Pharmaceutical giant Ranbaxy Laboratories' ex-promoters Shivinder Singh, his older brother Malvinder Singh and three others have been sent to four-day police custody in a Rs 740-crore fraud case. They have been accused of misappropriating funds of Religare Finvest Ltd.
The other three accused are Sunil Godhwani, Kavi Arora and Anil Saxena. The other three accused are Sunil Godhwani, Kavi Arora and Anil Saxena. Mr Godhwani was the managing director of Religare Enterprises, while Mr Arora and Mr Saxena held managerial positions.
Malvinder Singh approached the Delhi High Court seeking to cancel the police case filed by the Economic Offences Wing (EOW). He said the First Information Report against them can only be investigated by the Serious Fraud Investigation Office (SFIO) and not by the EOW, which he claimed doesn't have the jurisdiction to probe the case.
"I joined the investigation twice in the past. I was in Ludhiana for my daughter's treatment and was arrested yesterday (Thursday) late night," Malvinder Singh said.
The brothers, however, had diametrically opposite arguments in the court. The younger one, Shivinder Singh, who said he has renounced corporate life to work with a religious group, argued for himself and did not oppose his arrest. He also offered to cooperate with the investigators.
The Delhi Police said it wants to unearth the money trail, and custodial interrogation of all the accused to confront them with the evidence the police has collected so far.
"For a fraud like this involving multiple companies and thousands of crores, custodial interrogation is needed. The SFIO probe is concerned only with the Companies Act. We are probing under sections of the IPC (Indian Penal Code). Criminal conspiracy has to be unearthed and the Delhi Police's probe is independent. The SFIO probe is separate," the counsel for Delhi Police told the court.
Lawyer Abhishek Manu Singhvi, appearing for Malvinder Singh, said the Companies Act clearly bars investigation under this law by any other agency other than the SFIO. "If any such investigation has begun by any other agency, it shall be transferred to the SFIO... So please don't grant police custody," Mr Singhvi said.
Kavi Arora has filed a bail application on the grounds that he has been cooperating with the probe.
"Kavi Arora's rile is being looked into. Maybe it's not in the FIR. FIR is not an encyclopaedia. The probe is going on," the Delhi Police's lawyer said.
Religare Finvest filed its complaint with the police against the Singh brothers in December. Five months later, the brothers were charged with cheating, fraud and misappropriation of funds.
"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.
Shivinder Singh and Malvinder Singh were heirs to the multi-billion dollar Ranbaxy Laboratories Ltd founded by their father. They sold it to Japanese firm Daiichi Sankyo in 2008 and focused on the family-owned Fortis Healthcare, a hospital chain, and Religare Enterprises, a financial services firm.
In 2013, Daiichi moved an arbitration tribunal in Singapore alleging that the brothers, while selling Ranbaxy, had concealed information about the US Food and Drug Administration and the Department of Justice investigating the company. The tribunal in 2016 ordered the Singhs to pay Daiichi Rs 2,562 crore. The brothers challenged the decision but in 2017, the Delhi High Court ordered them to pay up.
The brothers' feud began after they lost control of both Fortis Healthcare and Religare.