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Flipkart founder Sachin Bansal moves Madras HC challenging ED’s ₹10,600-cr FEMA violation notice

Our Bureau Chennai | Updated on September 04, 2021

Sachin Bansal   -  Businessline

Notice violates the petitioner’s fundamental rights guaranteed under the Constitution, says petition

Flipkart founder Sachin Bansal on Friday moved the Madras High Court challenging the ₹10,600-crore Foreign Exchange Management Act (FEMA) violation notice issued by the Enforcement Directorate (ED), Chennai, on July 1, 2021.

Admitting the plea, Justice R Mahadevan observed as to why the authorities failed to take action against the alleged violation for the past 12 years. He also directed the ED to file its response by three weeks.

Bansal said the writ petition arises from the arbitrary, unreasonable and patently perverse issuance of the impugned notice alleging non-compliance with a condition under the FDI policy in respect of shares issued by certain Flipkart group companies to foreign investors during the period 2009 to 2014.

The impugned notice is violative of the petitioner’s fundamental rights guaranteed under Articles 14, 19 and 21 of the Constitution of India, and ought to be quashed by the court, the petition said.

The impugned notice suffers from the vice of the exercise of power after an unreasonable delay of 12 years and is in breach of the settled position of law, as held by the Supreme Court in many cases, that a regulatory authority cannot invoke jurisdiction beyond a reasonable period of time.

Further, the impugned notice does not provide any justification, nor a single line of clarification, that explains the delay or why the adjudication proceedings has been initiated on the current date.

Bansal said he had attended 20-30 meetings with the ED personnel in the period 2013-15, and had, throughout the investigation, cooperated with them, including by providing the requisite information without any delay or demur.

Allowing the adjudication proceedings to continue after a significant lapse of time will only be unjust and unfair to the petitioner, the petition said.

The impugned notice does not pertain to any issues or allegations of money laundering, tax evasion, fraud or other public crime and is limited to allegations on an alleged non-compliance of a structural condition under the applicable FDI policy which is at best capable of varied interpretation.

“The petitioner has no remedy except to invoke his constitutional remedy under Article 226 of the Constitution of India before this honourable Court, as there is no statutory limitation period prescribed for filing of a complaint for initiating adjudication proceedings under Section 16 of FEMA and accordingly the present issue cannot be raised or resolved before the Respondent No 2 (The Special Director, Adjudicating Authority, ED) during the adjudication proceedings,” the petition said.

Bansal urged the court to dispense with the production of the original of the impugned notice; to pass an order of interim stay on the operation of the impugned notice; issue a writ, order or direction, more particularly a writ in the nature of Certiorari or any other writ of similar nature, calling for the records of Respondent No. 2 relating to impugned notice... and thus render justice, the petition said.

Published on September 03, 2021

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