The Enforcement Directorate on Thursday said it has seized assets worth about Rs 8 crore of a software development company and its directors as part of a foreign exchange violation probe linked to issuance of allegedly fraudulent global depository receipts (GDR).
A GDR is defined as a negotiable financial instrument issued by a depository bank and it enables a company to reach investors in capital markets abroad.
The action has been taken against CAT Technologies Limited, which has registered offices in India, US and some other countries.
"The seized assets include 12 immovable properties of CAT Technologies Limited, Dhiraj Kumar Jaiswal, Laxmi Pershad Jaiswal, Dinesh Kumar Jaiswal and Nisha Jaiswal," the ED said in a statement.
The total value of these properties is Rs 8.03 crore and they have been seized under Section 37A of the Foreign Exchange Management Act (FEMA), it said.
Investigation was initiated against the company and its directors in connection with "fraudulent" issuance of GDRs and "non-utilisation" of the same for bonafide purposes, the ED said.
The probe found, the agency alleged, that Dhiraj Kumar Jaiswal, the managing director of the company, in connivance with Arun Panchariya and others, issued GDRs in the name of his company on two occasions in 2007 and 2009. He did not deliberately repatriate the GDR proceeds worth USD 16.47 million to India as per the statutory requirements, it alleged.
A large part (USD 13.8 million) of the amount raised abroad was diverted to its subsidiary, CAT Technology FZE, a "shell" company in the UAE, the ED claimed.
The entire scam was orchestrated by Panchariya, a person of Indian origin residing abroad, it said.
Panchariya is the promoter of London-based Pan Asia Advisors Limited and his associates facilitated the issuance of GDRs, opening of the bank account of the company in Euram Bank, Vienna and bank account of its subsidiary in Mashreq Bank, UAE, the agency said.
Panchariya is "suspected to be behind several GDR frauds that were committed by him in connivance with the promoters and directors of various Indian companies".