IIT, IIM educated Subhiksha founder sentenced to 20 years over investor fraud

R Subramanian, the founder of the retail chain Subhiksha and an alumnus of IIT with a degree from IIM, has been sentenced to a 20-year prison term for defrauding investors. The court order, dated November 20, 2023, discloses that Subramanian, a distinguished engineer from IIT Madras, received a conviction from a special court in Chennai for duping hundreds of investors and diverting their investments through various shell companies.

The court convicted Subramanian and his associates under the Tamil Nadu Protection of Interests of Depositors (in financial establishments) Act (TNPID Act). According to the ruling, Subramanian and his cohorts solicited deposits through four schemes endorsed by A1 M/s. Viswapriya India Ltd, specifically Prime Invest, Asset Backed Security Bond, Liquid Plus, and Safety Plus.

They misled depositors, luring them to invest in the financial institution, as per the court. Upon maturity, they duped depositors into reinvesting the matured amount in new schemes that promised significant short-term returns. Ultimately, they failed to return the matured amount, resulting in defrauding the depositors.

Viswapriya, established as a financial services company in May 1991, marked Subramanian's initial business endeavour. Subsequently, he launched Subhiksha in 1997. The array of schemes offered by Viswapriya attracted numerous investors, and presently, 587 affected investors are still awaiting compensation. Subramanian confessed to defaulting on over Rs 137 crore to depositors across all schemes and has not voluntarily deposited any amount for the past decade.

The court has levied a fine of Rs 8.92 crore on Subramanian and a fine of Rs 191.98 crore on the convicted entities. Among this sum, Rs 180 crore is designated for compensating depositors. The compensation funds are to be transferred to an authorised body, which will distribute them after validating the documentation of the affected investors, as mandated by the court's ruling.