A plea has been filed in the Delhi High Court challenging the arrest of Bhushan Steel's erstwhile promoter Neeraj Singal, who was taken into custody by the Serious Fraud Investigation Office (SFIO) for allegedly siphoning off funds worth over Rs 20 billion.

The petition filed by Singal's mother is likely to come up for hearing tomorrow before a bench of Justices S Muralidhar and Vinod Goel.

The plea seeks release of Singal, who was arrested on August 8 and remanded in judicial custody, from alleged illegal arrest and custody.

The petition, filed through advocates P K Dubey, Ranjana Roy Gawai and Arshdeep Singh, challenged certain provisions of the Companies Act which imposes unreasonable restrictions for grant of bail to persons arrested under the Act, claiming that it was violative of fundamental rights.

Singal was arrested in relation to an investigation being carried out by SFIO into the affairs of Bhushan Steel Ltd and Bhushan Steel and Power Ltd pursuant to a May 2016 order of the central government under the provisions of the Companies Act.

The plea claimed that the arrest was illegal as no grounds or reasons of arrest were communicated to him, orally or in writing, by the probe agency at the time of arrest.

It added that the power of arrest cannot be exercised retrospectively for the offences allegedly committed prior to coming into force the provisions relating to arrest under the Act.

According to the SFIO officials, it was the first time that the agency has arrested a person for fraudulent activities.

Last year, the probe agency, which comes under the Corporate Affairs Ministry, got powers to arrest people for violations of companies law.

The finance ministry had said Singal was "accused to be guilty of siphoning off funds of over Rs 20 billion from the loans availed by Bhushan Steel Limited using more than 80 companies".

The companies were used for fraudulent activities of rotation of funds through bogus loans and advances, and investments, among others, it had said in a tweet.

In another tweet, the ministry said fraudulent activities contributed to the company becoming insolvent.

"Bhushan Steel Limited is one of the 12 big cases that had been referred for insolvency resolution by banks. Tata Group has taken-over management of the company from the Singals. SFIO investigation is on-going," it had said.

First Published:Aug 20, 2018 5:54 AM IST