Delhi Court pronounces charges against Malvinder, Shivender Singh for cheating, conspiracy

New Delhi: A Delhi Court on Thursday pronounced charges against Religare promoters Malvinder Mohan Singh and Shivender Mohan Singh for cheating and criminal conspiracy.
The Economic Offence Wing (EOW) of Delhi Police had registered a case of alleged siphoning off funds against Religare Finvest Limited (RFL) in 2019.
As per the chargesheet, RFL had a corporate loan book since 2008 and it is alleged that siphoning of funds took place from 2016 onwards and the loans taken were never returned. The allegations are in connection with 19 entities.
Additional Sessions Judge (ASJ) Sheetal Chaudhary Pradhan of Saket District Court on Thursday pronounced charges against accused Malvinder Mohan Singh, Shivinder Mohan Singh, Rajender Prasad Aggarwal, Krishnan Subramanium, for the offences punishable under section 420 (Cheating), 120B (Criminal Conspiracy) IPC.
"Now to come up for framing of charge on April 5, 2025, against accused Malvinder Mohan Singh, Shivinder Mohan Singh, Rajender Prasad Aggarwal, Krishnan Subramanium, for the offences punishable under section 420/120B IPC, " The court ordered on January 16.
The court discharged other accused persons and said, "Accused persons namely Sunil Godhwani, Kavi Arora, Anil Saxena, Maninder Singh, Pankaj Sharma, Sunil Garg, Harpal Singh, Rashi Dhir, AC Mahajan and Narender Kumar Goushal, are discharged as no offence is made out against them."
The court has also pronounced charges against companies charge-sheeted in this case.
The court said authorised representatives of companies namely M/s A&A Capital Services, M/s Modland Wears P Ltd, M/s Platinum Infrastructure Pvt Ltd and M/s Fern Healthcare Pvt Ltd are also directed to appear personally on the next date of hearing for framing of charge.
The remaining accused companies shall be proceeded under Section 305 CrPC, the court said.
The court said, "It is made out that both accused Malvinder Mohan Singh and Shivender Mohan Singh in conspiracy with each other created the corporate loan book (CLB) since the beginning of RFL business primarily for utilizing funds at their disposal. This was done through loan products primarily unsecured and also through investment routes in a systematic manner. The modus- operandi had been to give inter-corporate loans to various companies under the control of the accused being the promoters either directly or indirectly to the companies owned and controlled by them and being the ultimate beneficiaries."
A complaint was made by the complainant company Religare Finvest Limited (RFL) to the EOW, which resulted in the FIR in question against the accused persons, for allegedly misappropriating, siphoning off and diverting through a labyrinth of financial transactions, the funds of RFL.
During the investigation, it was revealed that a high amount of shareholder's funds of REL was invested in RFL. In this manner, the diversion of funds from RFL caused a direct loss to the shareholders of REL for the reason REL owned 85.64 per cent equity share capital in RFL, the management of RFL is under the control of REL and REL is accountable for the actions taken by the management of RFL.
It was also found that the Corporate Loan Book (CLB) was created at the beginning of RFL business to utilize funds at the disposal of Promoters.
It is alleged that this was done through loan products unsecured and also through investment routes in a systematic manner.
In the present matter, both accused Malvinder Mohan Singh and Shivender Mohan Singh have been alleged to have siphoned off the funds to the tune of Rs 1260 crore by playing fraud upon the complainant company.
The court noted, "From the evidence available on record, the SEBI report, the statements of the witnesses cited by the prosecution, it is also clear that the accused Malvinder Mohan Singh and Shivinder Mohan Singh in criminal conspiracy with each other and having dishonest intention, gained wrongfully by transferring the funds to RHC Holdings through 19 entities (being the accused companies herein) by misusing their influence and caused wrongful loss to the complainant company being the subsidiary of the RHC Holdings."
Also, during the said period, accused Malvinder and Shivender having influence and control over the complainant company diverted the amount of Rs 1260 crore through 19 entities which were under their control and management directly or indirectly, the court noted.
"Therefore, both accused Malvinder Mohan Singh and accused Shivinder Mohan Singh are liable to be charged for the offences punishable under section 420/120B IPC, " the court ordered on Thursday.
It was argued that the allegations against the accused are various inter-corporate loans that were disbursed by RFL to companies under the direct/indirect control of the promoters. These loans were eventually utilised by RHC Holdings Pvt Ltd (owned and controlled by the promoters) through a process of complex transactions among 19 entities.
The present case originates from the complaint of December 18, 2018, filed by the complainant that the complainant is a non-banking financial company. Complainant company Religare Finvest Limited (RFL) is registered with the Reserve Bank of India (RBI) and is licensed to undertake the business of financial services as a non-deposit-taking/lending Non-Banking Financial Company (NBFC).
It operates as a small and medium enterprise (SME) financing-focused NBFC and is in the business of extending SME working capital loans, securing SME business expansion, loans, short-term trade finance and other loans to various entities.
The accused Malvinder Mohan Singh and Shivinder Mohan Singh, the accused in the FIR in question, were the Promoters along with the entities controlled by them and with persons acting in concert with them, owned the majority shareholding of REL till June 2017 and were as such classified as the Promoter of REL. They both continued to control REL till February 2018,
the time they remained on the Board of Directors of REL and thereby, since the complainant company was a subsidiary of REL, they also controlled the complainant company i.e. RFL. Thus, both the aforesaid accused allegedly played a significant role in the management and conduct of affairs of the complainant- company and exercised deep and pervasive control over its management, it is alleged.
It has been alleged that the accused Singh brothers, in conspiracy with Sunil Godhwani, being in control of the Complainant Company, caused it to give unsecured, high-value purported loans to shell companies and related/known entities of the accused. The loans were given by the Complainant Company on the sole and express basis that these entities were known to accused persons. Thus, as and when and pursuant to the instructions received from them or accused Sunil Godhwani or their agents/nominees/associates, sums to the tune of hundreds of crores were disbursed by RFL at very short notice and at times without adequate documentation for the same (in many instances the documentation was created only subsequently).
Senior advocate Manu Sharma and advocate Arjun Kakkar argued on behalf of accused Malvinder Mohan Singh that ingredients of Section 420 are not made out as the manner in which the complainant company was working with regard to corporate loan book was within the prior knowledge of the complainant.
It was also argued that the accused Malvinder Mohan Singh was never on the board of RFL and was the Non-Executive Chairman of REL from December 13, 2004, to April 6, 2010, and July 29, 2016 to November 14, 2017. He was also a Non-Executive Director of REL from November 14, 2017, to February 14, 2018.
On behalf of accused Shivender Mohan Singh, it was argued that the investigation of the present matter is biased and motivated. The prosecution case reeks of outright malice as the EOW acted under the pressure of RFL and conducted a completely one-sided investigation with a pre-determined mindset to implicate him amongst others.
During arguments, Counsels for accused persons had also discussed the concept of vicarious liability and had stated that the same is missing from the criminal law and the accused persons cannot be made liable vicariously for the offences committed by the Directors of the company, the Promoters or the Company itself.
The counsel argued, that the accused persons cannot be charged for the offence punishable under section 120B IPC.
It has been alleged by the prosecution that the modus operandi adopted for the siphoning off was evergreening of unsecured loans which were rotated via circuitous transactions through shell entities which only existed on paper but had no business.