After creating a nationwide network of retail stores, R Subramanian now seems to have spun a web of court cases, which has scuttled every winding-up petition filed against his defunct Subhiksha Trading Services as well as government-led fraud investigations into the company?s alleged wrongdoings.
Subramanian ? who had created one of the country?s largest retail chains of about 1,600 stores that collapsed under heavy debt ? is currently surrounded by a mountain of lawsuits, with more than 100 cases pending in the Madras High Court alone.
?It is a fact that he (currently) spends a considerable amount of his time in litigation,? says a person with direct knowledge of Subramanian’s routine. ?He spends lot of time meeting lawyers, talking to them over the phone and going to courts whenever necessary.? Subramanian did not answer to phone calls and text messages on his mobile.
Small vendors to multinational banks such as Barclays Bank Plc have sued Subhiksha for recovery while the company, in turn, has sued vendors, landlords, bankers, local police and the central government, among others.
In July 2010, the ministry of corporate affairs had asked the Serious Frauds Investigation Office to probe the alleged mismanagement of funds by the promoters of Subhiksha that led to its collapse. Subhiksha challenged the order in the Chennai court, alleging the government did not follow the proper procedure of the investigation and got a stay. Over a year later, the court last week vacated the stay on the SFIO probe, paving the way for the investigation into Subhiksha?s alleged malpractices. Meanwhile, Subhiksha is again in the process of filing a petition against the order, the person quoted above said.
Similarly, an Employees Provident Fund Organisation (EPFO) bid to assess the mismanagement of PF contributions of thousands of Subhiksha employees in 2009 is bogged down in court cases. Earlier this year, the Madras High Court dismissed the company?s proposal to merge with a construction firm called Blue Green Constructions, after cases were filed by Kotak Mahindra Bank and HCL Infosystems. Subhiksha appealed to a division bench against the order and all the winding-up petitions are currently subject to the case.
Wipro founder Azim Premji who had bought a stake in Subhiksha from ICICI Ventures for about Rs 230 crore months before the company admitted to widespread financial trouble, had once labeled Subhiksha as a case of corporate fraud similar to Satyam Computer Services Ltd. Subhiksha filed a defamation case against Premji and the case is pending in the Madras High Court.
One of the most aggressive among a band of modern retailers that emerged in India in the mid-2000s, Subhiksha expanded heavily nationwide before an economic slowdown in late 2008 left the retailer cash-strapped and a mounting debt that finally led to its demise in 2009. The former Indian Institute of Management (Ahmedabad) alumnus Subramanian was instrumental in turning his single store retail venture in 1997 to one of the country?s biggest retail networks. Many attribute the collapse of Subhiksha to Subramanian?s vaulting ambition.
