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
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.