Delhi HC stays RBI order on Religare Finvest's debt recast

The Delhi High Court (HC) has put on hold an order by the Reserve Bank of India (RBI) against the debt recast of the financial services firm Religare Finvest Ltd (RFL) until the next hearing.

RFL, a fully-owned unit of Religare Enterprises Ltd (REL), in a statement to the BSE, said that it has filed a petition in the Delhi HC against the RBI’s order that restructuring of RFL cannot be executed with REL because the lenders had classified RFL as ‘Fraud’ exposure.

Delhi HC’s order, dated 18 February 2022, said, “Despite advance service none appears for the respondent (i.e. Reserve Bank of India). Having perused the impugned communication, it prima-facie appears that the respondent has ignored the vital fact that the erstwhile promoters of REL are no longer in charge of the affairs of either the petitioner company or of REL.”

“In case the impugned order is not stayed, grave and irreparable prejudice will be caused to the petitioner as the banks are likely to take precipitative steps against the petitioner on account of the impugned communication. It is, accordingly, directed that till the next date, the operation of the impugned communication dated 11 February 2022 will remain stayed, ” HC further added.

RFL contested lenders’ decision to classify its loans as fraudulent and stated that the firm was a victim of fraud perpetrated by former management.