The Case That Landed Singh Brothers In Jail
Malvinder and Shivinder Singh’s legal troubles took a turn for the worse this week.
Malvinder and Shivinder Singh’s legal troubles took a turn for the worse this week as the two brothers were arrested by the Delhi Police on charges of fraud. The charges were levelled by a firm the Singhs once owned.
The brothers, the third generation of a once-successful North Indian business family, have been accused of conspiring to divert money from Religare Finvest Ltd. at the time they were promoters of the company. The new management of Religare Finvest has alleged they diverted the company’s money to pay private debts, and that the Singhs were aided by bankers at Lakshmi Vilas Bank - to use the company’s deposits as security for private loans.
Religare and Singh Brothers: The Back Story
Religare Finvest, a non-banking financial company, is an unlisted subsidiary of Religare Enterprises Ltd., promoted by Malvinder and Shivinder Singh.
The Singhs were the promoters of REL from its inception until February 2018 when they stepped down from the posts of non-executive chairman and vice-chairman following accusations that they siphoned funds, and after their shareholding fell to some 3 percent on account of share pledge invocations. Subsequently, institutional investors at REL installed new boards and management at the company and its subsidiary RFL.
The new management found the companies to be in “terrible financial condition” and also discovered “widespread illegal siphoning of funds” from REL and RFL, according to the first information report filed by the Economic Offences Wing of the Delhi Police.
The Lakshmi Vilas Bank Twist
The new management found that one key reason for the financial condition of the companies was the “misappropriation by Lakshmi Vilas Bank Ltd. of the monies due to RFL on account of four fixed deposits” amounting to Rs 750 crore (with interest Rs 791 crore).
These were short term fixed deposits and renewed by RFL from time to time till their maturity in July 2017. But in July that year RFL found the fixed deposits had been encashed into its account and the money subsequently debited. LVB later claimed there had been an error and restored the fixed deposits, but made no mention that they had been encumbered.
It was only in February 2018 that the bank informed RFL the fixed deposits had been used as security in loans extended to RHC Holding and Ranchem, both private companies controlled by the Singhs.
It appears that some employees of RFL(under the influence of Malvinder Singh and Shivinder Singh) may have been aware of this scheme to misuse RFL’s funds and their privately owned borrower/promoter entities. However, it is a fact that no security was ever created nor was any security documentation ever executed by RFL to provide the FDs as security.FIR by Economic Offences Wing of the Delhi Police
In December 2018 RFL filed a criminal complaint against Malvinder Singh, Shivinder Singh, Sunil Godhwani - the former managing director of REL, and other officials.
In early 2019, an investigation by Securities and Exchange Board of India also found diversion of funds from REL and RFL to the Singhs. The securities regulator ordered the two companies to “initiate steps to recall all the loans amounting to Rs 2,315.09 crore” along with due interest within three months.
What Next For Singh Brothers?
In September 2019, another FIR by the police included allegations against Laxmi Vilas Bank officials for colluding with the Singh Brothers in the diversion of RFL funds.
Days later, the two brothers were arrested along with former REL officials Sunil Godhwani, Kavi Arora and Anil Saxena.
After their arrest the brothers were produced in the Saket court on Friday where Malvinder opposed his arrest claiming cooperation with the investigation and lack of valid ground for arrest. Shivinder has claimed that he himself is a victim of fraud and does not oppose arrest. He has offered to cooperate with the investigating agencies and informed the court that he has not hired any lawyer for his defence.
The Saket court has for now sent the brothers to four days of police custody for further interrogation.
The court order notes that..
“the offence is of very serious nature involving huge amount of siphoning of money. The Police Custody is necessary to trace the trail of the cheated amount and find out the role of the other persons who might have participated in the conspiracy and confrontation with the other officials of RFL and REL.’’
The Singh brothers will next be produced in court on Oct. 15 when it will take a call on whether to further extend the custodial remand.
Also Read
The downfall of the Singh family is documented in this story: The Billionaires And The Guru: How A Family Burned Through $2 Billion
And the latest on the guru’s defence: Radha Soami Chief Claims In High Court Don’t Owe Money To Singh Brothers
The Singhs are also being pursued by Japanese drug major Daiichi.
Another Singh family company, Fortis Healthcare Ltd., has also accused the brothers of siphoning money from the company and is seeking to recover dues from them.