Subhiksha founder Subramanian held for alleged fraud

Tamil Nadu police EOW alleges he cheated Viswapriya depositors of about Rs 150 crore

The Economic Offences Wing (EOW) of the Tamil Nadu police on Saturday arrested R Subramanian, known for his Subhiksha retail stores, in connection with allegedly cheating depositors of about Rs 150 crore.

Subramanian’s counsel, however, said he had surrendered on his own.

This came a day after the Madras High Court refused to grant Subramanian anticipatory bail in a case filed by the EOW. The case is based on a complaint by city-based investor G Ramadoss, who had invested Rs 6.6 lakh in a scheme called Prime Investment. The complaint dates back to 2013.

The money was raised by an entity called Viswapriya (India) Ltd. Apart from deposits, it also raised money through the issue of debentures. In October 2013, debenture holders of the company approved a restructuring scheme that allowed more time to Subramanian to repay.

However, through the past two years, Viswapriya couldn’t keep its promise, even under the restructured terms, according to investors.

EOW officials said Subramanian was arrested here and would be produced in the court on Saturday evening. He had been charged with sections under the TNPID Act, 1997, sources said.

Subramanian had founded Subhiksha in 1997, which collapsed in 2009.

In 2013, the EOW had registered a case against him for cheating and breach of trust, according to reports. Two cases registered by the agency against Subramanian relate to his financial services business. So far, 300 complaints have been received for default worth about Rs 40 crore. Overall, about 4,000 depositors in Tamil Nadu have invested about Rs 150 crore with Subramanian.

THE STORY SO FAR

• June-July 2013:  Investors find something amiss in Viswapriya, as cheques bounce
• July 2013: Subramanian assures investors, saying it was a “maturity mismatch” issue
• September 19, 2013: Scheme of arrangement filed by Viswapriya for restructuring debentures
• October 21, 2013: Complaint lodged with EOW by investors
• November 24, 2013: Court convenes meeting of debenture holders
• November 24, 2013: Debenture holders support scheme
• April 2014: Company court sanctions scheme
• August 2015: Madras HC dismisses writ petition by Viswapriya to quash EOW FIR
• September 2015: Court dismisses anticipatory bail application

The investigation agency said it had been ascertained that Subramanian had collected funds from the public under various schemes, including fixed deposit and debentures schemes.

The agency alleges Subramanian started 49 companies and manipulated records. It added he had been absconding since August 6, 2015, after the high court dismissed his writ petitions. To nab him, the EOW had put in place 12 special teams across four states.

In 1991, Subramanian had launched Viswapriya as Viswapriya Financial Services Pvt Ltd. He had earlier worked with Citi Bank, Mumbai, and Enfield India.

He has been facing 11 civil cases, including those related to the debt recovery tribunal and the Negotiable Instruments Act, amounting to about Rs 400 crore. He is also facing four criminal cases, including two by the EOW, Tamil Nadu, and one filed by Bank of Baroda with the Central Bureau of Investigation, Chennai.