V.P. Nandakumar, the managing director and chief executive officer of Manappuram Finance Ltd, on Friday alleged that the Enforcement Directorate (ED) froze shares worth ₹2,000 crore but valued them at only ₹140 crore.

This comes a day after ED said it froze assets amounting to ₹143 crore in the form of bank balance and shares after carrying out searches at six premises owned by Manappuram Finance and its MD in Kerala's Thrissur.

The probe agency said it found and seized various 'incriminating documents' during its search. ED is investigating the non-banking financial company on the allegations of money laundering from the 'illegal collection of deposits' from people.

In a letter to the NBFC's board, Nandakumar said that he received an order of freezing under the Prevention of Money Laundering Act, 2002 in respect of certain assets on May 4. These include 19,29,01,996 equity shares in the company.

The Manappuram Finance CEO called the order 'patently high-handed', 'arbitrary' and 'unreasonable' for many reasons.

"Firstly, the total amount of pending deposits to which the matter pertains is less than Rupees Ten Lakhs which is lying in escrow Account. Secondly, the shares that have been frozen by the Enforcement Directorate are worth approximately Rupees 2000 Crores, but the value attributed to them is around Rupees 140 Crores," Nandakumar said, adding that he is reviewing his legal options in this matter.

Nandakumar said the searches by ED have nothing to do with the affairs of the company but pertains to a 10-year-old matter of his erstwhile proprietorship, Manappuram Agro Farms (Magro), which is no longer in existence. The freezing order itself clarifies that the ED's search operation was directed at Magro, he said.

Magro used to accept deposits from people residing at Valapad and its neighbouring areas where Nandakumar's family has done business for over 60 years. It would pay interest on these deposits and use the funds so raised in its primary business of agriculture.

The total quantum of deposits outstanding as on February 1, 2012 was ₹143.85 crore which was fully and duly accounted for in Magro's books, said Nandakumar.

Since the principal business of Magro was agriculture, it accepted deposits in the bona fide belief that this was permissible under law, the NBFC's MD said. However, based on communications from the RBI in 2012, Magro stopped accepting, renewing and soliciting deposits, he added.

As on December 31, 2022, Magro has repaid deposits worth ₹143.76 crore and the total outstanding amount remaining in the escrow amount is only ₹9.24 lakh. "This balance is outstanding only because certain depositors have failed to claim their respective deposits," said Nandakumar.

The NBFC's CEO said after over 10 years, a 'certain individual' lodged an FIR with the Valappad police station in relation to the acceptance of deposits.

"The FIR is a malicious abuse of process by an individual who has a long-standing grouse against my family and me. I am certain that its frivolity will eventually be established before the courts. Meanwhile, I am fully cooperating with the Enforcement Directorate as I am very clear that there is no illegality of any kind at all. The alleged matter of the deposits has already been examined in detail by all the concerned regulators and there has been no adverse order passed against me or Magro," said Nandakumar.

Meanwhile, shares of the NBFC fell as much as 14% on Friday to an intra-day low of ₹102 on the National Stock Exchange (NSE).

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