Religare case:NCLT 'no' to interim stay on Rs 500cr investment

The National Company Law Tribunal (NCLT) today declined a plea by India Horizon Fund for an interim stay over Religare Enterprises' move to invest up to Rs 500 crore in its arm Religare Capital Markets.

The tribunal also observed that there was "deliberate suppression of material facts" from it by IDBI Trusteeship Services Ltd, a consenting party in the suit, which has already approached the Bombay High Court on the same issue.

"Having heard the counsel for the parties on the grant of interim relief, we are of the considered view that no interim relief could be granted at this stage," said a two-member tribunal bench headed by Chairman Justice M M Kumar.

Institutional investor, India Horizon Fund along with IDBI Trusteeship Services, had moved NCLT seeking a stay over the proposal by Religare Enterprises to invest in Religare Capital Markets for repaying debt related to Mauritius business and capital needs of Indian business.

The NCLT observed that IDBI Trusteeship Services Ltd had made no disclosure to it about the suit before the Bombay High Court, where it was declined interim relief on the same.

"Moreover, at this stage, the locus standi of the petitioner, if it is left alone without the consenting party (IDBI) would be only 5.59 per cent and therefore, there would be valid doubt for its locus standi," the tribunal added.

India Horizon Fund moved the NCLT under section 241, 242 and 244 of the Companies Act 2013, which deals with oppression of the minority shareholders and mismanagement.

The sections mandate that only parties or individuals who own more than 10 per cent stake in a company can appeal at the NCLT.

"In view of the above, we decline to exercise our equitable discretion of granting any interim relief," the tribunal added.

The petitioners, however, have claimed to meet the criteria along with the consent letter of IDBI.

The NCLT has directed Religare Enterprises to file its reply within four weeks and any rejoinder by the parties in two weeks and has fixed next date of hearing on November 8, 2017.

"Let the reply be filed within four weeks with a copy in advance to the learned counsel for the petitioner. Rejoinder, if any, to be filed within two weeks," it added.

Religare Enterprises' shareholders have given their approval to an ordinary resolution through postal ballot, the company said today in a regulatory filing.

As per the voting result, 55.63 per cent shareholders voted in favour of the proposal while the remaining 44.37 per cent were against it.

The voting result also showed that 99.95 per cent of total votes cast by public institutional shareholders were against the resolution. Promoters did not participate in the voting.

However, 99.03 per cent of the public non-institution shareholders who participated in the voting were in favour of the proposal.

The voting was closed on September 9.

In the postal ballot notice issued in July, Religare Enterprises had said it proposed to make further capital investment of up to Rs 500 crore in Religare Capital Markets (RCML).

RCML subsidiary Religare Capital Market International, Mauritius Ltd (RCMIML) had availed of 'stand-by letter of credit facility' (SBLC) of USD 72.5 million from Axis Bank in 2014.

"The SBLC facility is falling due for repayment. Since RCML and RCMIML are in losses and have negative cash flows, they need support from the holding company, which is Religare Enterprises Ltd," the July 26 notice said.

Religare Enterprises said it will use part of sale proceeds from divestment of its health insurance business to make investment in RCML.

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