Former Reliance ADAG executive Amitabh Jhunjhunwala was taking crucial decisions with respect to disbursal of funds from RHCL and RCFL to shell/paper entities operated and controlled by the Reliance Anil Ambani Group in the guise of Corporate Loans, according to the grounds of arrest document exclusively accessed by FinancialExpress.com.

The ED arrested two former executives of the Reliance ADAG group on Wednesday in connection with a money laundering probe. Amitabh Jhunjhunwala and Amit Bapna face money laundering charges linked to a broader investigation into banking irregularities involving alleged proceeds of crime running into thousands of crores of rupees.

Reliance Group said in a statement to financialexpress.com that Jhunjhunwala and Bapna had no association with the Group since 2019.

What were the reasons for arrest?

The grounds of arrest document establishes that Jhunjhunwala was among the key decision-makers for various operations of Reliance Home Finance and Reliance Commercial Finance. This included raising funds, monitoring cash flow, monitoring Assets Under Management, analysis of Annual Operating Plans, and disbursal of loans. The document also records that the heads of RHFL and RCFL were actively reporting to him — establishing a CEO-level reporting chain that ran through Jhunjhunwala. The document was signed by Jhunjhunwala himself and also names Amit Bapna as having acted on his approvals. He had served as Director of Reliance Capital Limited from March 2003 and as Vice Chairman from March 2006, both until September 2019 — with “full control over the affairs and management of RCAP group of companies, including RHFL and RCFL.”

According to the Enforcement Directorate, the former Reliance ADAG Group MD played a prominent role in a “pre-conceived and well-planned scheme” to siphon funds through shell companies during this period. The investigation under the Prevention of Money Laundering Act revealed that public funds were diverted from RHFL and RCFL under the pretext of corporate loans “by cheating banks, shareholders, investors and other public institutions.” The ED has alleged that total laundering across ADAG entities exceeds Rs 40,000 crore, of which approximately Rs 11,500 crore in proceeds of crime from the RHFL and RCFL cases alone is yet to be fully traced.

Dubai residency and flight risk

The Enforcement Directorate tagged Jhunjhunwala as a flight risk in its grounds of arrest document, explicitly noting that he holds Dubai residency and a Golden Visa.

“You being a Non-Resident Indian (NRI) and a holder of a Golden Visa of Dubai, visit India only occasionally to meet your family and friends; therefore, you constitute a substantial flight risk and are likely to evade the due process of law,” read an excerpt from the document.

India and the UAE have had an extradition treaty in place since 1999, under which both countries have agreed to hand over fugitives who have committed an offence in the requesting state. 

However, the treaty contains a standard limitation: neither country can compel extradition of its own nationals. This means that if Jhunjhunwala, as an Indian national, were to leave for Dubai, the UAE could not formally hand him over to India — though he could be tried in the UAE under a parallel process. 

A Golden Visa, which confers long-term legal residency, would give him a stable legal foothold in that jurisdiction during any such proceedings — which is the practical concern the ED has flagged, rather than any formal override of the treaty itself.

Remanded in ED custody for five days

The duo were arrested on Wednesday night before being produced before a special PMLA court, which remanded them to ED custody for five days. 

 The ED had initially sought seven-day custody to untangle what it called a “complex web of shell companies” used to divert bank loans. The duo are expected to appear before the court again on April 21.

“The available material on record indicate that there is imminent possibility of involving some other persons and the entire money trail of about Rs 11,500 crore is required to be traced so the proceeds of crime can be recovered. The accused persons are required to be confronted with the documents and the entire gamut of the complex transaction are required to be unveiled during the course of investigation,” the special court judge said in the remand order.