Ex-Ranbaxy promoter Shivinder Singh arrested over ₹2,397 cr fraud at Religare Finvest

“The alleged persons, having absolute control of Religare Enterprises Ltd and its subsidiaries, put Religare Finvest Ltd in poor financial condition by way of disbursing loans to the companies having no financial standing and controlled by the alleged persons," Delhi Police said in a statement.

EOW is now on the lookout for Shivinder Singh’s elder brother, Malvinder, a senior Delhi Police official said on condition of anonymity. Malvinder Singh is in Ludhiana for medical treatment, business news channel ET Now reported. The two others arrested are Kavi Arora and Anil Saxena, who held senior managerial positions at Religare Enterprises and its subsidiaries.

The arrests are the culmination of around a year-long probe into the affairs of the Singh brothers, heirs to a storied business house that was worth billions a few years ago. Much of their troubles can be traced to the breakneck expansion plan of group companies that threw their businesses into a debt spiral.

The Singh brothers were promoters of financial firm Religare Enterprises and hospital operator Fortis Healthcare till last year. Godhwani was the chairman and managing director of Religare Enterprises till 2016.

The accused, Delhi Police said, were arrested under Section 409 (criminal breach of trust by a public servant, banker, merchant or agent) and Section 420 (cheating) of the Indian Penal Code.

The financial irregularities were flagged during independent audits by the Reserve Bank of India and Securities and Exchange Board of India (Sebi), said Delhi Police.

Sebi, in a March order, directed Religare Enterprises and its subsidiary to recover the amount, after an audit found they had diverted funds to various entities related to the promoters.

The arrests were made based on a complaint filed by Religare Enterprises arm Religare Finvest in December, when it alleged that the three people had misappropriated funds of the company to the tune of ₹740 crore through loans to entities that were related to them or their associates.

Religare Finvest had also named N.K. Ghoshal, a long-time associate of the promoters, along with directors of the promoter companies. One of the promoter companies, RHC Holding Pvt. Ltd, declined to comment on the arrests. The Singh brothers could not be reached for comment as their mobile phones were switched off.

In December, Religare Enterprises and its subsidiary made another complaint to the corporate affairs ministry alleging misappropriation of funds worth ₹2,230 crore of the company and its units.

The complaint also alleged that illegal issuances and redemption of preference shares led to undue gains of approximately ₹290 crore to promoter groups.

In August, the Enforcement Directorate (ED) searched the residences of the Singh brothers in New Delhi in connection with a money laundering case.

The searches were made after ED registered a case against the duo under the Prevention of Money Laundering Act (PMLA), following allegations of financial irregularities and subsequent downfall of their businesses.

In February, Malvinder Singh had filed a criminal complaint against Shivinder alleging financial fraud.

Apart from allegations of financial fraud, the three have been at the centre of multiple controversies, including an alleged financial fraud at Fortis Healthcare.

Fortis Healthcare had also filed a case with Sebi and the Serious Fraud Investigation Office for recovery of around ₹500 crore from the brothers.

The brothers were taken to court by Japanese drugmaker Daiichi Sankyo Co. to enforce an arbitration award of nearly ₹2,600 crore by a Singapore tribunal in a case involving their former company, Ranbaxy Laboratories.