In a forceful statement, the appellate tribunal asserted that the evidence clearly indicates that no financial debt was extended by the financial creditor (Religare Enterprises) to the corporate debtor (Ligare Aviation) in consideration of time value of money, a crucial requirement under the Insolvency and Bankruptcy Code (IBC).
Granting appeals from Daiichi Sankyo Company, a global Japanese pharmaceutical firm and shareholder, the NCLAT noted that the transactions involved were simply a ”round tripping of money/layering of money” intended for ”some undisclosed fraudulent purposes” and did not constitute any financial debt that could initiate insolvency proceedings.
”We conclude that the evidence on record clearly shows there was no financial debt disbursed by Financial Creditor (Religare Finvest) to the Corporate Debtor (Ligare Aviation) for the time value of money…” stated a two-member NCLAT bench.
Additionally, the Memorandum of Understanding (MoU) for the loan was described as a ”sham one-page document created dishonestly to give the impression of genuine transactions to a fraudulent transaction,” as noted by NCLAT in its order dated May 27, 2026.
Religare Enterprises and Ligare Aviation are related companies, both part of a group led by Malvinder Mohan Singh and Shivinder Mohan Singh, the former promoters of Ranbaxy Laboratories and Fortis Healthcare.
In its 69-page ruling, the NCLAT criticized the Principal Bench of the National Company Law Tribunal (NCLT) in New Delhi for accepting the insolvency application from Religare Enterprises despite the lack of genuine financial debt.
”The Adjudicating Authority (NCLT) did not examine the claim that the amount was swiftly transferred, not remaining with the corporate debtor for even 24 hours,” remarked NCLAT.
The NCLAT highlighted that ₹3.6 crore was transferred by Religare Arts Investment Management Ltd (RAIML) to Ligare Aviation on March 31, 2009, which was then remitted to Religare Finvest, a subsidiary of Religare Enterprises, as evident from that day’s bank transfer.
”The bank transfer of 31.03.2009 further reveals various amounts received from multiple group companies and subsequently sent to other group companies on the same day,” added NCLAT.
It was asserted that a Memorandum of Understanding (MoU) was established between RAIML and Ligare Aviation on March 30, 2009, which sanctioned an amount of ₹5 crore at an interest rate of 13%. Following this MoU, RAIML transferred ₹3.6 crore on March 31, 2009.
Concurrently, Daiichi Sankyo received an arbitral award totaling ₹3,500 crore on April 29, 2016, in Singapore from the Singh Brothers and their associated companies, prompting enforcement proceedings before the Delhi High Court.
The high court issued orders to attach properties of several group companies, including RHC Holdings, which owed money to Ligare Aviation. This issue also reached the Supreme Court.
Subsequently, on December 8, 2017, the NCLT approved the amalgamation of RAIML with Religare Enterprises. On March 27, 2019, Religare Finvest filed an FIR against the Financial Creditor-Religare Enterprises claiming that the funds advanced under the MoU were not meant to be repaid.
The FIR made numerous allegations, asserting that loans were granted on a non-arm’s length basis. It alleged that the MoUs were fraudulent documents crafted to disguise sham transactions intended solely to siphon off funds. It claimed that Religare Enterprises is liable for actions taken by the previous management.
In this context, Religare Enterprises submitted an insolvency petition to the NCLT on January 18, 2021, for non-payment of ₹5.87 crore.
Meanwhile, the Supreme Court issued an order halting the insolvency proceedings against 23 companies. On September 22, 2022, the apex court directed that all proceedings, including the FIR and those before the NCLT, be concluded appropriately.
The NCLT accepted the insolvency application from Religare Enterprises, noting that none of the MoUs included provisions stating that the payments received by Ligare were intended for onward transmission to a third party.
The appellate tribunal rebuffed this claim, asserting that this ”observation of the NCLT is entirely flawed”.
It also stated that the FIR filed by Religare Finvest and the claims made therein, along with subsequent proceedings, ”cannot be relied upon as substantive evidence in the proceeding” under Section 7. The FIR was lodged by a subsidiary of the financial creditor, making accusations against the former promoter of both the corporate debtor and financial creditor, it emphasized.
Reversing the NCLT’s decision, a bench of the NCLAT comprising Chairperson Justice Ashok Bhushan and Member Barun Mitra declared, ”There was no financial debt present in the transaction, and the initiation of CIRP by the financial creditor was unwarranted based on such a transaction. The order from the adjudicating authority (NCLT) allowing the Section 7 application is unsustainable.”
