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Delhi HC issues notice to DBS Bank in the Religare deposit fraud case

On 27 November, the Lakshmi Vilas Bank-DBS Bank merger came into effect as per the amalgamation scheme notified by the government and the RBI

December 03, 2020 / 07:46 PM IST

The Delhi High Court has issued a notice to DBS Bank India in connection with the ongoing Rs750 crore Religare Finvest Ltd (RFL) deposit case with erstwhile Lakshmi Vilas Bank (LVB). DBS has been given five weeks to respond to the notice.

On 27 November, the LVB-DBS merger came into effect as per the amalgamation scheme notified by the government and the Reserve Bank of India (RBI).

The court has observed that according to the plaintiff (Religare Finvest), the LVB has merged with DBS. To be sure, the court hasn’t made DBS as a party in the case so far. The notice was issued on December 1 and the next hearing is on February 25, 2021. An email sent to DBS seeking its response on the matter remained unanswered till the time of filing this story.

The case pertains to alleged misappropriation of Rs750 crore deposit of RFL by LVB officials in collusion with certain Religare employees. In May, 2019, Religare had informed the exchanges that it has filed a complaint with Economic Offences Wing (EoW) of Delhi Police against LVB, RHC Holding, Ranchem Private Ltd, and certain employees of these institutions, including Malvinder Singh and Shivinder Singh.

The EOW, on September 25, arrested two people in connection with diversion and misappropriation of RFL's funds. The accused, who held senior positions at LVB where RFL had placed its funds in fixed desposits (FDs), have been identified as Pradeep Kumar (57) and Anjani Kumar Verma (48).

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According to the EOW, they colluded with the former promoters of Religare Enterprises (REL), Malvinder Mohan Singh and Shivinder Mohan Singh.

A case was registered after Manpreet Singh Suri of RFL filed a complaint with the EOW against the Singh brothers and their companies RHC Holding Ltd and Ranchem Pvt Ltd, and LVB and its then directors/employees.

"It was alleged (in the complaint) that in November 2016, RFL placed an amount of Rs 400 crore in two fixed deposit (FDs) with LVB. These FDs were created by RFL for short-term tenor with intention to keep them free from all and any encumbrance. Thereafter, in January 2017, RFL placed an additional amount of about Rs 350 crore in another couple of FDs with LVB. Like with the first 2 FDs, these 2 FDs were also created by RFL for short-term tenor with the intention to keep them free from all and any encumbrance," the EOW said in a statement.

Malvinder and Shivinder Singh, who had been arrested by the EOW last December, have been in judicial custody. Earlier this year, the Enforcement Directorate (ED) on January 10 filed a chargesheet against the Singh brothers before a Delhi court in the said case. The probe agency has accused them of money laundering punishable under Sections 3 and 4 of the Prevention of Money Laundering Act. REL was controlled by Malvinder and Shivinder Singh until February 2018. Post exit of the duo from the Board of Director of REL on February 14, 2018, the Boards of REL and RFL were reconstituted.

“The new management discovered that one of the major reasons for RFL’s terrible financial condition was tile misappropriation by LVB of monies due to RFL on account of four fixed deposits placed by it with LVB amounting to approx. Rs. 791 crores (including interest accrued on Rs. 750 crores of principal amount), such misappropriation had caused a massive unlawftil loss to the RFL and consequently to all its stakeholders including the public shareholders,” REL said in its note to exchanges in May, 2019.
Dinesh Unnikrishnan
first published: Dec 3, 2020 07:46 pm

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