Singh Brothers sent to four days' police custody in misappropriation case after complaint by Religare Finvest

Shruti Mahajan October 11 2019
Singh Brothers

A Delhi Court today granted the Economic Offences Wing (EOW) of the Delhi Police four days' custody of former Ranbaxy owners Malvinder and Shivinder Singh (Singh brothers) and three others in the case relating to misappropriation of funds on a complaint lodged by Religare FinVest Limited.

Chief Metropolitan Magistrate at the Saket District Court Deepak Sehrawat passed the order today after the accused persons were produced before the Court.

Malvinder Singh opposed the custody on the ground that he had joined the investigation and had answered questions put to him to the best of his ability. It was further argued by Advocate Manu Sharma on his behalf that he had submitted an affidavit providing a list of entities to the Delhi High Court. These entities can be approached to recover monies to repay dues owed by Malvinder. Thus, custodial interrogation by the investigating officer to recover the money was not required, Malvinder's counsel argued.

Senior Counsel Vikas Pahwa, representing the complainant in the case, pressed for the police custody of the accused. Pahwa countered Malvinder's argument by saying that the investigating officer's job is not to recover money, but to ascertain the commission of an offence and for this, the custodial interrogation was required.

Senior Counsel JK Dassalso arguing for the complainant company, submitted before the Court that the Securities Exchange Board of India (SEBI) had in fact prima facie found that there had been siphoning off of funds. The market regulator, in its recent order, had directed for recall of loans of over Rs 2000 Crores disbursed by the Religare FinVest and Religare Enterprises, Dass told the Court highlighting the magnitude of the matter.

Interestingly, younger brother Shivinder Singh not only argued for himself, but also chose not to oppose the request for police custody. He submitted before the Court,

"I believe I'm a victim of the fraud... And I'll take the opportunity to assist the agency in the investigation."

The overlap between the case registered by the Serious Fraud Investigation Office (SFIO) and the EOW was also brought up during the course of the hearing. Counsel for Malvinder Singh argued that the EOW ought to step back while the SFIO is already investigating the case. Pahwa countered this by invoking Section 212(2) of the Companies Act, which restricts the power of the SFIO to probe offences under Companies Act only. He said that the EOW is investigating offences under the Indian Penal Code.

A petition on this overlap of proceedings has also been filed by Malvinder Singh before the Delhi High Court.

The EOW had arrested the former promoters of pharma giant Ranbaxy on Thursday. Shivinder Singh was detained by the Delhi Police on Thursday, while the elder brother Malvinder Singh was nabbed late on Thursday night from Punjab. Sunil Godhwani, former CMD of Religare, and two others were also arrested by the Police.

The arrest comes in a complaint concerning Religare Enterprises which was under the absolute control of the Singh Brothers. Manpreet Suri of Religare Finvest accused the brothers of siphoning off funds and misappropriation of funds to the tune of over Rs 2000 crore. This complaint, filed in December 2018, led to the brothers being charged with cheating, fraud, and misappropriation of funds in March 2019 when the FIR was registered.

Religare Enterprises Limited owned an 85% stake in Religare Enterprises which controlled Religare Finvest at the time the alleged offence was committed. Godhwani was the CMD while the other two accused - Kavi Arora and Anil Saxena - held crucial managerial positions in Religare Enterprises at the time.

The Singh Brothers are also under the scanner for not paying dues to Japanese company Daiichi Sankyo in relation to the case concerning Fortis Healthcare. The dues had encumbered pertaining to the arbitral award granted by a Singapore-based tribunal.

The tribunal had found the Singh brothers and others guilty of several counts of misconduct when Daiichi bought their 34.82% stake for $2.4 billion in 2008. The Singh brothers and twelve others were found to have made false claims in a self-assessment report, along with misrepresenting the genesis, nature, and severity of the US regulatory investigations into Ranbaxy.

On January 31 last year, Justice Jayant Nath of the Delhi high court had upheld the enforceability of the Rs 3500 crore arbitration award.

[Read the Order]

State vs Singh Brothers (Religare fraud) - October 11