as­serted that its share­hold­ing was higher as it had re­cently In­dia Hori­zon Fund files a suit un­der sec­tions of the Com­pa­nies Act, 2013 It seeks dis­so­lu­tion of ‘ir­ra­tional and fraud­u­lent’ board and man­age­ment in­voked pledges of 16% in Reli­gare En­ter­prises but trans­fer of shares were tak­ing time. ET re­ported on Thurs­day that In­dia Hori­zon Fund sought im­me­di­ate dis­so­lu­tion of the board and man­age­ment cit­ing “ir­ra­tional and fraud­u­lent” man­age­ment of the com­pany’s funds by the pro­mot­ers and the board of di­rec­tors.

It also sought this dis­so­lu­tion due to fre­quent and un­ex­plained write-offs by the com­pany and its sub­sidiaries. More­over, the firm asked for a foren­sic au­dit, ap­point­ment of an ad­min­is­tra­tor un­til a new board can be set up and re­ver­sal of al­leged fraud­u­lent trans­ac­tions.

It al­leges that re­spon­dents Reli­gare En­ter­prises, Reli­gare Cap­i­tal Mar­kets, pro­mot­ers Malvin­der and Shivin­der Singh and the Reli­gare board were li­able for losses that stemmed from this.

The plain­tiff had asked to stay the share­holder res­o­lu­tion passed on Septem­ber 11 to pay ₹ 500 crore to the Cap­i­tal Mar­kets sub­sidiary of Reli­gare En­ter­prises, which in turn would pass the money to its in­ter­na­tional arm, which would then re­pay a loan due to Axis Bank. In­dian Hori­zon Fund was of the view that the money due to Axis Bank should be paid by the Singh brothers from their per­sonal in­vest­ment com­pany that agreed to take on fu­ture fund­ing re­quire­ments of Reli­gare Cap­i­tal in 2012.

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