Lakshmi Vilas rejects Religare Finance's disclosure, threatens action

Religare Enterprises Ltd alleges Lakshmi Vilas misappropriated four fixed deposits worth Rs 791 crore.

Lakshmi Vilas Bank (LVB) said it is in the process of taking necessary proceedings against Religare Finvest Ltd (RFL) for filing "frivolous corporate announcements" as disclosures, Religare Enterprises Ltd (REL) had made a regulatory filing with the exchanges last week alleging that it has suffered a loss after LVB misappropriated four fixed deposits worth Rs 791 crore including interest accrued.

Meanwhile, the Bank received approval from the majority shareholders to issue 16.8 million equity shares of the Bank on a preferential allotment to Indiabulls Housing Finance Ltd, at an Extraordinary General Meeting held today.

LVB said that the Bank and/or its officials have not done any wrong and aren't liable for any such misappropriation of monies in respect of the said four fixed deposits of RFL, which were placed with LVB as securities against which Religare Group Companies had availed loans. 

The Bank is in the process of proceeding against RFL and its officers responsible for publishing such frivolous corporate announcements under the garb of 'disclosures', more so in view of the already pending dispute before a competent court of law, LVB informed Exchanges.

REL in a filing on May 16, hasd said, "The new management discovered that one of the major reasons for RFS's terrible financial condition was the misappropriation by LVB of monies due to RFL on account of four fixed deposits placed by it with LVB amounting to approx. Rs 791 crore (including interest accrued on Rs 750 crore of principal amount), such misappropriation had caused a massive unlawful loss to the RFL and consequently to alll its shareholders inclduing the public shareholders."

Denying the charges, the lender claimedd RFL had been filing false and frivolous proceedings and addressing false and frivolous letters to various entities and authorities claiming that the fixed deposits opened with the bank were not offered as security for loans granted to its group companies. LVB asserted that that the fact was contrary to RFL's contention.

The Bank further said that during 2016-17, the promoters Malvinder Mohan Singh, Shivinder Mohan Singh and their related parties had control and influence over RHC Holding Pvt Ltd (RHC), and Ranchem Pvt. Ltd. (Ranchem), the wholly owned subsidiary of RHC. The three Religare group companies in November 2016 approached the Bank for financial assisance against security of term deposits, inlcuding Rs 200 crore for  RHC, Rs 175 crore for Ranchem, which has to be secured by way of fixed deposits which were to be opened with LVB and by post-dated cheques in favour of LVB. The Bank issued the loan and RFL opened two fixed deposits of Rs 210 crores and Rs 190 crore respectively by instructing the Bank to debit its current account. RFL also handed over two post-dated cheques for an aggregate amount of Rs 402, 13,42,437. With the creation of security, the Bank disbursed the loans of Rs.199.50 crore to RHC and Rs 174.8 crore to Ranchem, as per the agreement between the parties. 

In January 2017, RHC requested for another loan of Rs 400 crore against the fixed deposits which were to be opened by RFL. Similarly, two fixed deposits of Rs 200 crore and Rs 150 crore were opened by RFL to secure this loan, considering which, the Bank sanctioned another loan of Rs 332.50 crore to RHC against the two new fixed deposits opened by RFL, it added.

Later RFL alleged that the fixed deposits were not given as securities for the loans by RHC and Ranchem. While this was settled later, Religare Group did not repay the loans, it alleges.

The dispute has been pending with the High Court of Delhi, where RFL sued the Bank, and the orders are reserved for RFL's interim application. 

"In this backdrop, the allegations of misappropriation of monies made against the Bank are vehemently denied as false and frivolous, when the Bank merely enforced the securities given against the loans," said the Bank.