Advik Capital's rights issue halted by Delhi court on derivative suit

A Delhi court has restrained Advik Capital Ltd. from proceeding with a rights issue after a derivative suit was filed by shareholder Fairplan Distributors. The court found a prima facie case based on allegations of fraud and mismanagement.

Delhi Court Stays Advik Capital's Rights Issue

A Delhi court has granted ad-interim relief in a derivative suit instituted by Fairplan Distributors Pvt. Ltd., restraining Advik Capital Ltd. and certain other defendants from taking further steps in relation to the company's proposed rights issue of equity shares.

Vacation Judge and District Judge Dr. Pankaj Sharma of the Patiala House Courts passed the order after observing that the plaintiff had established a prima facie case warranting interim protection. The court restrained the defendants from proceeding with the proposed rights issue, including filing the letter of offer with the Securities and Exchange Board of India (SEBI), dispatching the abridged letter of offer, opening the subscription period, receiving subscription money, and making any allotment of shares, pending disposal of the suit.

Derivative Suit Alleges Fraud, Mismanagement

The court also issued a summons to the defendants and fixed August 22, 2026, as the returnable date. According to the plaint, Fairplan Distributors Pvt. Ltd., which claims to hold 23.46 per cent of the equity share capital of Advik Capital Ltd., has instituted the proceedings as a derivative action on behalf of and for the benefit of the company. The suit seeks a permanent injunction, a mandatory injunction and declaratory relief.

The plaintiff has relied on judgments of the Supreme Court to contend that a derivative action is maintainable where the persons alleged to have committed wrongdoing are themselves in control of the company's affairs. The defendants in the matter include Eraaya Lifespaces Ltd., Advik Capital Ltd., Vikas Garg and other individuals.

According to the plaint, Vikas Garg, arrayed as Defendant No. 3, exercised both de facto and de jure control over the affairs of Eraaya Lifespaces Ltd. and Advik Capital Ltd. The plaintiff has contended that the derivative action became necessary because the company itself was allegedly unable to initiate proceedings against those stated to be controlling its management.

The plaintiff further alleges acts of fraud, diversion of funds and mismanagement by Vikas Garg in concert with other defendants. It also alleges that certain members of the Audit Committee of Advik Capital Ltd. failed to discharge their statutory duties under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The allegations remain subject to adjudication and have not been examined on the merits by the court. The plaintiff has additionally alleged diversion of around Rs. 64 crore through transactions involving Elitecon International Ltd., Global Tabac Legacy and Business Bay Agencies.

It has also been contended that the proposed rights issue, disclosed through a BSE filing dated April 9, 2026, would be the fourth such issue undertaken by Advik Capital in four years. After considering the submissions and documents placed on record, the court granted interim protection and directed the plaintiff to comply with the requirements of Order XXXIX Rule 3 of the Code of Civil Procedure. The matter has also been directed to be placed before the Principal District and Sessions Judge for the assignment of the suit. (ANI)

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