ED arrests Subhiksha founder R Subramanian in cheating case

By: FE Bureau | Chennai | Published: March 1, 2018 5:44 AM

The Enforcement Directorate on Wednesday arrested R Subramanian, the founder of erstwhile discount retail chain Subhiksha, in a bank cheating case. ED sources said that the arrest was made in a case of alleged cheating and that he has been remanded in jail by the metropolitan magistrate of a local court. The case was filed under the Prevention of Money Laundering Act (PMLA). A source from the ED said that they had been looking into a case relating to a fraud of about Rs 77 crore. “The loan taken from Bank of Baroda was diverted for purposes other than it was intended,” he said. The CBI had also been on the hunt for him after a complaint was filed by Bank of Baroda. Earlier, in 2015, the Economic Offences Wing (EOW) of the Tamil Nadu police had arrested Subramanian for allegedly cheating depositors. The amount involved was Rs 150 crore. In March 2016, ED had attached assets to the tune of Rs 4.5 crore of the accused in a case related to the Rs 77-crore fraud in Bank of Baroda.

The company has also defaulted on staff salaries and vendor payments. In January 2009, Subhiksha moved the banks which had given loans amounting to about Rs 750 crore to restructure its debt. It had cited falling demand as a reason for its inability to adhere to the original repayment schedule. The retail chain, launched in 1997, notched up high growth initially by opening a large number of stores. However, it had to shut shop in 2009, owing to mismanagement, resulting in a financial crunch. Subramanian’s company had availed of loans from a consortium of about 13 banks, including from private sector lenders HDFC Bank, ICICI Bank and Kotak Mahindra Bank. Subhiksha defaulted on payments and triggered a slew of litigations.

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