RHFL fund-diversion case: SAT stays ₹25 crore Sebi fine on Anil Ambani

The Securities Appellate Tribunal (SAT) on Friday put a conditional stay on the ₹25 crore penalty imposed on the Anil Dhirubhai Ambani Group (ADAG) chairman, Anil Ambani, over his alleged involvement in the Reliance Home Finance Ltd (RHFL) fund-diversion case.

“There should be no recovery of the penalty amount ( ₹25 crore) subject to 50% of the deposit within four weeks,” said a bench led by Justice Dinesh Kumar in its order. 

SAT issued a notice to the Securities and Exchange Board of India (Sebi), asking it to file a reply within four weeks.

A detailed order, however, is awaited.

Anil Ambani had challenged Sebi’s 22 August order, which banned him from participating in the securities market for five years and required him to pay a penalty of ₹25 crore for allegedly siphoning funds from RHFL by providing loans to borrowers linked with the promoters. 

The regulator stated that it would assess the amount of illegal gains generated by the purported fraudulent schemes and take appropriate action.

This matter concerns general-purpose working capital loans (GPCL) that RHFL disbursed during 2018 and 2019. RHFL’s loan book had jumped dramatically from ₹3,742 crore in 2017-18 to ₹8,670 crore in 2018-19.

Sebi, in its probe, found certain disclosure lapses and violations at RHFL. 

Harish Salve, senior counsel representing Ambani, pleaded for a stay on the penalty. He informed the bench that the order arises from the alleged violations of the Sebi Act and the Prohibition of Fraudulent and Unfair Trade Practices (PFUTP) rules.

“There is not a single rupee that has come to Anil Ambani’s account,” Salve argued, adding that the Sebi did not even mention any purchase, or sale, or dealing of securities by Ambani while passing the order.

On the other hand, Sebi argued: “Thousands of crores of rupees from ₹4,000 crore to 8,000 crore have gone out without following due process. The monies have gone to related parties and sister concerns in the ADA Group (also known as Reliance Group).”

“In the capacity of ADAG’s chairman, Ambani sanctioned and signed all these loans worth thousands of crores,” it said. “That is the egregious nature of wrongs mentioned in the Sebi’s impugned order.”

Sebi’s August order noted that during FY18 and FY19, RHFL disbursed thousands of crores in GPC loans to entities with negative net worth and minimal assets. These loans were issued without any collateral or security, representing a significant deviation from standard credit due diligence. 

RHFL’s management disregarded internal credit ratings and waived the requirement for assessing the probability of default, allowing these risky loans to proceed unchecked.

Separately, Sebi imposed fines of ₹27 crore on Amit Bapna, ₹26 crore on Ravindra Sudhalkar, and ₹21 crore on Pinkesh Shah—all key officials at RHFL. 

In addition, it fined several entities associated with the fraudulent scheme ₹25 crore each.