6 April 2019: The Supreme Court has ordered a stay in response to a plea by Daiichi Sankyo on the insolvency proceedings against 23 companies allegedly linked to the Singh brothers, Malvinder and Shivinder, on petitions filed by Religare Finvest (RFL) .
Daiichi had approached the apex court saying a March 14 order by Securities and Exchange Board of India (Sebi) had found many of these companies to have ultimately routed money borrowed from Religare Finvest to the Singhs.
Religare Finvest filed insolvency petitions in July last year on grounds that these companies had defaulted on loans of Rs 1,900 crore taken from the NBFC. “It was observed that funds amounting to Rs 2,315.09 crore had been diverted from the books of RFL for the utilisation of promoters and promoter group entities of Religare Enterprises,” the order quoting an independent forensic audit stated.
“The ultimate beneficiaries of such fund diversion, prima facie, are Shivinder Mohan Singh and Malvinder Mohan Singh as the entities were jointly being controlled by (them) through Shivi Holdings Pvt Ltd and Malav Holdings Pvt Ltd, respectively,” the order stated.
“The stay has been granted in response to Daiichi plea that NCLT proceedings initiated by Religare Finvest against some of judgement debtors and garnishee companies would impede recovery of Daiichi’s dues and impose moratorium on execution proceeding,” said Amit Mishra, partner at P&A Law offices, which is representing the Japanese drug maker.
Religare did not respond to an emailed request for comments.
The companies were granted loans on the basis that they were parties ‘known to the promoters,’ according to internal company correspondence and an audit conducted by external auditor TR Chadha on behalf of private equity investor Siguler Guff, ET had reported in July last year.
The list of companies includes Modland Wears, Fern Healthcare, Volga Management, Zolton Properties and Torus Buildcon. Some of these companies are also accused of facilitating the alleged diversion of funds from Fortis Healthcare by the Singh brothers.
Daiichi has also independently filed an application at the NCLT to be party to the insolvency proceedings against these companies, though sources close to Religare argued that none of the companies were party to transactions involving the sale of Ranbaxy to Daiichi Sankyo and were not recipients of proceeds received by the Singh brothers from that sale.
Daiichi’s has won an arbitration award in Singapore after it sought compensation from the Singhs on grounds that they concealed information from the drug maker at the time of Ranbaxy’s sale to the Japanese company about a decade ago.