Based on the FIR filed by the Central Bureau of Investigation after the seizure of old and new currencies worth several crores in December, the Enforcement Directorate filed a case against Reddy and his associate K. Sreenivasulu under the Prevention of Money Laundering Act (PMLA).
Reddy was arrested on Monday night and produced before a Magistrate at his residence and remanded in judicial custody till March 28.
Also arrested were two associates, Sreenivasulu and Premkumar.
"They were arrested late on Monday night. They have been accused of converting Rs 34 crore demonetised currency into new currency," an officer from the Enforcement Directorate told IANS.
After his earlier arrest by the CBI, Reddy was released on conditional bail.
Based on the CBI FIR, the Enforcement Directorate registered a case on December 20 against Reddy and his business partner Sreenivasulu.
The CBI had filed the case after the Income Tax department raided their residential and office premises.
That is when Rs 131 crore of cash was seized, including Rs 34 crore in new Rs 2,000 currency, 177 kg of gold and documents showing property worth several crores.
Based on the evidences gathered and documents seized from Reddy and his associates, Income Tax officials raided the residences of then Tamil Nadu Chief Secretary P. Rama Mohana Rao and seized incriminating documents, cash and gold jewellery.
They also raided Rao's office at the Secretariat and the residential and business premises of his son Vivek Papisetty as well as other family members.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)