The SEBI (Securities and Exchange Board of India)  on Friday restrained Reliance Home Finance Ltd, industrialist Anil Ambani and three other individuals from the securities market for allegedly siphoning off funds from the company. The three other individuals are Amit Bapna, Ravindra Sudhakar and Pinkesh R Shah.

In a 100-page interim order, the regulator also restrained the individuals from "associating themselves with any intermediary registered with SEBI, any listed public company or acting directors/ promoters of any public company which intends to raise money from the public till further orders." 

The order, pertaining to alleged siphoning off of funds from the company, has been passed against a total of 28 individuals and entities (noticees). The focus of the SEBI probe was to broadly look into the manner in which loans were dispersed by Reliance Home Finance Ltd (RHFL) during 2018-19 to several borrowing entities.

SEBI noted that the root of the present proceedings can be traced to multiple sources, inter alia, a letter of Price Waterhouse & Co addressed to RHFL intimating their resignation as the statutory auditor of the company; and complaints received by SEBI alleging siphoning off/diversion of funds of RHFL by promoters and management of the company.

There were multiple Fraud Monitoring Returns (FMRs) from banks alleging, among others, that funds borrowed by RHFL from different lenders were partly used towards repayment of loans, the regulator said.

It was also complained that various connected parties and companies with weak financials were used as conduits to siphon off funds from RHFL to entities connected to the promoter company Reliance Capital, the order said.

"It is noted that one individual person Anil Ambani, who controls the company due to his position as a promoter and controlling shareholder by way his direct and indirect shareholding, is seen to be exercising unfettered powers...," SEBI said.

The order noted that the company's Key Managerial Persons (KMPs) like Executive Director and CEO Ravindra Sudhalkar and the CFOs -- Amit Bapna and Pinkesh R Shah -- "instead of bringing such misdeeds to the notice of the Board of Directors/Regulators, are prima facie found to be hand in gloves with Ambani, in siphoning off the borrowed funds of the company to other financially weak promoter group companies which is evident at different stages of approval of those General Purpose Corporate Loans (GPCL) transactions".

The amount of loans disbursed by RHFL under General Purpose Corporate Loans (GPC loans) have increased exponentially from around Rs 900 crore as on March 31, 2018 to around Rs 7,900 crore as on March 31, 2019, the order said.

The noticees include Adhar Project Management and Consultancy Private Ltd, Indian Agri Services Pvt Ltd, Phi Management Solutions Pvt Ltd, Arion Movie Productions Pvt Ltd, Citi Securities and Financial Services Pvt Ltd, Deep Industrial Finance Ltd, Azalia Distribution Pvt Ltd and Vinayak Ventures Pvt Ltd.

Gamesa Investment Management Pvt Ltd, Medybiz Pvt Ltd, Hirma Power Ltd, Tulip Advisors Pvt Ltd, Mohanbir Hi-Tech Build Pvt Ltd, Netizen Engineering Pvt Ltd and Crest Logistics and Engineers Pvt Ltd (now known as Cle Pvt Ltd) are among the noticees.

Other noticees are Reliance Unicorn Enterprises Pvt Ltd, Reliance Exchange next Ltd, Reliance Commercial Finance Ltd, Reliance Cleangen Ltd, Reliance Business Broadcast News Holdings Ltd, Reliance Broadcast Network Ltd, Reliance Big Entertainment Pvt Ltd and Reliance Capital Ltd.

The regulator noted that the prima facie observations contained in the order are made on the basis of the material available on record and the prima facie findings shall also be considered as a show cause notice.

"The noticees (noticee nos. 1 to 28) are further called upon to show cause as to why inquiry should not be held against them... (for) alleged violations of provisions of SEBI Act, 1992, LODR Regulations and PFUTP Regulations," SEBI said, adding that the noticees can file their replies within 21 days of receiving the order.

They can also indicate whether they desire to avail an opportunity of personal hearing on a date and time to be fixed in that regard.

SEBI also clarified that the restraint imposed on RHFL should not come in the way of any resolution/revival plan approved or to be approved, under any law.