Shivinder Mohan Singh, the former promoter of Fortis Healthcare and Religare Enterprises, has made scathing allegations against elder brother Malvinder Mohan Singh and Sunil Godhwani in his petition filed with the National Company Law Tribunal (NCLT).
The younger Singh alleged that Malvinder Singh and Godhwani, the former chief of Religare, colluded to divert .`750 crore from Religare Finvest Ltd., a wholly owned subsidiary of Religare, and another.`473 crore from Fortis Healthcare to RHC Holding Pvt Ltd., the flagship holding company of the Singh brothers.
Additionally, Malvinder Singh forged the signature of Aditi S Singh, wife of Shivinder Singh, in RHC documents, according to the petition.
The routing of funds to RHC did not help the holding company in any meaningful way and instead resulted in a value loss that far exceeded the amount diverted, Shivinder Singh alleged in the petition, a copy of which is with ET.
“Malvinder Singh and Sunil Godhwani, by putting RHC in a debt trap, acted prejudicially to the interest of its creditors and shareholders,” he said in the petition.
Their financial malfeasance “destroyed a company worth Rs 5,000 crore,” the younger Singh’s lawyer argued at the NCLT on Thursday, when the case was first heard.
“There are instances of Aditi Singh being shown as present for the board meeting of RHC when she was in fact abroad,” according to the petition, citing a board resolution dated September 25, 2014.
The tribunal ordered the Singhs to maintain status quo on directorship and shareholding in RHC after Shivinder Singh’s lawyer asked it to prevent Malvinder Singh from transferring, selling, alienating or creating any third party rights or interest over the company.
It also granted Shivinder Singh permission to inspect and take copies of RHC’s statutory records using a chartered accountant and the company secretary of Shivi Holdings, which he owns.
Malvinder Singh and Godhwani have been directed to file their replies to the suit within two weeks, following which Shivinder Singh will get two weeks to file a response. The NCLT will hear this case next on October 9.
“Cases for acts of oppression and mismanagement are usually filed by minority shareholders against a majority shareholder. These are very rare instances where an equal joint venture partner has filed such a petition against the other partner,” said Saurav Kumar, a partner at IndusLaw.
“The accusations of wealth erosion, etc., made in the petition are quite severe in nature and a detailed investigation as to the circumstances under which such accusations were made needs to be conducted… The NCLT has rightfully ordered a status quo in the matter so that a further investigation could be conducted.”
THE FUND DIVERSIONS
Singh and Godhwani diverted Rs 750 from listed company Religare’s wholly owned non-banking finance subsidiary Religare Finvest to RHC through Laxmi Vilas Bank, according to the petition. Malvinder Singh, or persons acting on his behalf, caused Religare Finvest to create a fixed deposit of about Rs 750 crore with Laxmi Vilas Bank on November 19, 2016, against which RHC and its subsidiary Ramchem Pvt were granted a loan of about Rs 750 crore, it was alleged in the petition.
“This eroded Religare Finvest Limited capital base and the loan availed by RHC against the fixed deposit remains outstanding till date,” Shivinder Singh said. He also claimed that Malvinder Singh, as executive chairman of Fortis Healthcare and Religare, made Fortis Healthcare extend Rs 473 crore in inter-corporate deposits to RHC, which was used preferentially to pay the company’s creditors.
“These loans have put the company in a precarious position. Because of this leveraging, there has been a burdening on subsidiaries (like Fortis and Religare), which has forced them to de-subsidiarise them,” said a person directly aware of the developments, on condition of anonymity.
The acts jeopardised attempts to sell stakes in Religare and Fortis, Shivinder Singh argued, because the delay in strategic transactions contributed to secured lenders of RHC losing patience and selling or dumping pledged Religare shares.
Ranjana Roy Gawai, managing partner of RRG & Associates, the law firm that filed Shivinder Singh’s petition in the NCLT, refused to comment on the grounds that the matter is sub judice.