Jewellery exporter Rajesh Exports has repaid its entire ₹510 crore debt to Canara Bank, following a decisive order from a Debt Recovery Tribunal (DRT). The payment resolves a protracted dispute with its largest creditor, but comes as the company faces intense scrutiny from multiple regulatory bodies over its financial reporting and business practices.
The settlement was compelled by the DRT to prevent the sale of the company’s properties. This legal route proved successful for Canara Bank after the Bengaluru-based exporter had previously blocked other recovery attempts, including action under the insolvency code, by securing a stay from the Karnataka High Court.
Rajesh Exports Canara Bank’s recovery
The path to this ₹510 crore recovery was a multi-year legal slog for Canara Bank. Rajesh Exports’ account was declared non-performing back in 2020, with the case being admitted to the Debt Recovery Tribunal in 2021. The bank had simultaneously initiated actions under the SARFAESI Act and the insolvency code, but these were halted by court order.
The DRT proceeding was the only legal avenue left open, and it took nearly six years to reach a conclusion in the bank’s favour. The debt originated from unpaid Letters of Credit (LCs) that Canara Bank had issued on behalf of Rajesh Exports for gold imports.
A significant portion of these payments were directed to Valcambi SA, a Swiss gold refiner and a step-down subsidiary of Rajesh Exports itself.
The dispute was not one-sided. Rajesh Exports had filed a staggering counter-claim of ₹20,456 crore against the bank. However, the DRT dismissed this claim in 2023, reportedly after the company produced what the tribunal deemed to be “fake bills.” For companies facing such financial disputes, understanding the law around suing for dishonoured cheques is critical, as it highlights the legal mechanisms available for recourse.
This resolution brings to a close a significant chapter of financial uncertainty between the two entities. It underscores the effectiveness of the DRT as a mechanism for lenders to recover dues when other avenues are exhausted or legally blocked by debtors.
A company under intense regulatory scrutiny
While the repayment to Canara Bank resolves one major headache, it occurs against a backdrop of serious allegations from market regulators. The company’s troubles are far from over, with investigations by both the Securities and Exchange Board of India (SEBI) and the Enforcement Directorate (ED) casting a long shadow over its operations.
SEBI’s allegations of financial misrepresentation
In a damning interim order issued on June 3, 2026, SEBI accused Rajesh Exports of large-scale financial misrepresentation and non-cooperation with investigators. The market regulator alleged the company had inflated its consolidated revenues by approximately ₹15.15 lakh crore between the fiscal years 2021 and 2025. This figure represents an astonishing 99.8% of the company’s total reported revenue during that period.
SEBI’s Whole Time Member, Kamlesh Chandra Varshney, noted in the order that between 97% and 99% of the firm’s consolidated revenue came from overseas subsidiaries, primarily the Switzerland-based Valcambi SA. The financials for this key subsidiary were not publicly disclosed by Rajesh Exports, obscuring a massive part of its business from investors and analysts.
Questionable transactions and fund diversions
The SEBI probe also flagged what it termed non-genuine transactions. These included sales of ₹11,487 crore and purchases of ₹11,488 crore with a private limited company, Affluence Shares and Stocks Pvt. Ltd. Such transactions raise serious questions about the nature and legitimacy of the company’s reported business volumes.
Furthermore, the regulator alleged that company funds worth ₹339 crore were routed to the personal accounts of Chairman Rajesh Mehta. This was reportedly done without the necessary approvals from the company’s board or its audit committee, pointing to severe corporate governance lapses.
The complexity of these corporate financial disputes often brings multiple parties into legal conflict, similar to how HDFC Bank and LIC contested a resolution plan for another major corporation.
Enforcement Directorate probe follows
Adding to the company’s woes, the Enforcement Directorate (ED) conducted searches on Rajesh Exports’ premises in late June 2026. The federal agency is investigating the company over alleged violations of foreign exchange laws, a direct follow-on from the financial irregularities unearthed by SEBI’s investigation.
Contradictions and what comes next
The forced repayment of the Canara Bank loan directly contradicts Rajesh Exports’ previous public statements describing itself as a “debt-free company.” This claim, now demonstrably false, further damages the company’s credibility with investors and the market.
The situation is a stark reminder of the legal principle that even partners in an unregistered firm can’t sue each other for recovery, underlying the importance of formal agreements and transparent financials.
A significant institutional investor caught in this turmoil is the Life Insurance Corporation of India (LIC), which holds a 10.8% stake in the jewellery exporter. The cascade of negative news and regulatory actions puts this substantial public investment under a cloud of uncertainty.
With the bank debt settled, Rajesh Exports can clear one liability from its books. However, the company’s future hinges on the outcome of the ongoing SEBI and ED investigations. The allegations of revenue inflation and improper fund diversion are severe and could lead to significant penalties, legal action against its promoters, and a fundamental reassessment of the company’s value and viability.