Religare Enterprises Sues Lakshmi Vilas Bank For Invoking Deposits Against Loans To Singh Brothers
Religare Enterprises Ltd.’s arm has sued a Delhi branch of the Lakshmi Vilas Bank to recover fixed deposits worth about Rs 800 crore that the lender invoked to recover loans to founders Malvinder Singh and Shivinder Singh.
On account of default in clearing the loans, the deposits were closed and the proceeds adjusted, the bank said in a statement informing the exchanges about the lawsuit in the Delhi High Court. “As per legal opinion received by the bank, the adjustment of deposits against loans are lawful (sic).”
The Singh brothers are facing allegations of financial irregularities at Fortis Healthcare Ltd. and Religare Enterprises to settle personal debt. They lost control of both the businesses after lenders invoked pledged shares.
Religare Finvest had invested Rs 794 crore in fixed deposits in November 2016 and January 2017. The non-bank lender received a letter from Lakshmi Vilas Bank confirming the fixed deposits on Feb. 9 this year, according to a statement accompanying Religare Enterprises’ annual results. Two days later, it got another letter from the bank informing that it had disbursed loans to RHC Holding Pvt Ltd. and Ranchem Pvt Ltd., the investment firms of the Singh brothers, against the deposits.
In April, Lakshmi Vilas Bank informed the statutory auditors of Religare Finvest that it had closed the deposits on Feb. 20 to liquidate the loans.
Religare Enterprises said it had warned the lender against creating illegal encumbrance on the deposits. Lakshmi Vilas Bank was “expressly informed” that Religare Finvest was “not party to any loans sanctioned or granted to any third party”, it said. The subsidiary had given “no authorisation, sanction or approval” allowing “creation of any security or encumbrance of the fixed deposits for any third-party loans or borrowings.”
The non-bank lender has now filed the lawsuit to recover Rs 791.5 crore.