On Wednesday, the Enforcement Directorate (ED) announced the seizure of movable and immovable properties valued at Rs 62.52 crore in connection with FEMA violations in the Global Depositary Receipts (GDR) scam case involving Farmax India Limited (FIL), its Managing Director Morthala Srinivasa Reddy, and Executive Director M. Malla Reddy.
The seized assets, including 23 immovable properties and equity shares, were confiscated under the provisions of the Foreign Exchange Management Act (FEMA). The investigation revealed that FIL, under the management of Morthala Srinivasa Reddy, issued GDRs in 2010 without repatriating the proceeds of US$ 71.45 million to India as required by law. Vintage, FZE, Dubai, a wholly-owned entity of Arun Panchariya, was the sole subscriber to the GDRs.
To secure the loan granted to Vintage, FZE by EURAM Bank, FIL pledged the entire GDR proceeds. Funds raised abroad were diverted to Farmax FZE, Dubai, and various entities controlled by Arun Panchariya. Additionally, EURAM Bank adjusted US$ 56.57 million against non-repayment of loans by Vintage FZE. The ED’s investigation targeted Farmax India Limited, its promoters, directors, and others involved in the fraudulent issuance of GDRs and their non-utilization for legitimate purposes.
By FCCT Editorial Team
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