Religare AGM back on track after Madhya Pradesh High Court rejects PIL

The Madhya Pradesh High Court dismissed a PIL blocking Religare's AGM, vacating the stay on Rashmi Saluja's reappointment and allowing the Burman family's stake acquisition process to proceed

The Madhya Pradesh High Court on Thursday dismissed a public interest litigation (PIL) that had indefinitely stalled the annual general meeting (AGM) of Religare Enterprises Ltd. The AGM, initially scheduled for December 31, was meant to consider the reappointment of Rashmi Saluja as chairperson, according to a report by Mint.

 

Solicitor General Tushar Mehta, representing the Reserve Bank of India (RBI), argued for the dismissal of the PIL, which was filed by Madhya Pradesh-based advocate Vijayant Mishra. Mehta pointed out that the petitioner was neither a shareholder in Religare nor directly connected to the company’s operations. Mehta argued that the case pertained to a Delhi-based firm, calling for the dismissal of the petition with heavy costs, the news report said.  

 

Withdrawal request accepted  

Subsequently, Mishra sought the court’s permission to withdraw the PIL, requesting the liberty to file it in the appropriate jurisdictional court. The court allowed this withdrawal, effectively vacating the stay on the AGM.  

 

In its ruling, the division bench of Chief Justice Suresh Kumar Kait and Justice Vivek Jain stated, “The petitioner is not a shareholder, is not aggrieved by the impugned order. This petition is accordingly disposed of with liberty to the petitioner to file before the appropriate court. Interim order stands vacated.”

Minority shareholder protection  

The PIL, according to Mishra, aimed to protect the rights of Religare’s minority shareholders. He alleged that the consolidation of four Burman family entities — Puran Associates, VIC Enterprises, M B Finmart, and Milky Investment & Trading Company — would harm over 73,000 small investors holding stakes worth up to Rs 2 lakh.  

 

Mishra further claimed that the Burman family’s move to increase their stake had created disputes and instability in Religare’s operations. He sought the establishment of an independent commission to oversee the acquisition process and ensure minority shareholder rights were safeguarded, the report said.

Interim order

On December 18, the court stayed Religare’s AGM and the RBI’s approval for the Burman family to make an open offer for an additional 26 per cent stake in the company. However, several prominent investors criticised the PIL, describing it as an affront to shareholder democracy.  

AGM to decide Saluja’s reappointment  

Religare’s AGM, originally planned for September but rescheduled to December, will deliberate on Rashmi Saluja’s reappointment as chairperson. The Burman family, holding a 25 per cent stake in the company, has been campaigning for her removal, despite her backing from the board.  

 

Under Section 152(6) of the Companies Act, one-third of non-independent directors must retire at every AGM. As the sole non-independent director, Saluja’s reappointment must be approved annually by shareholders.  

 

Proxy advisory firms InGovern and Institutional Investor Advisory Services (IiAS) have urged shareholders to reject Saluja’s reappointment. They argue that the ongoing legal and power struggles between the Burman family and the current management under Saluja could disrupt boardroom efficiency and the company’s governance.  

Gradual stake acquisition

The dispute traces back to September 2023, when the Burman family signaled their intention to gain a controlling stake in Religare. The family, which also promotes Dabur, has been acquiring shares through four entities owned by cousins Anand and Mohit Burman.  

 

Since April 2018, the Burmans have steadily increased their stake in Religare. From an initial 9.9 per cent holding, they expanded their share to 14 per cent by June 2021 and acquired an additional 7.5 per cent in August 2023. By January 2024, their stake exceeded 25 per cent, granting them veto power over special resolutions within the company, the news report said.