Mumbai: In a fresh twist in the ongoing Religare Enterprise takeover battle between its chairperson Rashmi Saluja and the Burman family members, the Enforcement Directorate(ED) has filed a case of cheating and criminal conspiracy, against Saluja and Group CFO Nitin Agarwal and and president and general counsel Nishant Singhal.
The ED has accused Saluja of getting a case registered against Dabur group chairman, Mohit Burman and his family members, with the aim of sabotaging the proposed acquisition of Religare and its subsidiaries. This move is alleged to have been a deliberate attempt to obscure the illicit gains obtained through their acquisition of Employee Stock Option Plans (ESOPs) from Care Health Insurance Limited (CHIL), a Religare subsdiary.
Based on the complaint made by the financial probe agency, the Mumbai police has booked Saluja and two others, namely Nitin Aggarwal, CFO of Religare Enterprises, Nishant Singhal, Group General Counsel, Religare Group in the said case. The ED has alleged unlawful gains to the tune of Rs 179.54 crore have been made by Saluja and others by acquiring the ESOPs at a price much lower by diverting the fund of M/s REL to subscribe to rights issue of CHIL.
In response to an email sent by FPJ to Religare seeking their comments, Religare stated that "the concerned officials have denied the allegations made in the FIR and are currently examining the matter to determine any further action deemed appropriate. They emphasized that there are no allegations against the company in this matter."
The ED had launched a probe into the FIR registered against the Dabur Group promoters, including Chairperson Mohit Burman and others. It had also recorded a statement of Mohit Burman.
The agency later investigated and questioned Religare officials, including CFO Nitin Aggarwal, and others. Subsequently a search was launched on the homes of senior officials of Rashmi Saluja's company, and seized several documents. Other officials whose homes were raided included Aggarwal, Singhal and Chirag Jain, COO of Religare Finvest. Raids were in connection with a money laundering probe related to allegations of funds being siphoned from Religare Finvest, a non-bank finance company (NBFC) of the Religare Group.
The said ED’s case originated from a First Information Report (FIR) filed by Vaibhav Gawli, an office assistant, alleging that funds were siphoned from Religare Finvest. The complaint accuses former Religare promoters Shivinder Singh, Malvinder Singh, and the Burman family—who had made an open offer to acquire a 26% stake in Religare Enterprises—among others.
However the ED’s probe found that Gawli was allegedly given a cash amount of Rs 2 lacs and directed to purchase 500 shares of REL worth Rs. 1.20 Lakh and the remaining amount of Rs 80,000 was offered to him for filing a complaint at Matunga Police Station against the Burman Family, the FIR states.
He further stated that the allegations made against the Burman Family in his complaint filed at Matunga Police Station are not known to him and these facts were mere reproduction of the facts stated in the papers handed by Rashmi Saluja for filing complaints against Burman Family. The FIR states he was also aware that Dr. Rashmi Saluja had been diverting funds in form of ESOPS from M/s REL and its subsidiaries. The purpose of the said complaint and FIR was also to continue enjoying the said benefits which might have been discontinued if Burmans had taken over the control of M/s REL,it further adds.
The FIR states that after the Insurance Regulatory and Development Authority of India (IRDAI) rejected the request for an initial grant of Employee Stock Option Plans (ESOPs), the Board of Directors of Care Health Insurance Limited (CHIL) convened on August 2, 2022. During this meeting, the Board approved the second grant of 2,72,11,327 shares to Rashmi Saluja at a price of Rs 45.32 per share, in the form of ESOPs. These ESOPs were scheduled to vest in three equal tranches, each amounting to 33.33%. Additionally, in the same meeting, the Board proposed to raise up to Rs 300 crore through the issuance of 2,72,72,727 shares of CHIL at Rs 110 per share via a rights issue. This rights issue, proposed by Saluja on behalf of REL, was subsequently accepted by the Board of Directors of CHIL.
This ED has deemed this as unlawful gains. “Money from M/s REL, which is a listed company and has common public as its investors, was invested into the rights issue of CARE with each share being valued at Rs 110/- while the shares of the same company were granted in the form of ESOPs at a much lower rate through two board resolutions on the same date,” the FIR states. “.... It appears that REL money was used to buy shares at higher price in order to fulfill the criteria for the vesting of ESOPS without paying attention to the price disparities ie. Rs 45.32/- v/s Rs110/-. The purpose of M/s REL subscribing to the rights issue at inflated price was to fulfil the conditions for vesting of 33.33% of ESOPs with Dr Rashmi Saluja, Shri Nitin Aggarwal and Shri Nishant Singhal. The said rights issue of CHIL was opened on 24/08/2022 and closed on 29/09/2022 with subscription of Rs 250 crore. Out of this, Rs 192 crore was invested by M/s REL where Dr Rashmi Saluja and Shri Nitin Aggarwal were the key decision makers. It is yet to be ascertained if the shareholders of REL had approved the said decision to invest Rs 192 crores in the rights issue of CHIL,” the FIR further adds.
The ED has deemed the transactions in question as unlawful gains. According to the FIR, “Funds from M/s RELigare enterprise lts, a publicly listed company with broad public investment, were channeled into the rights issue of CARE, where each share was valued at Rs 110. However, the same shares were granted to Rashmi Saluja through ESOPs at a significantly lower rate, as determined by two board resolutions on the same date.
The Burman family, the largest shareholder of Religare Enterprises, claims that 22.7 million options were illegally issued to Saluja and is demanding their cancellation. Care Health executives have been asked to provide details about employee stock option plans (ESOPs) issued by the company between FY19 and the present. The federal probe agency has also requested details of the board and statutory approvals related to the ESOPs.
By August last year, the Burman family had accumulated a 21.5% stake in REL through various entities. In September, they acquired an additional 5.27% stake, triggering a mandatory open offer to buy an additional 26% stake from the public. The open offer was made at Rs 235 per share on September 25.
On October 18, independent directors of REL Enterprises wrote to regulators, including the Reserve Bank of India, SEBI, and the insurance watchdog, alleging fraud and other breaches by the Burmans.
On October 26, entities controlled by the Burman family wrote to the REL board, seeking a probe into trades of the firm’s shares by Chairperson Rashmi Saluja. This complaint was subsequently sent to Sebi and the stock exchanges on November 8.
Last month, Saluja moved the Delhi High Court (HC) following ED’s action of attachment of ESOPs. The court is likely to hear the matter on September 23. In June Sebi directed REL to submit the open offer proposal from the Burman family to the regulator.
