Hyderabad: The chairman of the Nagarjuna group, K.S. Raju, was taken into custody by the police here over the alleged failure of Nagarjuna Finance Ltd (originally promoted by Nagarjuna group) in repaying depositors to the tune of around Rs100 crore. The police have also arrested P.K. Mahadevan, promoter director of Nagarjuna Finance, under sections 420 and 406.
The two will be produced before the additional chief metropolitan magistrate court at Nampally here on Tuesday. M. Malla Reddy, the station house officer of the Panjagutta Police Station, where the corporate offices of Nagarjuna group are located, said: “Around 60 arrest warrants issued against Raju following cheating cases filed by depositors and orders of various consumer forums were transferred to the Hyderabad City Crime Station.”
Raju has been fighting cases filed by the ministry of company affairs through the Registrar of Companies (RoC), which had moved the economic offences court against Raju.
Raju claims his group had divested its equity holding in the finance company in favour of a Mumbai-based firm, Mahalakshmi Factoring Services Ltd (MFSL), in September 2000 and that the onus now lies with MFSL.
However, the RoC insisted that since the management change at Nagarjuna Finance was allegedly done without shareholder or depositor consent, a change in management through a memorandum of understanding cannot absolve the promoters of their statutory responsibility.
The RoC had also submitted to the court that the MoU entered into between the Nagarjuna group promoters and MFSL does not grant the promoters any indemnity. The RoC is seeking repayment to all depositors along with contractual interest and damages. Addressing a press conference on 26 February 2005, Raju said MFSL had assets worth around Rs90 crore as against deposit dues of around Rs40 crore. The company had paid around Rs300 crore to depositors during 1996-2000 before the finance company was divested, he had said.
The RoC says the new management of Nagarjuna Finance could repay only Rs54.8 crore by December 2003 while the outstanding was Rs98.37 crore.