Sebi issues demand notices to 7 entities in Religare Enterprises case

Capital markets regulator Sebi has issued notices to seven entities asking them to pay Rs 4.3 crore within 15 days in a case concerning diversion of funds of Religare Finvest, an arm of Religare Enterprises.

In addition, the regulator warned of attachment of assets and accounts if they fail to make the payment within the stipulated time.

The seven entities that received notices are — Torus Buildcon, Artifice Properties, Rosestar Marketing, Oscar Investments, Ad Advertising, Zolton Properties, and Saubhagya Buildcon.

The demand notices came after the entities failed to pay the fine imposed on them by the Securities and Exchange Board of India (Sebi) in October 2022.

In seven notices issued on Monday, Sebi directed them to pay Rs 4.3 crore, which includes interest and recovery cost, within 15 days.

In the event of non-payment of dues, the regulator will recover the amount by attaching and selling their moveable and immovable properties. Besides, the entities will face attachment of their bank accounts.

Also, the regulator takes the route of arrest and detention in prison to recover the amount.

In October 2022, Sebi imposed penalties totalling Rs 21 crore on 52 entities, including these seven entities, for huge diversion and misutilisation of funds of Religare Finvest.

In this case, the regulator levied a fine of Rs 85 lakh on Torus, Rs 65 lakh on Artifice, Rs 60 lakh each on Oscar and Rosestar, Rs 50 lakh each on Zolton and Ad Advertising; and Rs 20 lakh on Saubhagya Buildcon.

The case involved a complex web of transactions whereby the funds of listed company Religare Enterprises Ltd (REL) were diverted through its subsidiary Religare Finvest Ltd (RFL) for the ultimate benefit of the erstwhile promoters — RHC Holding, Malvinder Mohan Singh and Shivinder Mohan Singh. Funds were also misutilised for repayment of earlier loans taken from RFL.

As per the order, the whole scheme of fraud led to the diversion of funds of Rs 2,473.66 crore out of a material subsidiary of REL, a listed company and also mis-utilisation of funds of Rs 487.92 crore of RFL.