SARFAESI Violation Sparks ₹5 Crore Defamation Suit Against Edelweiss.

Unmesh Gujarathi
Sprouts News Exclusive
Contact: +91 9322755098

Edelweiss ARC and Chairman Rashesh Shah face a ₹5 crore defamation notice for alleged illegal takeover of a Patiala property, SARFAESI Act violations, and reputational damage. Issued by journalist Kanwar Manjit Singh, the notice accuses the firm of forged documents, misuse of police, and public humiliation. Investigations are underway.

In a case raising serious questions about the conduct of one of India’s leading asset reconstruction firms, Edelweiss Asset Reconstruction Company Ltd. (EARC), its Chairman Rashesh Shah, and several senior executives have been served with a ₹5 crore defamation notice. The notice, issued by senior journalist and PT Media Pvt. Ltd. Director Kanwar Manjit Singh, alleges unlawful takeover of commercial premises and reputational damage stemming from what is described as a blatant abuse of legal procedures.

According to the legal notice, the takeover occurred in July 2024 at C-179, Focal Point, Patiala. It names six key individuals — Rashesh Shah, Anil Kumar, Anuj Jain, Nikhil Arya, Bhawesh Jha, and Deepak Goyal — for acting “with malice” and violating provisions of the SARFAESI Act, India’s securitisation and asset recovery legislation. The complainant claims Edelweiss officers submitted false affidavits to multiple judicial forums including the Punjab and Haryana High Court, District Magistrate Patiala, local courts, and the Debt Recovery Tribunal (DRT) in Chandigarh.

The Sprouts News Investigation Team (SIT) reviewed the legal submissions, which allege that Edelweiss’s officers intentionally misrepresented facts to gain illegal possession of the property. This included filing fabricated documents and ignoring critical judicial directions. One such incident from June 2022 is also highlighted in the notice, where despite an active stay order, Edelweiss’s recovery agents allegedly trespassed and harassed staff at the premises.

The journalist’s legal team states that repeated warnings and letters to Edelweiss’s senior management went unanswered. According to SIT’s review, this indicates a pattern of willful negligence and systemic suppression of facts. The notice frames this not as a one-off violation, but as an orchestrated campaign to damage both the business and personal credibility of the complainant.

Moreover, the legal document describes a dramatic and public seizure involving unauthorized state personnel, police, and banners labeling the business owner as a defaulter. This, the complainant asserts, was designed for maximum humiliation and reputational assassination. No lawful inventory of seized movable assets — including sensitive manuscripts, rare collections, and digital archives — was made. The complainant pegs their value at over ₹50 crore.

The notice goes on to allege that forged assignment documents were used in proceedings to secure the asset. Sprouts News Investigation Team (SIT) has learned that key assets, including intellectual property, internal records, and archives, were removed without any documentation or receipt. The complainant warns that if these are not returned in their original state, a separate criminal case would be launched.

Further, a complaint is already pending before the Punjab Vigilance Bureau, naming certain government officials who allegedly cooperated with Edelweiss ARC in conducting the raid. It accuses these officials of abuse of power and dereliction of duty, reinforcing the claim that state mechanisms were misused to facilitate a private corporate agenda.

Currently, a petition under Section 17 of the SARFAESI Act is under judicial review at DRT-III, Chandigarh, while perjury proceedings related to false affidavits are also in motion. The notice also demands an unconditional apology, return of all property, and payment of ₹5 crore in damages. Failure to comply will trigger further civil, criminal, and regulatory action.

This is not the first time Edelweiss or its promoters have faced scrutiny. In 2020, the Enforcement Directorate (ED) raided Edelweiss offices in Mumbai in connection with alleged FEMA violations involving offshore investments. While the company denied any wrongdoing, the investigation led to reputational setbacks in the financial sector.

In 2023, Edelweiss ARC was also named in multiple RTI-based exposés covered by national media, where borrowers accused the firm of using third-party agents to harass defaulters and forcibly seize properties in Tier-2 cities. These reports, reviewed by SIT, echo similar patterns of collusion with state authorities and disregard for due process.

Additionally, whistleblower complaints surfaced internally in 2024, alleging financial irregularities and misreporting of asset recoveries to investors. Though Edelweiss dismissed these allegations as “baseless”, independent audits were never made public, raising transparency concerns among stakeholders and regulators alike.

“This battle is not just about my property or damages — it’s about fighting the misuse of financial power to strip away dignity and legal safeguards,” said Kanwar Manjit Singh in a media statement. He emphasized the need for regulatory agencies to rein in such corporate behavior and demanded immediate intervention by the Reserve Bank of India (RBI) and SEBI to investigate Edelweiss ARC’s conduct.

The complainant’s legal team is also preparing to approach the National Human Rights Commission (NHRC), citing violation of privacy, right to dignity, and misuse of police powers for a civil dispute. Civil society groups and press associations in Punjab have expressed solidarity with Singh, noting the chilling effect this kind of financial aggression could have on independent media and entrepreneurs.

As the case gains traction, the Sprouts News Investigation Team (SIT) will continue to follow developments, including judicial rulings, regulatory responses, and any possible enforcement actions against Edelweiss ARC and its leadership.

Despite repeated attempts to contact the company for a quote, no response has been received.