The Enforcement Directorate (ED) has issued a provisional seizure order targeting assets worth ₹2,026.65 crore belonging to Sasan Power Ltd., a wholly owned subsidiary of Reliance Power. Additionally, bank balances totaling ₹6.16 crore have been seized as part of the ongoing investigation.
This action by the ED relates to alleged contraventions of foreign exchange regulations, specifically involving transactions from nearly two decades ago. The order primarily focuses on shares held by Reliance Power in Sasan Power, which were previously pledged to Power Finance Corporation Ltd. (a Government of India undertaking) as security for more than ten years.
Details of the Allegations
According to Reliance Power's filing with the BSE, the ED's order concerns alleged violations stemming from foreign currency convertible bonds issued in 2006 and an overseas investment made in 2008 into a Singapore-based subsidiary. The company maintains that all applicable approvals were obtained for these transactions at the time.
The provisional seizure, issued under Section 37A of the Foreign Exchange Management Act, 1999 (FEMA), means Reliance Power is currently restricted from transferring, selling, pledging, or otherwise dealing with the affected assets. However, the company noted that no penalty has been imposed at this stage.
Reliance Power's Response
Reliance Power has stated it is currently assessing the full implications of the ED's order and intends to dispute the allegations of contravening Section 4 of the FEMA Act. The company affirmed its commitment to taking all necessary legal steps to safeguard its interests, as well as those of its shareholders and other stakeholders.
The seizure remains provisional and is subject to confirmation by the competent authority, a standard procedure under FEMA regulations.