The Securities and Exchange Board of India (Sebi) has directed the former promoters of Fortis Healthcare Ltd (FHL) — Shivinder Mohan Singh and Malvinder Mohan Singh — and eight other entities to repay Rs 403 crore along with interest to FHL after finding diversion of funds from the company.

Sebi maintained that all the entities prima facie acted in a fraudulent manner in diverting funds worth around Rs 403 crore from FHL for the ultimate benefit of parent company RHC Holding Pvt Ltd and group company Religare Finvest Ltd in violation of securities laws.

In a 21-page interim order passed on Wednesday, the market regulator said prima facie the role of FHL and Fortis Hospitals Ltd (FHsL) in the alleged diversion of funds through conduit entities has been established.

Apart from the Singh brothers, FHsL, RHC and Religare Finvest, the other entities asked to repay the money are Shivi Holdings Pvt Ltd, Malav Holdings Pvt Ltd, Best Healthcare Pvt Ltd, Fern Healthcare Pvt Ltd and Modland Wears Pvt Ltd. The money has to be paid within three months.

Pending completion of investigation and till further orders, the Singh brothers and the eight entities have also been directed not to dispose of any of their assets or divert any funds without Sebi’s prior permission.

However, they can utilise funds for certain purposes, including meeting expenses of day-to-day business operations, the order said.

The market regulator started to probe the matter after a report came out stating that the former promoters had taken at least Rs 500 crore out of FHL and that its auditors Deloitte Haskins & Sells LLP had refused to sign the company’s second-quarter results for 2017-18 until the funds were accounted for or returned.

The market regulator said during the course of discussions, the auditors mentioned that FHL through its subsidiary has given inter-corporate deposits (ICD) to three Indian companies worth Rs 473 crore from 2013-14. These transactions were not classified as related-party transactions.

These loans were given at the beginning of each quarter and returned by the end of the quarter and never reported in the balance sheet as the outstanding amount at the end of the quarter was nil. This, they said, has been happening from 2013-14. However, for the quarter ended September 2017, the amount was not returned by the three borrower companies.