The Securities Appellate Tribunal (SAT) has dismissed an appeal of Shivinder Mohan Singh, former promoter of Fortis Healthcare, against Sebi's order asking Religare Enterprises and Religare Finvest to recall loans.
The Securities and Exchange Board of India (Sebi), through an interim order in March 2019, had asked Religare Enterprises and Religare Finvest to initiate steps to recall loans worth Rs 2,065 crore extended to Singh and several other entities.
Funds were diverted from the books of Religare Finvest for utilisation of promoters and promoter group entities of Religare Enterprises, as per the interim order.
The direction came after the regulator received complaints alleging financial mismanagement and diversion of funds in Religare Finvest, a subsidiary of Religare Enterprises.
A confirmatory order was passed in September 2019. Following Sebi's confirmatory order, Singh approached SAT.
Dismissing his plea, SAT said Singh was a director and promoter in both the companies when the alleged diversion of funds took place.
Further, the tribunal said Singh's contention that he has nothing to do with diversion of funds cannot be accepted in principle at this stage.
"We are not inclined to interfere in the impugned orders at this belated stage. The appeal fails and is dismissed with a direction that the WTM (whole time member) will decide the matter within six months from the date the appellant (Singh) files his objection/reply to the show cause notice," the tribunal said in an order passed on December 24.
Singh's counsel had challenged Sebi's order arguing that the regulator's confirmatory order directing recalling of loans is illegal.
The order, which is in nature of a disgorgement, cannot be passed at a stage when investigation initiated by Sebi is still under progress, the counsel argued.
It was contended that such an order, which has the element of finality, could only be passed after a complete inquiry.
Singh also contended that he had no role in diversion of funds and accused other noticees of orchestrating the alleged diversion.
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