Sources close to TR Pachamuthu said the charges against him were influenced by political vendetta.
The chairman of business conglomerate SRM Group and chief of the Tamil Nadu's Indiya Jananayaka Katchi (IJK) party, TR Pachamuthu, has been sent to judicial custody till September 9 after being arrested on Friday in a cheating case.
A statement by the city police said a movie producer Madan and a few others had cheated 111 persons collecting nearly Rs 75 crore for under graduate and post graduate medical seats.
Investigators allege Mr Pachamuthu, who is involved in collecting the capitation fees, cheated the students by not admitting them to his medical colleges in Chennai and Trichy nor did they return the money.
Madan had gone missing a few months ago and police have registered a missing persons case based on a compliant by his mother.
Mr Pachamuthu heads the Rs 10,000 crore SRM Group that has a chain of engineering and medical colleges across India.
His party the IJK had fought the recently assembly polls in alliance with the BJP.
Sources close to Mr Pachamuthu said the charges were influenced by political vendetta. They say his university admitted students by merit on the basis of the entrance examination it conducted.
The court is likely to hear his bail plea on Monday.