Subhiksha founder R Subramanian held for cheating

By: |
Chennai | September 20, 2015 12:20 AM

The Economic Offences Wing (EOW) of the Tamil Nadu police on Saturday arrested R Subramanian, founder of the now-defunct Subhiksha retail store chain, once hailed as the mini-desi model of global retail giant Walmart.

The Economic Offences Wing (EOW) of the Tamil Nadu police on Saturday arrested R Subramanian, founder of the now-defunct Subhiksha retail store chain, once hailed as the mini-desi model of global retail giant Walmart. The arrest follows the Madras High Court rejecting his anticipatory bail application on Friday.

Subramanian is accused of cheating depositors of around Rs 250 crore. A case of cheating and criminal breach of trust had been registered against Subramanian in October 2013.

As per EOW officials, Subramanian is facing 11 civil cases, including cases in the Debt Recovery Tribunal. They said an amount of R400 crore is owed to different banks, including two public sector ones. He is also facing four criminal cases, including two cases pending with EOW, Tamil Nadu, and one case filed by Bank of Baroda with the CBI in Chennai.

EOW officials said Subramanian collected money from the public under various schemes, including fixed deposit and debenture schemes. “He was absconding since August 6 this year and the Madras High Court has dismissed his writ petition. EOW had deployed 12 special teams to nab him,” the official said.

So far, 300 complaints have been filed by depositors for an alleged default of Rs 40 crore. There are 4,000 depositors in Tamil Nadu who have invested about Rs 150 crore in the firm. Earlier Azim Premji’s Zash Investment had invested in the company, along with ICICI Ventures and others.

The court had earlier this month asked Subramanian to furnish details to prove his ability to repay debenture holders. However, a clear picture regarding the veracity of his commitments had not emerged. Besides, the police and the depositors’ association were of the view that unless Subramanian was taken into custody, a clear picture would not emerge in the whole episode. The judge said considering these facts, anticipatory bail could not be granted. The EOW officials had launched a manhunt to track Subramanian, with a dozen special teams working to locate him after sleuths found that his wife and daughter had also vanished since last week from their house in Chinna Neelankarai. The police had arrested four directors in the first week of August and three others a month later. Inquiries revealed that Subramanian had been running over 40 financial institutions.

When the issue went to court, the Madras High Court in 2012 had ordered the winding up of Subhiksha Trading Services. The order came in response to a winding-up petition filed by Kotak Mahindra Bank, to which Subhiksha owes around

R40 crore. The court also ordered the official liquidator to take over the assets of Subhiksha. Problems began for Subhiksha in October 2008, when it had started receiving legal notices for outstanding payments. In January 2009, the chain was forced to shut down over 1,600 shops following a cash crunch. Subhiksha began operations in 1997.

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