Delhi Police files fresh FIR against Malvinder and Shivinder for Rs 400 crore 'fraud'

The Delhi Police have filed another case against Malvinder and Shivinder Singh, the erstwhile promoters of Religare Enterprises, charging them with criminal breach of trust, cheating, falsification of accounts and criminal conspiracy.
The Economic Offences Wing (EOW) of the Delhi Police registered the fresh First Information Report earlier this month on a complaint by Fortis Healthcare Ltd following an enquiry.

According to the FIR, Malvinder and Shivinder Singh, the former promoters of Fortis, have allegedly duped the company of over Rs 400 crore, siphoning off the money for personal gain and to pay off their loans.

“Enquiry has substantiated allegations of the complainant wherein promoters in conspiracy with their associates indulged in criminal breach of trust and criminal mis-appropriation by diverting the funds of the company,” the FIR says.

ET has reviewed a copy of the FIR.

The Singh brothers were promoters, shareholders and held top managerial positions in Fortis Healthcare Ltd till February/March 2018.

They are currently behind bars and facing a probe by the EOW of Delhi Police and the Directorate of Enforcement (ED) in a multi-crore loan fraud at Religare Enterprises. Both Malvinder and Shivinder have previously denied allegations of wrongdoing (s) against them.

The FIR says the method of operations adopted by the Singh brothers was that “the inter-corporate deposits (ICDs) were advanced in the beginning of each quarter for a period of 90 days and ostensibly returned by the borrower companies by the end of the said quarter. Hence, the same were not reported as outstanding in the balance sheet.”

In the next quarter, the ICDs were re-issued/rolled over. The forensic inquiry discovered several emails, proving the circular movement of the ICD amounts.

“These were unlawfully and illegally done at the behest of the Singh brothers, who at the relevant time controlled the majority of the shareholding in the complainant company and were on its Board of Directors,” according to the FIR.

For the quarter ending September 2017, the principal balance of ICDs amounting to Rs 494 crore was not received back at the expiry of 90 days. Subsequently, an amount of about Rs 92 crore was recovered during FY18 and the balance principal of around Rs 402 crore was provided for in the financial statements, the FIR says.

Fortis has alleged that the ICDs were given to three borrower companies “directly/indirectly” linked to the Singh brothers.

Reproducing the complaint given by Fortis, the FIR says the Singh brothers were “instrumental in granting and/or rollover of the ICDs… (and) using their authority, by-passed/overturned the well set procedures of Fortis Healthcare to facilitate the re-issuance/rolling over of the said ICDs.”

The transactions pertaining to the issuance of ICDs were earlier investigated by the Securities and Exchange Board of India through its forensic auditors.

Fortis has supplied relevant emails to the EOW.

“Manifestly, Singh brothers misused their positions and influence in the complainant company and wrongful gain/undue benefit to themselves and the entities directly and indirectly owned and/or controlled by them”, the FIR adds.

In its complaint, Fortis has alleged that “during August 2016, credit assessment of the borrower companies was carried out by the employees of the complainant company (Fortis) which showed the debt-equity ratio as above 2 and as high as 52 times for the borrower companies and the only source of funding for these entities was liquidation of loans and advances and other current assets. Despite that, ICDs were granted/rolled over due to the influence of Singh brothers.”

To buttress its accusations, the company stated further in the FIR that during August-September 2016, “communications between the employees of the complainant company were noted pertaining to avoiding further rollover of ICDs. Despite such assessment and notes, ICDs were got rollover by the Singh brothers.”