Reliance Power received an ED order to seize Sasan Power shares worth ₹2,026.65 crore over a probe into 2006 bonds and a 2008 investment.

The Enforcement Directorate (ED) passed the order under Section 37A(1) of the Foreign Exchange Management Act (FEMA), the law that governs how money moves in and out of India.

Reliance Power received it on 12 October and told the stock exchanges the next day, as listing rules require.

The order covers two things. One is the company’s holding in Sasan Power Ltd, its wholly owned subsidiary, valued at Rs 2,026.65 crore. The other is bank balances of Rs 6.16 crore.

ED is looking for two old deals. In 2006, Reliance Power issued foreign currency convertible bonds, which are bonds that can later turn into shares.

In 2008, it invested overseas in a subsidiary based in Singapore. The agency says these deals breached Section 4 of FEMA.

The company disagrees. It says it carried out both transactions with every approval it needed.

The order is provisional, which means it is not final. A competent authority must confirm it under Section 37A.

Until that happens, Reliance Power cannot sell, transfer, pledge or otherwise deal with the assets the order covers. The ED has not imposed any penalty so far, the company said.

A lender already has a claim on the seized shares. Reliance Power pledged the Sasan Power shares to Power Finance Corporation, a government-owned lender, under security arrangements that go back more than 10 years.

Reliance Power said it is studying what the order means for the business. It will take whatever legal steps its advisers recommend to protect the company, its shareholders and other stakeholders.

This is not the first time the ED has acted against assets linked to the group. In July, the agency reportedly issued a separate provisional attachment of about Rs 1,021 crore, covering shares of Reliance Infrastructure and receivables from Sasan Power and Reliance Cleangen.

The next step is the competent authority’s decision on whether to confirm the seizure. The company’s disclosure gives no timeline for that decision.

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