The XII additional chief metropolitan magistrate has remanded Nagarjuna Group chairman and founder director of Nagarjuna Finance Limited, K Satyanarayan Raju and director PKS Mahadevan to judicial custody till 29 December.

The two, who were arrested on Monday for allegedly defrauding NFL depositors, will be kept at the Chenchalguda central prison on judicial remand till 29 December.

The court also rejected their petition seeking medical assistance, saying, "The court saw no merit in the petition filed (under Section 54) to send them to a medical examiner."

The police, meanwhile, is expected to have recovered some documents relating to the case from Raju.

NFL, a non-banking financial institution, had defaulted on repayment of matured deposits after it suffered an acute liquidity problem in 1999. The depositors approached civil courts, police stations and consumer fora and filed cases against NFL directors. Nearly 700 warrants issued by courts across the country are pending against them.

Nagurjana Finance Ltd collected deposits worth hundreds of crores till 1997-98 from 52 branches country-wide.

The company had allegedly collected deposits of Rs98.3 crore from 85,160 people in Andhra Pradesh alone in 1997-98. Of this, Rs23.02 crore belonging to 16,122 depositors matured on 31 December 1999, but the company defaulted on payment of the matured deposits.

Instead it sold itself to a company in Mumbai and tried to absolve itself of the responsibility to repay the deposits.

According to reports, the defaults started when borrowers failed to repay loans. According to reports, the company had to receive Rs130 crore from its borrowers.

There are about 58 borrowers who owe Rs1-5 crore each to NFL, according to reports. In fact, since 1999-2000, the company had discontinued its financial services activities and focused on recoveries.

The Rs12,500-crore Nagarjuna Group is a diversified group with interests in agrochemicals, irrigation systems and energy.