Farouk M Irani, ex-Managing Director of First Leasing Company of India Limited, who is known as the father of Indian leasing in business circles, was arrested by the Chennai Zonal Office of the Enforcement Directorate, under the Prevention of Money Laundering Act on Tuesday.
A senior official from Enforcement Directorate said Mr Irani has been produced before the court and further investigations are in progress.
An investigation by the ED revealed that Subramanian had an unpaid loan of Rs 77 crore to his name for the purpose of establishing the chain of stores.
The ED also listed Rs 790 crore in unpaid loans to a consortium of bankers and immovable properties of Rs 4.50 crore.
He was remanded to the judicial custody by the Chennai XIV Metropolitan Magistrate for seven days. Further investigation is underway.
The Chennai-based FLCL was incorporated in 1973 and came out with public issue in 1983. The firm was jointly promoted by Farouk Irani and A C Muthiah, the promoter of SPIC.
FLCL was involved in several businesses including leasing and hire-purchase. In 2013, the company admitted to its bankers about an Rs. 1,000 crore gap in its balance sheet, following which the Reserve Bank directed the firm to cease operations.